Sinofert expects second-half pickup despite over-capacity concerns
Sinofert, the mainland’s largest fertiliser maker and distributor, says its second-half profitability will likely improve although it saw no quick-fix to chronic industry over-capacity.
Sinofert, the mainland’s largest fertiliser maker and distributor, says its second-half profitability will likely improve although it saw no quick-fix to chronic industry over-capacity.
The Hong Kong-listed unit of state-owned oil and gas-to-property conglomerate Sinochem posted a 60.8 per cent year-on-year net profit fall to 138 million yuan (HK$173.5 million) for the year’s first six months. It was within the 55 to 65 per cent profit decline warning it flagged early this month.
Chief executive Wang Hongjun said product prices have rebounded slightly from mid-year lows. Coupled with cost-cutting measures, he expected the company’s second-half results to improve from the first-half.
“With rising utilisation at [our customers’] composite fertiliser plants, and higher phosphate and nitrogenous fertiliser procurement prices agreed in India, we are cautiously optimistic on second-half product prices,” he told reporters.
We are cautiously optimistic on second-half product prices
“Low product prices have rendered many small and mid-size players in losses, which is favourable to over-capacity reduction and consolidations, but this will be a slow process and we can’t expect substantial over-capacity relief in two to three years.”