China Bluechem Reports Highest Profits In 11 Years Despite Market Challenges

China: China BlueChemical Ltd, a leading chemical fertilizer central enterprise in terms of both production capacity and production volume in China, has announced its audited annual results for the year ended December 31st, 2022. Revenue for the company was up 6.6% compared to 2021, for a total of RMB 14.279 billion. Net profit attributable to owners of the Company also grew 9.7%, reaching RMB 1.643 billion.

In 2022, despite the challenges caused by the COVID-19 pandemic, regional conflicts, geopolitical tensions and rising energy and food prices, China BlueChem was still able to make impressive progress. The company achieved a record-high profit since 2012, which enabled it to recommend a payment of a final dividend of RMB0.178 per share (tax included) to its shareholders - representing a payout ratio of 50%.

Fudao celebrated a record-breaking year in terms of production management, with their Hainan Phase I and II methanol plants achieving an impressive long-term operation period of over 400 days. This achievement contributed to the Company's annual methanol production volume increasing significantly to a new high of 1,520 thousand tonnes. 2022 also saw remarkable growth in other areas for Fudao including 1,962 thousand tonnes of urea, 933 thousand tonnes of Phosphate and compound fertilizers and 21 thousand tonnes of POM.

In order to capitalise on the opportunities, present in sales management, China BlueChem has taken several steps. They have strengthened their market research and analysis capabilities with advanced pricing techniques powered by big data, which has increased the competitiveness of the Company in the marketplace. The business has also improved its channel influence, employed new policies, adjusted product mixes and utilised an innovative B2C e-commerce direct selling model in order to combat falling exports and maintain a healthy balance between production and sales. In 2021, the organisation sold 1.959 million tonnes of urea, 1.506 million tonnes of methanol, 625 thousand tonnes of phosphate fertilizers, 299 thousand tonnes of compound fertilizers and 21 thousand tonnes of POM respectively. Additionally, 91 thousand tonnes of urea and 66 thousand tonnes of DAP were exported during the same period.

The Company has taken steps towards high-quality development by doing research on high-end and new chemical material projects. Of these, the PMMA (Poly Methyl Methacrylate) project was given extra attention. Strategic partnerships have been formed with academic institutes, such as the Chinese Academy of Agricultural Sciences, BASF, and the Chinese Academy of Sciences. Simultaneously, production facilities with inferior capacities have been removed or reformed to create more efficiency. Out of all Central Enterprises in the fertilizer sector, the Company leads in both production capacity and output; utilizing technology to achieve their goal of providing “solutions to plant nutrition”.

In 2022, the Company achieved significant success with their acrylonitrile project, signalling their transition from inorganic to organic chemicals. Their successful launch in February 2023 completed the construction period in record time for this type of project in China. Technology breakthroughs were also made during that year for industrial utilisation of carbon-rich natural gas in the South China Sea. By applying their technology, they increased the gas's Carbon Dioxide content from 22% to 35%.

The Company is continuing to make strides in its green and low-carbon development strategy and maintain its strong position in energy efficiency. For 11 consecutive years, their methanol production facilities have been awarded the prestigious title of "Leader in Energy Efficiency" by the China Petroleum and Chemical Industry Federation. As the Company actively promotes their "green Methanol", their production activities’ detrimental impact on the environment is being reduced.

China BlueChem was accepted into the official 2022 China Brand Value Evaluation List with a brand value of RMB3.971 billion - an increase of RMB772 million from the previous year.

Looking ahead to 2023, an economic recovery is expected to bring a corresponding rise in export and industrial demand. However, agricultural demand will remain cyclical. The urea market may see limited price declines while Ammonium Phosphate prices are likely to remain firm at high levels, though there could be downward fluctuations during the low season for fertilizers in the second half of the year. New Methanol production capacity may slow down throughout the year, impacting costs of this product as well as its traditional downstream products; however, increased demand for Polyoxymethylene (POM) for new energy vehicles is anticipated.

The Company is committed to strengthening its HSE (Health, Safety and Environment) performance, refining production management, strategically controlling costs, proactively researching and innovating new technologies, and maintaining its high-quality development trajectory. The acrylonitrile project will begin commercial operations this year with the Company's full efforts. Additionally, the Company aims to capitalize on opportunities presented by the construction of the Hainan Free Trade Port such as wharf and logistics investment projects. New growth drivers are also being explored in order to provide attractive returns for shareholders.