Thread Content
Hualu Hengsheng boosts profitability through lean operations Author/Source: Sinochem News Network Date: February 21, 2022 Clicks: 5 A few days ago, Shandong Hualu Hengsheng Chemical Co., Ltd. released an announcement regarding its expected annual profits, forecasting that it would achieve a net profit of 7 billion to 7.5 billion yuan in 2021, representing an increase of 289.32% to 317.13% compared to the previous year. Based on the profit rankings for the first three quarters of last year, Hualu Hengsheng ranked third in terms of net profit among the 299 listed companies in the chemical industry sector. For five consecutive years, its comprehensive index of key operational metrics ranked first among the 22 listed companies in the fertilizer industry sector. The chemical industry is a cyclical sector that is highly affected by market conditions, resulting in large fluctuations in the performance of many companies. How has Hualu Hengsheng managed to maintain steady growth in its performance and high profit levels? “It’s mainly because we focus on building sustainable profitability, emphasizing lean management aimed at improving operational efficiency.” ”Gao Jinghong, the company’s deputy general manager, said. Adhere to a market-oriented approach and adopt diversified, flexible joint production. “To run a business, one must focus on its core activities, emphasize its strengths, and possess competitiveness.” ”Gao Jinghong explained that over the years, Hualu Hengsheng has remained low-key and pragmatic, staying focused on the goal of enhancing its competitiveness in the industry. It has continued to concentrate its efforts on improving its core business, striving to make it stronger, more efficient, and more sophisticated. Since 2018, Hualu Hengsheng has invested over 10 billion yuan in various high-end chemical projects, including large-scale ethylene glycol production, improvements in the quality of purified adipic acid, new materials based on caprolactam and nylon, as well as dimethyl carbonate production. Through optimization and adjustments, the company phased out the equipment from before 2000, reducing the comprehensive energy consumption per 10,000 yuan of output value by 42%, with the profit contribution rate of products worth 10,000 yuan exceeding 60%. By building up its capabilities, the fertilizer business continued to maintain its advantages; the supply of polyurethane raw materials increased, and efforts were made to improve the quality of carbonylation-derived products ； New chemical materials have formed clusters and entered the field of new energy batteries; the market share of various products such as DMF, trimethylamine, oxalic acid, adipic acid, and dimethyl carbonate ranks among the top three in the industry. Modern chemical production is characterized by large-scale operations, systematization, and integration within industrial parks. Hualu Hengsheng has adopted a systems-thinking approach; through continuous online optimization and resource integration, it was the first in the industry to develop a flexible circular economy model based on clean gasification, one that extends multiple product chains through the further processing of syngas, thereby achieving \"one core, multiple outputs\" production. Through continuous improvement over the past few years, it has gradually evolved into a large-scale integrated production system for the entire park, featuring an integrated yet diversified structure, close coordination among the five major sectors, and coordinated production and sales of over 40 different products. Adhere to cost leadership, explore ways to reduce costs and improve efficiency. For traditional manufacturing industries, production is the foundation of operations, and online production management is key to enhancing operational efficiency. Hualu Hengsheng adheres to a low-cost strategy, strengthens lean operations and refined management, and continuously carries out activities aimed at saving energy and reducing consumption as well as improving quality and efficiency, achieving cost savings and efficiency gains of over 300 million yuan each year. Hualu Hengsheng adopts benchmarking management, breaking down indicators such as processes, consumption, and equipment operation into more detailed components. By comparing these with industry benchmarks, it identifies gaps and formulates corresponding measures, thereby achieving continuous improvements in process technology and equipment standards. In the acetic acid production sector, by setting benchmarks against multinational companies and through optimization, innovation, and upgrades, the annual production capacity of the acetic acid plant was increased from 200,000 tons to 600,000 tons, with parameters such as quality and energy consumption reaching advanced levels in the industry ； In the production of adipic acid, it has strived to match industry leaders; by employing alcoholysis technology, costs have been significantly reduced, enabling the production of high-quality adipic acid and placing its production capacity among the top three in the industry. Hualu Hengsheng strengthens its lean production management system, focusing on the systematization of process management, the standardization of equipment management, the standardization of job management, and the refinement of basic management, in order to achieve safe and stable operation over long periods of time ； Cost control is implemented at various stages such as the procurement of raw materials and material consumption during production, with strong efforts made to achieve simultaneous control and reduction of costs and expenses. Advanced energy-saving technologies and processes are adopted, and the utilization of raw materials, as well as that of waste materials and thermal energy, is continuously improved, ensuring that all waste is fully utilized. As a result, the total cost of the company’s main products is more than 15% lower than the industry average, and it has been recognized as a leader in energy efficiency for industries such as coal-based synthetic ammonia, methanol, and acetic acid on seven occasions. Adhering to win-win competition and cooperation to improve profitability, Hualu Hengsheng upholds the marketing philosophy of \"win-win competition and cooperation.\" By relying on high-quality products, low-cost operations, and a superior service system, it enhances customer value through long-term and stable partnerships, achieving mutual benefit and shared success while increasing customers’ dependence on the company. The marketing department adheres to a market-oriented approach, analyzes and assesses the situation before taking action, seizes opportunities to move forward, and ensures proactive adaptation to the market, its healthy development, and effective guidance in its direction. Leveraging its advantages in flexible combined production, Hualu Hengsheng adjusts its production structure in a timely manner based on market conditions, using production to promote sales and sales to drive production, thereby maintaining stable and high levels of production as well as a balance between production and sales. The sales rate for its core products and the recovery rate of payment amounts have always remained at 100%. What’s more remarkable is that Hualu Hengsheng has always maintained ample cash flow, which alone is sufficient to meet the funding needs of its projects. Gao Jinghong said that the company maintains an annual investment of over 2 billion yuan, and its operational scale continues to grow; however, its debt-to-asset ratio is declining year by year, currently standing at only 21.5%. Thanks to a scientific and rational industrial structure and the advantages of flexible multi-product production through multiple output streams, Hualu Hengsheng was able to withstand market fluctuations and the impact of the COVID-19 pandemic, navigate through economic cycles, and maintain a steady pace of growth. Thanks to its efficient cost control and systematic internal governance, Hualu Hengsheng has always remained at the forefront of the industry. It is known as the \"King of the Red Sea\" and a \"blue-chip stock\", and in July 2021 it was designated by the State-owned Assets Supervision and Administration Commission as a model enterprise for the initiative to create benchmarks among key state-owned enterprises.