Shanghai Petrochemical Announces 2013 Interim Results

HONG KONG, Aug. 28, 2013 /PRNewswire/ -- 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, 2013 (the "Period").

According to IFRS, turnover for the Group for the Period amounted to RMB57,085.9 million, representing an increase of 22.92% over the corresponding period of the previous year. The Group recorded profit after taxation and non-controlling interests of RMB473.2 million, an increase of RMB1,624.7 million year-on-year (2012 interim: loss after taxation and non-controlling interests of RMB1,151.5 million). Basic earnings per share amounted to RMB0.066 (2012 interim: basic loss per share of RMB0.160).

Mr. Wang Zhiqing, Chairman of Shanghai Petrochemical, said, "In the first half of 2013, facing a very complex domestic and international economic environment, China continued to focus on improving the quality and efficiency of economic growth and holding firm to the overall theme of seeking progress while maintaining stability in order to maintain steady economic growth. However, economic growth continued to slow. In the first half of the year, demand for petroleum and chemical products in China remained sluggish, complicated by a slowdown in growth in the consumption of petroleum and petrochemical products and a slackening rate of growth in the development of the industry. Facing a challenging business environment in the first half of 2013, the Group fully utilized the strength of its Refinery Revamping and Expansion Project in a safe and smooth operation, market-oriented and higher economic return-focused approach to further improve safety and environmental protection conditions and to maintain stable production and business operations, leading to a significant year-on-year improvement in its operating results."

In the first half of 2013, net sales of the Group reached RMB52,162.2 million, representing an increase of 19.62% over the same period of the previous year. Of this, net sales of petroleum products, intermediate petrochemical products and trading of petrochemical products increased by 43.68%, 4.67% and 7.01%, respectively. Net sales of synthetic fibres, resins and plastics declined by 4.59% and 8.91%, respectively.

During the period, due to the commencement of the Refinery Revamping and Expansion Project, the output of refined products increased significantly, with the total volume of goods produced increasing by 29.45% year-on-year. During the period, the Group processed 7,707,300 tons of crude oil (including 350,400 tons of crude oil processed on a sub-contract basis), representing an increase by 39.67%, year-on-year. Total production of refined oil products reached 4,449,300 tons, representing an increase of 55.24% year-on-year. Of this, the output of gasoline was 1,381,600 tons, representing an increase of 215.79% year-on-year; the output of diesel was 2,514,800 tons, representing an increase of 22.29% year-on-year; and the output of fuel was 553,000 tons, representing an increase of 48.62% year-on-year. The Group produced 478,700 tons of ethylene, a decrease of 0.23% year-on-year; and 456,900 tons of paraxylene, an increase of 7.46% year-on-year. The Group also produced 550,100 tons of synthetic resins and plastic (excluding polyesters and polyvinyl alcohol), representing a decrease of 2.71%; 448,400 tons of synthetic fibre monomers and 264,800 tons of synthetic fibre polymers, representing decreases of 12.56% and 18.95%, respectively; and 127,600 tons of synthetic fibres, representing an increase of 2.16%. In the first half of 2013, the Group's output-to-sales ratio and receivable recovery ratio were 99.74% and 99.34%, respectively.

In the first half of 2013, the trend of international crude oil prices was volatile, fluctuating within a relatively narrow range. The Group's average unit cost of crude oil was RMB4,853.39 per ton, representing a decrease of 11.20% year-on-year. During the first half of the year, the Group's cost of crude oil accounts for 69.56% of the total cost of sales.

The full operation of the Refinery Revamping and Expansion Project has given a boost to the Group's crude oil processing capacity. With higher adaptability in crude oil processing, the Group's high-sulfur crude oil processing capacity was enhanced considerably. The enhanced capacity, along with the optimization of the Group's raw materials composition, brought the Group's production costs down significantly. During the period, the Group fully utilized the strengths of the Refinery Revamping and Expansion Project and fully implemented optimization and efficiency enhancement measures, bringing significant improvements to the Group's operating results. The refinery segment turned a loss into profit in one stroke during the period, indicating that overall efforts to optimize efficiency have been effective.

In the first half of the year, the Company continued to push forward the progress of the A-share reform scheme. The Company committed its best efforts to securing the support of the holders of circulating shares to the A-share reform scheme through numerous methods, such as roadshows, online interaction, telephone discussion and other means to enhance communications with its shareholders. On 8 July, the shareholders approved the A-shares reform scheme through online and on-site voting.

Looking forward, Mr. Wang Zhiqing said, "In the second half of 2013, global economic growth may encounter a further slowdown, while the Chinese economy will maintain steady growth momentum. With the support of the Chinese government, the overall domestic consumers market will continue to grow steadily, while the growth in market demand for energy and bulk chemical products will accelerate, and the industrial economy will likely remain stable with a slight improvement in the second half. The trend of international crude oil prices for the second half will depend on various factors such as the seasonal increase in demand, the global economic recovery and the geo-political situation in the Middle East. The trend of international crude oil prices will likely be relatively stable in the second half. The pricing mechanism for refined oil products launched by the Chinese government in the first half of the year brought the industry one step forward closer to marketization, and increased the flexibility in reflecting changes in international markets. Such a move will help to stabilize and improve the Company's refinery segment.

Facing a very complex domestic and international economic environment in the second half, we will focus on improving the quality and efficiency of our development and will continue to prove the strengths of the new Refinery Revamping and Expansion Plant by focusing on safety and environmental protection as well as stable production and by employing system optimization and upgrade as a means to accomplish the objectives and tasks for the whole year. These include continuing to accomplish tasks in safety and environmental protection, with a focus on green, low-carbon development; continuously improving the optimization of production and operation systems to maximize efficiency; further extrapolating the production potential of our plants and equipment and to push forward the construction of follow-on development projects; accelerating the push for a batch of key research projects as well as the pace of technological improvement and improvements in information technology; pushing forward follow-up work related to the A-share reform scheme to plan for future development as a platform for the development of related business of Sinopec; further strengthening corporate management and capital operation to enhance the management standard and performance on an ongoing basis; and strengthening the establishment of a staff team that will create a stable and harmonious environment for the Company's development."

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 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; 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.

Encl: Consolidated Income Statement (Unaudited): http://www.prnasia.com/sa/attachment/2013/08/20130828231818804728.pdf

SOURCE Sinopec Shanghai Petrochemical Company Limited