China Petrochemical Development Corp (CPDC, 中石化) yesterday reported a conservative earnings outlook for the second half of the year as clients’ inventories remain high.
Demand has also been weak since the fourth quarter of last year amid the US-China trade dispute, which had led to a 20 percent decline in prices of its main products in the first half of the year, CPDC vice president and spokesperson Chen Ying-chun (陳穎俊) said.
Lower prices of caprolactam (CPL) and acrylonitrile (AN) products caused second-quarter net profit to fall by 47.15 percent annually to NT$643.76 million (US$20.61 million), or earnings per share of NT$0.23, the company said.
In the first half, net income declined 58.95 percent to NT$953.38 million, or earnings per share of NT$0.34.
In the first eight months, cumulative revenue fell 16.92 percent to NT$21.81 billion on declining CPL shipments, the company said.
Prices of AN products, which accounted for 34 percent of total sales in the first eight months, have rebounded, but those of CPL products, which contributed about 52 percent of sales, are still low, it added.
Due to petrochemical product price fluctuations, CPDC plans to expand its land development and special chemicals business in a bid to raise the proportion of their total sales to at least 30 percent in five years, from 10 percent each now.
The firm aims to expand its special chemical business by setting up operations in China, it added.
CPDC might consider cutting CPL production if prices remain low and the business is unable to break even, Chen said.
As for its AN business, the utilization rate is expected to stay at 90 percent this quarter, but would fall next quarter as plants in Kaohsiung’s Dashe District (大社) are to close for maintenance, he said.
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