Sunvic Chemical narrows Q1 loss as revenue rises

Singapore

SUNVIC Chemical Holdings reported on Tuesday a narrowing of its fiscal first-quarter losses.

The manufacturer of intermediate chemical products, such as acrylic acid (AA) and acrylate esters (AE), said its net loss attributable to shareholders decreased to 3.7 million yuan (S$750,600) for the quarter ended March 31, 2017, from a net loss of 60.9 million yuan the year before. This, as its revenue grew 40 per cent to 589.0 million yuan, from 422.3 million yuan.

Sunvic said this was due mainly to an increase in revenue from the sales of AA and AE, as well as other chemical products. It added that the increase in revenue from AA and AE was mainly from higher sales volume and average selling prices when compared to the year before.

As such, it achieved a gross profit of 82.6 million yuan in the first quarter of 2017, compared to a gross loss of 1.4 million yuan in Q1 2016. Profit from operations was 28.45 million yuan but, at the pre-tax level, it was a loss of 70,000 yuan as finance costs rose 29.8 per cent to 28.52 million yuan.

"We have seen a temporary rebound in AA and AE selling prices in Q1 2017 due to shut-down maintenance by some of the AA producers in China during the period, which resulted in better margins," it said.

Its loss per share narrowed to 0.7 fen, from 11.4 fen.

AA and AE are used in the production of industrial, consumer and agricultural products such as coatings, adhesives, diapers, textiles, detergents and herbicide.

According to Sunvic's website, it is "the largest producer of AA and AE with (an) annual production capacity of 525,000 tonnes and 350,000 tonnes, respectively".

Sunvic, based in China, says it has a client base of over 500 customers located in China and overseas markets.

Looking ahead, Sunvic said it expects the operating environment of the AA industry to remain challenging in the near future, due to the current oversupply situation and the excess production capacity of AA in China.

"Management is taking a conservative view that the price and volume rebound in Q1 2017, which was mainly due to plant shut-downs by other AA producers in China, may not be sustainable in a longer term," it added.

The company listed on the Singapore Exchange in February 2007.