Profit declines of over 30% reported by listed fertilizer companies in their mid-year reports

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Profit declines of over 30% among listed fertilizer companies in their interim reports Author/Source: Sinochem News Network Date: 2019-09-04 Clicks: 55 On August 31, the interim reports of listed fertilizer companies were made public. Overall, the performance was rather mediocre and fell short of the market average. 　　Data shows that in the first half of the year, 22 listed fertilizer companies achieved profits of 3.69 billion yuan, a decrease of 35.1% compared to the previous year, ending a two-year streak of profit growth; the arithmetic average earnings per share was 0.1204 yuan, down 44% year-on-year. 　　According to analysts in the capital market, the decline in the performance of fertilizer-related listed companies can be attributed to two main factors: first, the base level was high last year, and the overall market conditions this year are worse than those of last year, making it difficult for these companies to exceed their performance from last year; second, many of these fertilizer-related companies also produce chemical products, and the prices of many such chemicals have dropped this year, affecting their profits. For example, Hualu Hengsheng and Luxi Chemical both saw a decline in their performance, by 22.1% and 55.6% respectively, and this was due to the drop in prices of chemical products. 　　Looking at sub-sectors, the phosphate fertilizer industry performed relatively well; the 3 listed companies in this sector achieved a total profit of 270 million yuan, representing a year-on-year increase of 147.4%. In the first half of the year, phosphate fertilizer prices remained relatively high. Coupled with good production performance by enterprises and effective cost control, gross margins increased, thereby enhancing the company’s profitability. 　　The performance of the nitrogen fertilizer industry has declined significantly. The 11 listed nitrogen fertilizer companies achieved a total profit of 2.22 billion yuan, a decrease of 51.6% on a year-on-year basis. Among them, Hechi Chemical, Liuhua Co., Ltd., and Shengjitang all incurred losses. In the first half of the year, the prices of urea and ammonium chloride remained high, which helped improve the performance of nitrogen fertilizer companies; however, declining prices of chemical products for many listed nitrogen fertilizer firms weighed on their performance. 　　Listed companies in the potassium fertilizer industry exhibit differences. Among them, Zangge Holdings recorded a profit of over 200 million yuan, while Yanhu Co., Ltd. incurred a loss of 420 million yuan. However, the losses of Salt Lake Co. are mainly due to losses in the chemical sector; looking at the potassium fertilizer business alone, things are still in good shape. In the first half of the year, Yanhuhu Co., Ltd.’s sales volume of potassium chloride increased by 38,000 tons on a year-on-year basis; the average selling price rose by 181 yuan per ton, while the gross margin increased by 1.19% on a year-on-year basis. 　　Profits in the compound fertilizer industry have declined. All 6 listed companies in the compound fertilizer sector reported profits, but due to high raw material prices and low prices of agricultural products at the downstream level, the performance of many of these companies declined. However, Xinyangfeng managed to thrive against the adverse market conditions, achieving a profit of 630 million yuan in the first half of this year, a 17.1% increase on a year-on-year basis, making it the compound fertilizer company with the highest profits among those listed on the stock market. Xinyangfeng stated that the new type of fertilizer has become a new source of profit growth for the company. In the first half of the year, the company’s sales of new type of compound fertilizers increased by 23.01% on a year-on-year basis, while its revenue rose by 28.32% during the same period.