China BlueChemical Ltd. (“China BlueChem” or the “Company,” stock code: 03983), a leading chemical fertiliser and methanol producer in China, has announced its unaudited interim results for the six months ended 30 June 2018.
During the period under review, the Company through refined management of the production process, continuously optimised plant production and operation, while steadfastly reforming its marketing system and fully grasping market trends. As a result, its production volume and sales volume of compound fertilisers hit a new record high for the interim period, and its sales volume for the first half of 2018 exceeded the yearly figure of 2017. The Company realised revenue of RMB5,498 million and gross profit of RMB1,336 million, representing an increase of 7.0% and 58.3% from the same period of 2017 respectively. China BlueChem recorded profit attributable to owners of the Company of RMB752 million, rising by 159.3% from the same period of 2017. Basic earnings per share were RMB0.16.
In 2018, the PRC government initiated to improve the quality of agricultural development and continuously highlighted the importance of ensuring food safety in China, and constant efforts were made to implement the policy of minimum purchase price for grain rice and wheat. In the first half of 2018, affected by the limits on natural gas supply and the rising environmental protection standards，some urea enterprises reduced urea production significantly，and the average ex-factory price of urea in China increased 21% compared with the same period of 2017. Similarly, the production volume of phosphate fertilisers in China decreased 22% compared with the first half of 2017, while the prices maintained the uptrend. Downstream demand of the methanol market was strong, and supply and demand kept in balance.
Mr. XIA Qinglong, Chairman of the Company said, “The Company achieved safe and stable operation of production plants in the first half of 2018 through refined management of the production process. Both Hainan Phase I and Phase II Methanol Plants broke their respective records by realising long-cycle operations that lasted over 290 days. The Company recorded a urea production volume of approximately 1.148 million tonnes for the first half of the year, and that the output of methanol amounted to approximately 718,000 tonnes, while the output of phosphate and compound fertilisers totalled approximately 452,000 tonnes, among which that the output of compound fertilisers hit a new historical high of approximately 117,000 tonnes. ”
Facing competition in the market, the Company remained steadfast in the reform of its marketing system. Leveraging its branding and geographical advantages, the Company endeavoured to expand its presence in the compound fertiliser market and fully grasped market trends to perform accurate pricing in tandem with the latest market changes. In the first half of the year, the Company sold approximately 1.174 million tonnes of urea. Revenue from urea amounted to RMB2,082 million, representing an increase of 16.3% compared with the same period of 2017. The sales volume of phosphate fertilisers and compound fertilisers was approximately 423,000 tonnes, and the revenue amounted to RMB1,062 million. The sales volume of methanol was approximately 704,000 tonnes with revenue at RMB1,813 million.
Mr. XIA concluded, “In the second half of 2018, domestic demand for chemical fertilisers will enter into the off-season. And particular attention should be paid to the global market trend. The fully-marketised operational environment and the upgrade of environmental protection standards will further facilitate the consolidation of the chemical fertiliser industry in the PRC. The methanol sector is still undergoing a development boom, where downstream traditional demand keeps steadily growing while methanol-to-olefins and methanol fuels still have much room for growth and therefore serve as the major driving forces of the demands for methanol. Looking ahead to the second half of the year, the Company will continue its efforts in coordinating the stable supply of upstream natural gas, with emphasis on the put-into-use of the natural gas from Dongfang 13-2 Gasfield as planned. At the same time, the Company will persistently strengthen and enhance HSE and refined production management, and in an effort to achieve the safe and stable operation of each production unit. The Company will bolster the operating capacity and put heightened emphasis on autumn sales as well as winter storage and sales of chemical fertilisers. The Company will also continue to optimise the product structure by increasing the production and sales proportions of NPK and value-added fertilisers. In addition，the Company will continue to step up efforts on cost reduction, quality improvement and efficiency enhancement, and to lower raw material procurement costs and strictly manage expenses. In terms of future development, the Company will continue feasibility studies for producing high value-added chemical products using natural gas in Hainan in tandem with the development of the offshore natural gas field in the South of Hainan and will continuously pay attention to domestic and overseas developments and evaluate merger and acquisition opportunities which are in line with the Company’s development strategies.”