Shanghai Petrochemical Announces 2011 Interim Results

HONG KONG, Aug. 26, 2011 /PRNewswire-Asia/ -- Sinopec Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or the "Company") (HKEx: 00338; SSE: 600688; NYSE: SHI) announced today the unaudited operating results of the Company and its subsidiaries (the "Group") prepared under International Financial Reporting Standards ("IFRS") for the six months ended June 30, 2011 (the "Period").

According to IFRS, turnover of the Group for the Period amounted to RMB49,500.8 million, representing an increase of 37.01% over the previous year. Profit attributable to equity shareholders of the Company amounted to RMB1,425.7 million (2010 interim: RMB1,513.7 million). Basic earnings per share was RMB0.198 (2010 interim: RMB0.210). The board of directors of the Company does not recommend a payment of any interim dividend for 2011 (2010 interim: Nil).

Mr. Rong Guangdao, Chairman of Shanghai Petrochemical, said, "In the first half of 2011, the Chinese economy continued to maintain stable and relatively fast growth, while China's petrochemical industry continued to maintain a healthy and steady operation. However, international crude oil prices surged significantly and stayed at high levels, and the profitability of the oil refining industry declined substantially, resulting in a turnaround from profits to losses. Coping with external market changes with a proactive approach, the Company continued to increase total physical production volume of products, and made every effort to push forward various tasks on production, operation, reform and development. During the Period, crude oil processing volume and outputs of gasoline, diesel, jet fuel, synthetic resin & plastics and other products reached record highs once again as compared to previous corresponding periods. The natural gas comprehensive utilization project reaped good economic benefits."

In the first half of 2011, the Group's net sales amounted to RMB46,345.1 million, representing an increase of 37.61% year-on-year, of which net sales derived from petroleum products, intermediate petrochemicals, resins and plastics, synthetic fibres and trading of petrochemical products increased by 46.78%, 29.87%, 13.04%, 22.53% and 87.10% respectively.

The fully completed Phase 5 Project of the Group continued to effectively produce its overall scale effect during the first half of 2011. As a result, total volume of goods produced increased by 14.87% year-on-year. During the Period, the Group processed 5,678,300 tons of crude oil (including 131,400 tons of crude oil processed on a sub-contracting basis), an increase of 12.60% year-on-year. Outputs of gasoline, diesel and jet fuel were 510,300 tons, 2,055,700 tons and 402,500 tons respectively, representing increases of 10.24%, 33.49% and 5.78% year-on-year respectively. Outputs of ethylene and propylene were 492,100 tons and 258,700 tons respectively, representing decreases of 0.36% and 4.30% year-on-year respectively. Output of synthetic resins and plastics (excluding polyester and polyvinyl alcohol) was 570,800 tons, representing an increase of 0.39% year-on-year. Outputs of synthetic fibre monomers, synthetic fibre polymers and synthetic fibres were 499,600 tons, 326,400 tons and 129,100 tons respectively, representing an increase of 0.04%, a decrease of 1.03% and an increase of 4.20% year-on-year respectively. The Group's output-to-sales ratio and receivable recovery ratio for the Period were 99.85% and 99.37% respectively.

In the first half of 2011, international crude oil prices fell after a rise but in general tended to surge significantly and remained at high levels. The Group's average unit cost of crude oil processed was RMB4,937.91/ton in the first half of 2011, representing an increase of 25.57% year-on-year. The Group's total costs of crude oil processed during the Period increased substantially by 42.89% year-on-year to RMB27,390.2 million, accounting for 61.76% of the Group's cost of sales for the Period.

During the Period, the Group fully commenced the construction of the Phase 6 Project, with the refinery revamping and expansion project as the key project, of which the construction of the new 3,900,000 tons/year residual oil hydrogenation plant, the new 3,500,000 tons/year catalytic cracking plant and the carbon fiber project with a capacity of 1,500 tons/year have already commenced; preliminary works for other projects such as the ethanolamine project with a capacity of 50,000 tons/year and the EVA (ethylene-vinyl acetate copolymer) project with a capacity of 100,000 tons/year proceeded actively as planned. Meanwhile, other key technological renovation projects of the Group such as optimization of energy saving and consumption reduction at No. 2 PTA Plant, the renovation on energy conservation and consumption reduction of No. 2 and No. 3 aromatics complexes, No. 4 main transformer of the 220 KV petrochemical substation and the capacity expansion of No. 6 main transformer of the No. 1 thermal power station, were also being carried out in an orderly manner.

Looking forward, Mr. Rong Guangdao said, "In the second half of 2011, there will be numerous uncertainties and instabilities during the process of recovery of the world economy. Amid steady and relatively fast development, China's economy will be faced with the contradictions and problems of unbalanced and uncoordinated development. Although the economic operation of the domestic petrochemical industry will maintain a stable and sound trend in general, the industry also faces pressures from policies, energy resources and environmental protection restrictions. Meanwhile, international crude oil prices are likely to lose the momentum for a substantial rise but to fluctuate at relatively high price levels. The Group expects that the cost pressure upon enterprises will increase and market competition will further intensify in the second half. The Group will continue to focus on the operation of plants, strive to increase the total physical production volume of products, push forward in full scale the construction of the Phase 6 Project, further optimize production and operation, and strive to improve profitability."

Shanghai Petrochemical is one of the largest petrochemical companies in China in terms of sales revenue and was one of the first Chinese companies to complete a global securities offering. Located in the Jinshan District which is at the southwest of Shanghai, it is a highly integrated petrochemical enterprise which processes crude oil into a broad range of products such as synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products.

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 such as: 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, the risk that the PRC government's implementation of macro-economic control measures to curb over-heating of the PRC economy may adversely affect the company; 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; the risk of not being able to raise the prices of the Company's products as is appropriate thus adversely affecting 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.

For the Consolidated Income Statement (Unaudited), please visit: http://www.prnasia.com/sa/attachment/2011/08/20110826321094.pdf

For further information, please contact:

Ms. Leona Zeng / Ms. Christy Lai
Rikes Hill & Knowlton Limited
Tel: +852-2520-2201
Fax: +852-2520-2241
Email: [email protected]

SOURCE Sinopec Shanghai Petrochemical Company Limited