The 2015 annual report of Hunan Kaimeite Gases Co. Ltd recorded a drastic decline in both revenue and profit for the company, largely due to its exposure to the plunging price of crude oil and related products.
Losses had been largely expected, after the company released its interim results last year and noted a significant loss in revenue and profit to date. Operating revenue had plunged to just RMB 27.6m ($4.3m) for the first six months of 2015, from RMB 124.8m ($19.6m) for the same period last year.
This trend was clearly sustained throughout the remainder of the year. Reported total revenue for the full year dropped 42% from RMB 261.9m ($40m) in 2014 to RMB 151.8m ($23.2m) in 2015. Operating profit fell drastically, down 447%, to a loss of RMB 68.12m ($10.4m) against the same period last year.
Net profit attributed to shareholders of the listed company dropped 244.6% from a profit of RMB 31.4m ($4.8m) in 2014 to a loss of RMB 45.5m ($6.9m) in 2015. The numbers get even worse if non-recurring gains and losses are deducted; net profit fell 276.7% to a loss of RMB 50.1m ($7.7m) compared with a profit of RMB 28.3m ($4.3m) in 2014.
Kaimeite Gases explained the huge loss as being due to the substantial drop in the prices of LPG and butane for its Anqing company, ultimately attributable to the price drop of crude oil and related products.
Moreover, the Changling subsidiary of the company suffered a huge operating loss of RMB 76.5m ($11.7m) due to the suspension of production for the whole year, caused by a dispute with the Sinopec Changling branch over their agreement.
Breaking down into specific products, revenue from the sales of liquid carbon dioxide (the main product of Kaimeite Gases) increased almost 12% from RMB 122m ($18.6m) in 2014 to RMB 136.6m ($20.9m) in 2015, with a gross profit of 67.9%. Sales of dry ice contributed RMB 7.6m ($1.1m) to operating revenue in 2015 and is only 0.17% more than that of 2014.
Revenue generated from sales of oxygen and nitrogen, and hydrogen dropped 48.7%, 34.1%, respectively.
Looking ahead, the company stated that by the end of the reporting period, its food-grade carbon dioxide capacity stood at 410,000 tonnes per year (tpy) – the largest in the country. Further still, when the construction of its Hainan subsidiary is complete, this will add extra capacity of 100,000 tpy of food-grade carbon dioxide, among other gases, to its portfolio.