Nanjing, China – System house Hongbaoli posted a 10% revenue gain in Q3 2016 to CNY 451m ($67m). Net profit in the quarter crashed 44% to CNY 11m.
The company’s net profit over the first nine months of 2016 declined 9% to CNY 75m. Revenue during the same period dropped 6% to CNY 1.3bn.
The price of feedstock PO jumped 50% in September - to CNY 13,500/tonne, and has fallen back in November – but the company’s product price is index-linked to the previous month’s PO price, and “such cost increments cannot pass to the customers in a timely manner,” said the Q3 report.
With 120kT/year PO facilities, Hongbaoli purchases 100kT PO from the market each year, the company’s general manager of sales, Wu Yiming told UTECH-polyurethane.com.
In September the government of Shandong province, where a large number of China’s PO makers using the chlorohydrin process are located, started an investigation on such companies’ environmental protection compliance.
So far five out of eleven investigated companies are found to have problematic practices and ordered to make rectification.
Hongbaoli is also mulling “major assets reorganization,” with its stock suspended since early October and plans to disclose further scheme details in November.
Exchange Rates: Xe.com 7 November 2016.