Jiutian Chemical Group C8R has recorded a loss of RMB162 million ($30.32 million) for the 1HFY2023 ended June, down from a net profit of RMB385.5 million this time last year.
Total revenue for 1HFY2023 fell 73% y-o-y to RMB393.1 million, while cost of sales fell 40% y-o-y to RMB540.3 million, “mainly due to lower sale volume”, says Jiutian.
Compared to earnings per share of 19.39 RMB cents this time last year, 1HFY2023 loss per share is 8.16 RMB cents.
No dividend has been declared for 1HFY2023. Jiutian had declared an interim dividend of 0.9 Singapore cents per share in 1QFY2023, which was paid on June 16.
In an Aug 3 announcement, its board of directors blamed the sharp turn in financial performance on a “significant downward correction” of product prices across all main products of the Group, namely dimethylformamide (DMF) and methylamine.
The average selling prices of DMF and methylamine were 62% and 63% lower y-o-y.
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The decline in prices, which started in 4QFY2022 ended December, were mainly due to the twin impact of industry wide softening of demand due to slower than expected economic recovery in China and addition of new capacity by its new main competitor, Jiangxi Xinlianxin Chemical Industry, which has a total DMF capacity of 200,000 tonnes per year, compared to Jiutian’s 150,000 tonnes per year.
Jiutian’s chairman, Han Lianguo, says, “We regret to announce a loss in 1HFY2023 after three years of continuous profits from FY2020. This was despite our efforts to contain the losses, such as adjusting our production volume in 1H2023 to achieve optimal financial performance, while continuing to supply strategically to long term customers and protect market share, against a very difficult environment of industry wide softening demand and increased supply.”
The group is in a net current assets position of RMB726.37 million as at June 30.
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On the macroeconomic front, challenges such as trade tensions, geopolitical conflict and other uncertainties remain as peripheral concerns, says Jiutian. In addition, the slower-than-expected recovery of China's economy is dampening demand across the board, adds the company.
“In view of the above, the business environment will remain challenging for the financial year. Going forward, the group will continue to monitor the market condition closely and adapt its business strategies as and when appropriate.”
Shares in Jiutian Chemical closed 0.1 cent lower, or 2.13% down, at 4.6 cents on Aug 3.
