Yip’s Chemical posts first half profit at HK$103mn

Despite profit drop, the group still optimistic to reach its annual turnover target of HK$20bn by 2015.

Yip’s Chemical Holdings Limited (“Yip’s Chemical”), the world’s largest manufacturer of acetate solvents and one of China’s largest manufacturers of petrochemical products, on Tuesday announced its 2011 interim results for the six month period (the “review period”) ended 30 June 2011.

The Group’s turnover continued to grow in the review period, reaching HK$3,768,244,000, a growth of 19%. However, due to easing market demand, incessant increases in raw material costs and operating costs, as well as intense competition in the coatings market which contributed to the challenging business environment, profit attributable to owners declined to HK$103,119,000 (Jan-Jun 2010: HK$116,245,000). Earnings per share amounted to HK 18.6 cents. (Jan-Jun 2010: HK 21.3 cents).

The Board has recommended an interim dividend of HK 8 cents per share (Apr-Sep 2010: HK 12 cents). At the same time, in order to celebrate the Group’s 40th anniversary, the Board has recommended a special dividend of HK 4 cents per share, according to a Yip's Chemical report.

Mr. Tony Ip, Chairman of Yip’s Chemical, said, “During the review period, the Group faced what can probably be described as the most challenging business climate in recent years. The global economic recovery has been weaker than expected while Europe continues to be plagued by the debt crisis as fears of contagion persist. Even in the heartland of the Group’s business – China – the market was adversely impacted by the Government’s interest rates hikes and other credit-tightening measures.

At the same time, raw material prices have continued to surge. These factors have continued to negatively impact the Group’s businesses, in particular the margins for coatings. However, since the latter part of the second quarter, most raw material prices have shown signs of retreat, thus alleviating cost pressures. We also saw the early signs of margin improvements in the coatings business. The Group has taken timely measures to reduce operating costs. We are committed to growing our businesses and expanding capacity and we remain optimistic about our future development outlook”.

Mr Ip concluded, “The Group remains confident about its future prospects. It is expected that we are able to reach our target of HK$8 billion in sales this year, and we are confident of achieving our mid-term target of HK$10 billion turnover by 2013. According to already approved expansion plans for both existing and new plants our total production capacity is to be increased to a level able to support an annual turnover of HK$20 billion by 2015. We have recently seen some moderation in raw material price volatilities which has affected the Group for the past year. However, we firmly believe that we can overcome the fundamental problems only by raising our competitiveness and passing on the increased costs to the market. The management has taken action to further lower operational costs. We are confident that our profitability is able to return to a more satisfactory level within the next two years.”