Shanghai Petrochemical Announces 2015 Annual Results

HONG KONG, March 16, 2016 /PRNewswire/ -- Sinopec Shanghai Petrochemical Company Limited ("Shanghai Petrochemical" or the "Company") (HKEx: 00338; SSE: 600688; NYSE: SHI) today announced the audited operating results of the Company and its subsidiaries (the "Group") prepared under International Financial Reporting Standards ("IFRS") for the year ended 31 December 2015 (the "Year").

According to IFRS, revenue of the Group for the Year amounted to RMB 80,748.1 million, representing a decrease of 20.93% over the previous year. The Company has achieved a successful turnaround from loss, with a net profit attributable to owners of the Company amounting to RMB 3,274.3 million (2014: net loss attributable to owners of the Company of RMB 692.2 million). Basic earnings per share amounted to RMB 0.303 (2014: basic loss per share of RMB 0.064 based on the Company's total issued share capital of 10.8 billion shares). The Board of Directors recommended the distribution of cash dividend in respect of the year ended 31 December 2015 of RMB 1.00 (VAT inclusive) for every 10 shares to all shareholders for the Year (2014: Nil).

Mr. Wang Zhiqing, Chairman of Shanghai Petrochemical, said, "In 2015, in view of the intensifying economic downward pressure and overwhelming problem of structural overcapacity, the Chinese government implemented a series of adjustment measures and reform initiatives to stabilize economic growth. Overall, the Chinese economy was stable, with an annual GDP growth of 6.9%, but the economic growth rate further slowed down. In terms of the petrochemical industry in China, the price of bulk petrochemical products remained weak in a low oil price environment, investments in the industry declined, and structural problems associated with the overcapacity of petrochemical products remained overwhelming and restrictions on resources, environmental protection and safety became tighter. However, compared with the significant drop in oil price, the decline in prices for downstream products was relatively small, there were increases in the profit on such products and the returns of the industry increased and stabilized. Amidst complicated and ever-changing market conditions in 2015, the Group focused on efficiency, and made great strides in safety and environmental protection standards, in optimizing production and operations as well as in cutting costs and expenses. It maintained smooth and stable production and operations, and significantly enhanced economic returns.

In 2015, the Group's net sales amounted to RMB 67,037.2 million, representing a decrease of 27.70% year-on-year. Of which, net sales of synthetic fibres, resins and plastics, intermediate petrochemicals, petroleum products and trading of petrochemical products decreased by 19.48%, 19.99%, 24.69%, 37.47% and 7.25% respectively.

In 2015, the Group achieved significant improvements in the stable operation of its production facilities. The expansion of total processing capacity resulted in an increase in actual production volume of the Group, which amounted to 13,866,200 tons, up 2.18% over the previous year. During the year, the Group processed 14,795,300 tons of crude oil (including 2,010,100 tons of crude oil processed on a sub-contract basis), representing an increase of 4.41% as compared with the previous year. Total production output of refined oil products amounted to 8,975,900 tons, up 6.55%, among which the Group produced 3,097,600 tons of gasoline, up 7.91%; 4,265,300 tons of diesel, up 4.92%, and 1,613,000 tons of jet fuel, up 8.36%. The Group produced 836,500 tons of ethylene, 533,000 tons of propylene and 112,300 tons of butadiene, up 3.99%, 4.47% and 6.34%, respectively. The Group produced 359,500 tons of benzene, up 3.45% and 659,700 tons of paraxylene, down 3.07%. The Group also produced 1,042,700 tons of synthetic resins and copolymers (excluding polyesters and polyvinyl alcohol), at par with the previous year; 801,600 tons of synthetic fiber monomers, up 13.56%; 416,600 tons of synthetic fiber polymers, at par with the previous year; and 223,800 tons of synthetic fibers, down 3.70%. Its output-to-sales ratio and receivable recovery ratio were 99.91% and 100%, respectively.

The world economy experienced a weaker-than-expected economic growth in 2015 and slack demand for oil. At the same time, the reduction in production cost of crude oil helped to maintain a faster growth in production volume. Global crude oil prices fluctuated between mid to low levels. In 2015, the average unit cost of crude oil processed by the Group (for its own account) was RMB 2,533.46 per ton, down 45.15% over the previous year. The Group's cost of processing crude oil in 2015 accounted for 51.61% of the total cost of sales.

During the Year, the Group leveraged its competitive edge in the production integration of the refinery and petrochemical segments and upheld its concept of optimizing the entire production process. It maximized the returns by applying the optimization to individual links in the production chain, such as procurement and allocation of crude oil, product mix, production schedule and fuel mix. Meanwhile, the Group continued to carry out various measures in energy conservation and emission reduction in compliance with the relevant national requirements, thereby achieving all targets set by the government. The Group was committed to "further expand the refining business, take the lead in the petrochemical industry, and implement integration of refinery and petrochemical segments". It also finished the first draft of the plan to construct and develop the "Thirteenth Five-Year" project. The Group produced 281,400 tons of new products and submitted 53 patent applications, and obtained seven patent authorizations. It further accelerated the building of management system and persistently optimized the management duty and organization structure within the Company.

Looking forward, Mr. Wang Zhiqing said, "The global economy will remain complex and volatile in 2016. Amid the continuous moderate recovery in developed countries, the US economy is expected to enter into an expansionary cycle driven by re-industrialization, although emerging economies are still facing downward pressure. China's economic development faces uncertainties in the recovery of the global economy. Under the principle of upholding growth anchored in stability, China will advance its supply-side structural reform by focusing on reducing production capacity, inventories and leverage, lowering costs and replenishing laggards. Besides, efforts will be stepped up in enhancing the quality and effectiveness of development, and the GDP is anticipated to maintain a medium to high growth rate. In this context, the domestic petroleum and petrochemical markets is facing a tougher external business environment. China will accelerate the opening up of the competitive businesses of natural monopolies in the industry, such as oil and natural gas. During the "Thirteenth Five-Year" period, petrochemical projects of tens of millions of tons will commence production and intensify the competitive pressure in the petrochemical industry. The Central and Shanghai government have introduced a series of safety and environmental protection policies, which will increase the development pressure faced by petrochemical enterprises, while other factors will bring even greater challenges to the development and survival of traditional petrochemical enterprises, including the acceleration of quality upgrading for refined oil, new industrial technologies and extensive application of new materials. Under the complex and volatile market and a prolonged severe operating environment, the Group will continue to adhere to the enhancement of development quality and effectiveness. Such an approach will not only ensure the prevention of safety and environmental protection incidents and further enhance production and operation level, but will also deepen system optimization, lower costs and enhance efficiency, while realizing sustained promising operating results.

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 at Jinshanwei in southwest 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; the risk of 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, 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 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.

Encl: Consolidated Income Statement (http://photos.prnasia.com/prnk/20160316/8521601743)

SOURCE Sinopec Shanghai Petrochemical Company Limited