Yantai, Shandong – Wanhua Chemical saw its 2015 net profit fall by 33% to CNY 1.6bn ($246m), on a 12% fall in revenue to CNY 19.5bn, according to its annual report published in early March.
Wanhua reports a sharp decline in annual net profit
This situation was mitigated partially by an estimated 10% increase in MDI sales volumes. MDI accounted for about two thirds of the company's total revenues during the year, global credit ratings agency Moody's said.
Taking further steps toward diversification, Wanhua put its HMDA, NPG and chloride hydroxide projects into operation last year, providing stable supplies to downstream sectors such as wind power and coatings.
In 2015 the company built storage tanks for MDI on the US east coast and set up a real estate agency in the country. It is looking to add manufacturing sites in the Americas, Europe and other Asian countries and establish storage facilities and logistics networks in all major markets. Overseas markets contributed 20% of last year’s total sales.
Wanhua has been turning itself from a state-run company to an international conglomerate. In February it announced its parent group Wanhua Industrial had changed its ownership status from “absolute state control” to “relative state control,” meaning the state’s stake in the parent was pared to less than half, giving more play to private capital.
Analysts at Moody's put Wanhua on review for a possible ratings downgrade in the light of its 2015 financial performance. "Wanhua Chemical refinanced some of its longer-term debt with short-term debt, and relied on short-term financing to reduce borrowing costs. Consequently, the company's short-term debt rose to CNY12 bn, up from CNY7 bn the year before, and dwarfed its CNY2 bn cash balance at end-2015."