Shanghai Petrochemical Announces 2012 Interim Results

HONG KONG, Aug. 27, 2012 /PRNewswire-Asia/ -- Sinopec Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or the "Company") (HKEx: 00338; SSE: 600688; NYSE: SHI) today announced 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, 2012 (the "Period").

According to IFRS, turnover for the Group for the Period amounted to RMB46,442.1 million, representing a decrease of 6.18% over the corresponding period of the previous year. The Group recorded loss after taxation and non-controlling interests of RMB1,151.5 million (2011 interim: profit attributable to equity shareholders of the Company of RMB1,425.7 million). Basic loss per share was RMB0.160 (2011 interim: basic earnings per share of RMB0.198). The Board of Directors of the Company does not recommend payment of an interim dividend for 2012 (2011 interim: Nil).

Mr. Rong Guangdao, Chairman of Shanghai Petrochemical, said, "In the first half of 2012, the economic growth in China decelerated. With respect to the petroleum and chemical industry, production growth slowed down; demand from the industry was sluggish; market prices fell; and government regulated the price of refined oil. Although the industry recently showed signs of level off and picking up, the Group's profits recorded a loss due to influences such as highly volatile international crude oil prices as well as sharp declines in the profitability of the oil refining and chemical industries. With the uncertainty in the global economic recovery, the Group braved challenges by actively strengthening safety and environmental protection as well as by orderly pushing forward the construction of the Phase 6 Project, thereby maintaining stable production and operations. In addition, the Group also achieved positive results by upgrading major technical and economic indices, optimizing its systems, advancing the construction of the Phase 6 Project, improving its technologies and improving its managerial system."

In the first half of 2012, weakened market demand resulted in a decrease in prices for intermediate petrochemicals, resins and plastic and synthetic fibres, as well as a decrease in sales volume in a number of products as compared to the corresponding period of the previous year. As a result, the Group recorded net sales of RMB43,604.8 million, representing a decrease of 5.91% as compared to the corresponding period of the previous year, of which net sales derived from petroleum products increased by 2.94% and net sales of intermediate petrochemicals, resins and plastics, synthetic fibres and trading of petrochemical products decreased by 9.42%, 12.00%, 25.63% and 11.89% respectively.

Due to the weak market demand, the Group adjusted the production plan and arranged turnaround for some plants in a timely manner, thus the total volume of goods produced decreased by 4.21%. During the Period, the Group processed 5,518,100 tons of crude oil (including 231,800 tons of crude oil processed on a sub-contract basis), representing a decrease of 2.82% over the corresponding period of the previous year. Output of gasoline and jet fuel were 437,500 tons, and 372,100 tons respectively, representing decreases of 14.28% and 7.56% year-on-year respectively. Ouput of diesel was 2,056,500 tons, an increase of 0.04% year-on-year. Outputs of ethylene and paraxylene were 479,800 tons and 425,200 tons respectively, representing decreases of 2.51% and 8.28% year-on-year respectively. Output of synthetic resins and plastics (excluding polyester and polyvinyl alcohol) was 565,400 tons, representing a decrease of 0.96% year-on-year. Outputs of synthetic fibre monomers, synthetic fibre polymers were 512,800 tons, 326,700 tons respectively, representing an increase of 2.63% and 0.09% year-on-year respectively. Output of synthetic fibres was 124,900 tons, representing a decrease of 3.26% year-on-year. The Group's output-to-sales ratio and receivable recovery ratio were 100.14% and 99.96% respectively.

International crude oil prices generally showed a falling trend after rising in the first half of 2012. The Group's average unit cost of crude oil processed (the portion traded for the Group's own account) was RMB5,465.53/ton, representing a year-on-year increase of 10.69%. The Group's total processed crude oil costs increased by 5.48% to RMB28,892.1 million year-on-year, accounting for 64.58% of the Group's cost of sales.

During the Period, in accordance with the Group's fast and effective work requirements, the Group was committed to carrying out the construction of the Phase 6 Project with the Refinery Revamping and Expansion Project and technological advancement programme as its focuses. Piling for the Refinery Revamping and Expansion Project commenced on 28 December 2010, and has recently entered into the final stage. The first stage of the Carbon Fiber Project, with a capacity of 1,500 tons/year, completed the oxidation and carbonization processes on 18 March, and the spinning unit was mechanically completed on 26 April. The Up-grading Project for the Optimization of the System and Reduction in Energy and Feedstock Consumption of the No. 2 PTA Plant was mechanically completed in April and was put into trial operation.

Looking forward, Mr. Rong Guangdao said, "In the second half of 2012, the international situation will remain complex and challenging, and prospects for global economic recovery remain uncertain. The Chinese economy is expected to gradually level off and pick up under the effect of the government's pre-tuned and fine-tuned policy for maintaining 'steady growth', but the extent of the economic upturn is expected to be limited. China's petroleum and chemical industry still has a relatively high potential for steady growth, and is expected to rebound from low levels, and to stabilize in the second half of the year. However, the contradiction of structural surpluses is still significant in the industry, leading to keener international competition across the industry. International crude oil prices for the second half of the year are expected to continue to fluctuate at high level. As we currently face a challenging production and operational situation, we will take measures to ensure safe and stable production, strive to improve economic return and continuously push forward the construction of the Phase 6 Project. These measures include continuing to maintain the safe and stable operation of plants, enhancing the level of production and operational optimization, ensuring the Phase 6 Project be successfully put into operation and to further accelerate the development of new products, improving business management on an ongoing basis, focusing on cost reduction and enhancing efficiency. Such measures are expected to accelerate the development of the Company, as well as to improve economic benefits."

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 southwest of Shanghai, the Group is a highly integrated petrochemicals 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, due to the PRC government's implementation of macro-economic control measures to curb over-heating of the PRC economy; 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 Company may not be able to raise the prices of its products as 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 the 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 the management; the risk of 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 laws.

For the Consolidated Income Statement (Unaudited), please visit: http://www.prnasia.com/sa/attachment/2012/08/20120827104714941265.pdf

For further information, please contact:

Hill+Knowlton Strategies Asia
Ms. Daphne Chan / Ms. Lilyan Li
Tel: (852) 2894 6217 / (852) 2894 6273
Email: [email protected] / [email protected]

SOURCE Sinopec Shanghai Petrochemical Company Limited