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Keyuan Petrochemicals Q2 sales down 48.9% from shutdown
05
Oct '13
Keyuan Petrochemicals Inc., an independent manufacturer and supplier of various petrochemical products in China, announced the Company's financial results for the quarter ended June 30th, 2013.

"Although our sales volume was negatively impacted by the 40-day facilities shutdown for the thorough routine inspection and maintenance that generally occurs every two years," commented Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "I believe that with our healthy backlog of sales and a clear growth strategy, Keyuan's core earnings potential will improve in the next quarter and going forward."

Sales for the three months ended June 30, 2013 were approximately $94 million, compared to $184 million for the three months ended June 30, 2012, a decrease of $90 million, or 48.9%. The substantial decrease was mainly due to the decrease in sales volume as a result of production interruptions in the quarter, which resulted in 98,000 metric tons of lost production.

Production interruptions were caused by a 40-day facilities shutdown for thorough routine inspection and maintenance that generally occurs every two years. During the three months ended June 30, 2013, we sold 85,999 metric tons of petrochemical products at an average price of $1,096 per metric ton, compared to 169,107 metric tons of petrochemical products at an average price of $1,091 per metric ton in the three months ended June 30, 2012. This represents a decrease of approximately 49% in overall products sold.

Sales for the six months ended June 30, 2013 were approximately $304 million, compared to $368 million for the six months ended June 30, 2012, a decrease of $64 million, or 17%. There was no significant change in the average selling prices for the six months ended June 30, 2013 ($1,123 per ton) and the average selling prices for the six months ended June 30, 2012 ($1,125 per ton).

Overall cost of sales was approximately $92 million for the three months ended June 30, 2013, or 97% of sales, as compared to approximately $178 million, or 96% of sales for the three months ended June 30, 2012. Cost of sales is primarily composed of the costs of direct raw materials (mainly heavy oil, benzene, butadiene and carbinol), labor, depreciation and amortization of manufacturing equipment and facilities, and other overhead.

The increase in the percentage of cost of sales was mainly due to the routine maintenance cost that occurred during the period and also the higher unit cost of $1,065 per ton for the three months ended June 30, 2013 as compared to unit cost of $1,053 per ton for the three months ended June 30, 2012.

Overall cost of sales was approximately $292 million for the six months ended June 30, 2013, or 96% of sales, as compared to approximately $352 million, or 96% of sales for the six months ended June 30, 2012.  In the six months ended June 30, 2013, average cost of finished product was $1,080 per metric ton, as compared to $ 1,076 per metric ton in the six months ended June 30, 2012, a slight increase of 0.4%.

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