Shanghai Petrochemical Announces 2010 Interim Results

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• USA - English

HONG KONG, Aug. 27 /PRNewswire-Asia/ -- Sinopec Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or the "Company") (HKEx: 338; SSE: 600688; NYSE: SHI) announced today the unaudited operating results of the Company and its subsidiaries (the "Group") for the six-month period ended June 30, 2010 (the "Period") prepared under International Financial Reporting Standards ("IFRS").

Under IFRS, turnover of the Group during the Period amounted to RMB36,128.3 million, an increase of 70.59% as compared to the corresponding period of the previous year, while profit attributable to equity shareholders of the Company was RMB1,515.1 million, an increase of 51.22% year-on-year. Basic earnings per share was RMB0.210 (2009 interim: RMB0.139). The board of directors does not recommend the payment of any interim dividend for 2010 (2009 interim: Nil).

Mr. Rong Guangdao, Chairman of Shanghai Petrochemical, said, "In the first half of 2010, the global economy had in general entered a recovery cycle, resulting in a better macro-economic domestic and international environment as compared to the corresponding period of the previous year. Given China's petrochemical industry maintained a sound economic operation, the Group fully seized market opportunities, strived with all its strength to increase product output volume and carried out various tasks on production, operation, reform and development. During the Period, the Group's crude oil processing volume and ethylene production volume reached relatively good levels as compared to previous corresponding periods. Major technical and economic indices also improved substantially year-on-year. As a result, the Group achieved satisfactory increases in profits."

In the first half of 2010, the Group realized net sales of RMB33,678.2 million, representing an increase of 76.47% as compared to the corresponding period of the previous year, of which net sales derived from synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products increased by 45.13%, 31.42%, 239.51% and 67.22% respectively. Such increases were primarily attributable to a substantial increase in sales volume of most products of the Group in the first half of the year, as well as increased prices of raw materials and energy which resulted in increased prices for the Group's products.

Owing to the full completion and commissioning of the Phase 5 Project, the Group's product portfolio was further improved and its resources utilization efficiency was enhanced in the first half of 2010. During the Period, the output volumes of the Group's products increased substantially over the corresponding period of the previous year. The Group processed 5,042,800 tons of crude oil, an increase of 20.21% year-on-year. In respect of the total amount of processed crude oil, the output of gasoline, diesel and jet fuel increased by 18.50% over the corresponding period of the previous year, among which the output of gasoline, diesel and jet fuel was 462,900 tons, 1,540,000 tons and 380,500 tons respectively, representing an increase of 6.00%, 21.04% and 25.87% year-on-year respectively. The Group produced 493,900 tons of ethylene and 270,300 tons of propylene, representing an increase of 12.43% and 14.19% year-on-year respectively. The Group also produced 568,600 tons of synthetic resins and plastics, an increase of 5.20% year-on-year; 499,400 tons of synthetic fibre monomers, 329,800 tons of synthetic fibre polymers and 123,900 tons of synthetic fibres, representing increases of 16.74%, 14.04% and 2.82% year-on-year respectively. The Group's products maintained good and stable quality and the Group's output-to-sales ratio and receivable recovery ratio in the first half of the year were 100.05% and 99.55% respectively.

In the first half of 2010, as a result of a number of factors such as the global economic recovery, the European debt crisis and frequent natural disasters, international crude oil prices were moving at high prices ranges, adding to the cost of the Group's oil refinery business. During the Period, the Group's total cost of crude oil processed amounted to RMB19,169.3 million, accounting for 60.25% of the Group's cost of sales. The average unit cost of crude oil processed was RMB3,932.37/ton, representing a significant increase of 54.59% as compared to the corresponding period of the previous year.

During the Period, the Group continued to adjust its business structure and product portfolio and focused on the earlier stage work of the Phase 6 Project with refinery revamping and expansion item as the main project. Starting from 15 March, 2010, the Group formally introduced the supply of natural gas from Shanghai network to accomplish the target of switching to 100% natural gas as substitute feedstock for No. 1 Hydrogen Making Plant, thereby achieving improved economic efficiency. Meanwhile, other key technological renovation projects of the Group have also proceeded in an orderly manner in the first half of the year. The Group was carrying out environmental appraisals for the refinery revamping and expansion project and the carbon fibre project, and strived to start the construction of these projects within the year.

Looking ahead, Mr. Rong Guangdao said, "In the second half of 2010, the recovery of the world economy remains uncertain and unstable. Although China's economy may be facing a better development environment than last year, but the economic operation growth may slow down due to the interaction of a mixture of domestic and international factors. Combined with persistently high crude oil prices, the domestic petrochemical industry may tend to soar high in the first half of the year and fall in the second half of the year. In addition, as a result of the operation of too many newly-built capacities of certain petrochemicals and dumping impact of imported petrochemical products, market competition will become more intense in the second half of the year. Faced with the severe production and operation situations as before, the Group will continue to focus on plant operation, make efforts for higher output volume, optimize production and operation, accelerate the construction of the projects in the next round development plan in a diligent and solid manner, further intensify internal management and strengthen its human resources structure and competence, with a view to further improving the Group's operation efficiency and development potential."

Shanghai Petrochemical is one of the largest petrochemical companies in the PRC and was one of the first Chinese companies to effect a global securities offering. Located in Jinshan District in the southwest of Shanghai, it is a highly integrated petrochemical complex which processes crude oil into a broad range of products in synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum categories.

This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including risks related to: the risk that the PRC economy may not grow at the same rate in future periods as it has in the last several years, or at all, including as a result of the PRC government's macro-economic control measures to curb over-heating; uncertainty as to global economic growth in future periods; the risk that prices of the Company's raw materials, particularly crude oil, will continue to increase; not be able to raise its prices accordingly which would adversely affect the Company's profitability; the risk that new marketing and sales strategies may not be effective; the risk that fluctuations in demand for the Company's products may cause the Company to either over-invest or under-invest in production capacity in one or more of its four major product categories; the risk that investments in new technologies and development cycles may not produce the benefits anticipated by management; the risk that the trading price of the Company's shares may decrease for a variety of reasons, some of which may be beyond the control of management; competition in the Company's existing and potential markets; and other risks outlined in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update this forward-looking information, except as required under applicable law.

Encl: Consolidated Income Statement (Unaudited): http://www.prnasia.com/sa/attachment/2010/08/20100827552800.pdf

    For further information, please contact:

     Ms. Hedy Shen / Ms. Christy Lai
     Rikes Hill & Knowlton Limited
     Tel: +852-2520 2201
     Fax: +852-2520 2241

SOURCE Sinopec Shanghai Petrochemical Company Limited