Yantai, Shandong – Wanhua saw a 129% year on year increase in net profit to CNY 3.7bn ($538m) in 2016, according to its annual report released on 11 April. Revenue in the year reached CNY 30bn, up 54% from 2015.
“[The] global economy showed moderate growth in 2016 and China’s supply side reform is starting to take effect,” said the annual report. “Global commodity prices, especially the oil price, had a clear rebound and China’s chemical prices have bottomed out.” The polymeric MDI price, for example, more than doubled to CNY 22,000/tonne at 2016 year end.
Meanwhile, in 2016 a plenty of small- to medium-sized Chinese chemical companies stopped production because they failed to meet the government’s increasingly stringent environmental regulations. Upgraded consumption is also driving up the demand for higher-end chemical materials. “Such transformation is bringing great opportunities to Wanhua’s development,” the report added.
Revenue from the firm's polyurethane product series, predominantly MDI and polyols with a 41% gross margin, rose by 13% in 2016 and accounted for 55% of Wanhua’s total revenue. Their sales volume increased by 7% year on year to 1.4m tonnes. The company said it has become the world’s leading MDI maker with an over 20% share in the global market.
Wanhua's specialty chemicals division which, mainly contains HDI, H 12 MDI and IPDI, had a 46% gross margin and CNY 1.5 bn sales, up 54% from 2015.
Last year Wanhua completed a CNY 2.5 bn fund raising through private placement, its first such placement since its listing in 2001.
A 300Tk/year ongoing TDI project at its Yantai site is expected to start operation in June 2018.
In 2016 capacity utilisation at the company’s 1.2m tonne/year MDI facilities in Ningbo and 1.8m tonne/year propylene oxide/acrylic ester facilities in Yantai were about 75%. Its 600kT/year MDI facilities in Yantai had a 58% rate due to the explosion in September .
The company spent 2.4% of its revenue on research last year, during which time it said it had rolled out a number of newly developed products including 25 waterborne coating resins, 199 TPUs, 28 casting polyurethanes and 98 modified isocyanates.
Wanhua’s export sales value jumped 14% in 2016 to CNY 6bn with a 30% gross margin, slightly lower than that for the domestic markets. The annual report warned about risks in feedstock procurement and exchange rates as “the feedstock’s variety and volume is growing swiftly, especially with increasing international procurement.”
Another risk factor is the company's reserve of talent. “The building of the southwest China site and the America site as well as the launch of a series of new products will be a test on the talent pool,” said the annual report.
Wanhua expects to have CNY 38bn revenue, or a 27% year on year increase in 2017.
Exchange Rates: Xe.com 13 April, 2017