One of the largest domestic industrial gas companies in China, Suzhou Jinhong Gas Co. Ltd., has released its 2016 financial results, including an 18% rise in operating revenue last year.

Total operating revenue increased from RMB 554.6m ($80.4m) in 2015 to RMB 654.5m ($94.9m) in 2016, an increase of 18%.

The company explained that the increase in revenue is mainly because it has worked aggressively to expand its market and market share, via the introduction of new products, as well as due to improvements in internal control.

However, net profit attributable to the shareholders of the company plummeted 37.4% from RMB 53m ($7.7m) in 2015 to RMB 33.2m ($4.8m) in 2016. If non-recurring gains and losses are deducted, the drop was a little less stark, decreasing 27.3% from RMB 44.6m ($6.5m) in 2015 to RMB 32.45m ($4.7m) in 2016.

Due to the expansion in the business, the operating costs, administration costs, and the cost of sales have also increased as a result. Coupled with the decrease in non-operating revenue, net profit has therefore dropped. The decrease in unit price and thus the gross profit of high purity ammonia – one of Jinhong Gas’ core products – was also a reason for the drop in profit, the company stated.

The company gave a breakdown of its business composition in which bulk gases, specialty gases, clean energy, and others account for 36.6%, 38.3%, 18.3%, and 6.8%, respectively, of total operating revenue.

Jinhong Gas is optimistic about its outlook and has described its advantages in pricing, its prominent capability in the research and production of specialty gases, its highly effective distribution management, regional development, and the reputation of its brand as positive factors to take forward.

The company is also understood to have submitted an application for an IPO in the main board.