The largest air separation plant manufacturer in China, Hangzhou Hangyang, has released its financial results for third quarter 2014, seeing a slight rise in operating income but a significant fall in total profit.
Compared with the same period last year (2013), operating income increased by 7.72% to RMB 1.592bn (approx. $265m). Total operating income for the year at the end of the third quarter was RMB 4.196bn, up 7.49% against the same period of 2013.
Net profit attributable to shareholders of the listed company, however, fell 23.51% compared with the same period last year. Total net profit attributable to shareholders at the end of the third quarter (Q3) plunged 51.8% when compared with same period last year.
Explaining the decrease in net profit, a company report stated, “Amidst a downturn in the macroeconomic situation, on one hand, the equipment business has been affected by price competition and rising costs, leading to [a] decrease in sales margin; on the other hand, some of the industrial gas projects are still in the construction phase and some newly completed projects are in the market development period, [and] the cost is still at a high level. These two factors have led to the fall in net profit compared with last year.”
Fellow Chinese gases company Hunan Kaimeite Gases (Kaimeite), also experienced a mixed third quarter as it maintained ‘substantial’ growth but saw net profit drop.
Chiefly engaged in the carbon dioxide business, though with increasing involvement in the recovery and purification of hydrogen and fuel gases, Kaimeite achieved an operating income of RMB 85.898m (approx. $14.316m).
This demonstrated impressive growth of 38.54% compared with the same period last year.
However, net profit for the period dropped 3.93% to RMB 19.757m (approx. $3.258m).
Total operating income at the end of the third quarter was RMB 210.764m, a 39.23% increase over the same period last year, whilst total net profit showed a drop of 3.32% to RMB 47.534m.
Operating costs for the reporting period increased by 43.40%, due to the addition of the operating cost of the subsidiary Anqing Kaimeite that has just started commercial operation. The company explains in its report, however, that the new income of this subsidiary in the liquefied gas, butane and hydrogen business is largely behind the company’s increase in income overall.
But issues with another of the company’s subsidiaries is causing uncertainty over its expected total revenue for 2014. With a dispute between wholly-owned subsidiary Changling Kaimeite and Sinopec Changling still unresolved, the operation of the former is now suspended. This, Kaimeite explained, will lead to uncertainty of the total revenue of the company for the whole of 2014.
The company anticipates that net profit attributable to the shareholders of the listed company for full year 2014 will be in the range of RMB 47.059m to RMB 76.47m, representing a potential drop of 20% to an increase of 30%.