Consolidated Revenue Increased by 17% YoY
2023 1Q Results Highlights:
- The consolidated revenue increased by 17% YoY to approximately RMB 6,279 million;
- Urea sales revenue increased by 23% YoY to approximately RMB 1,953 million;
- The income attributable to owners of the parent decreased by 13% YoY to approximately RMB 333 million.
HONG KONG / ACCESSWIRE / May 8, 2023 / China XLX Fertiliser Ltd. ("China XLX" or the "Company", together with its subsidiaries collectively known as the "Group") (HKSE:01866.HK) announced that the Group recorded consolidated revenue of approximately RMB 6,279 million for the three months ended 31 March 2023 (the "Period"), representing an increase of 17% YoY. The income attributable to owners of the parent decreased by 13% YoY to approximately RMB 333 million.
During the Period, the Group stepped up R&D and promotion of high-efficiency fertilisers, strengthened the development of R&D platforms, and promoted energy saving and emissions reduction in its production system. Revenue from high-efficiency fertilisers accounted for more than 50% of total fertiliser revenue, and their gross profit margin was 9 percentage points higher than traditional fertilisers, thereby ensuring stable growth in the operating results of chemical fertiliser products. Although chemical fertiliser products made up 60% of total revenue and 65% of total profit, the growth of the fertiliser business was offset due to the high volatility of chemical product market.
During the Period, the Group's urea revenue reached approximately RMB 1,953 million, representing an increase of 23% YoY. Sales volume of urea for the first quarter of 2023 was approximately 768,000 tons, up 19% YoY, of which high-efficiency urea accounted for 52% of the total sales volume of urea. Gross profit margin of the urea business increased by 2 percentage points to 30% from a year ago. With its advanced coal gasification production technology, the Group increased the coal conversion rate to over 99.7%, while the power consumption per ton of urea production reduced by over 50% when compared with the traditional technology. It possesses apparent cost leadership.
Revenue from compound fertilisers increased by 6% YoY to approximately RMB 1,560 million, mainly due to approximately 5% increase in the sales volume. Sales volume of compound fertilisers increased to 530,000 tons during the Period, of which 40% originated from high-efficiency compound fertilizers. Since high-efficiency fertilisers are crucial to cash crops and there is greater demand for them, the Group will continue to step up R&D efforts and promote the application of high-efficiency fertilisers so as to enhance its profitability.
Revenue from methanol was approximately RMB 528 million, up 9% YoY mainly attributable to 13% YoY increase in sales volume. Revenue from melamine was approximately RMB 198 million, down 27% YoY due to the decline of melamine price resulting from a slow recovery of the downstream real estate industry and weak demand in international markets, resulting in a 31% YoY decrease in the average selling price of melamine. Revenue from medical intermediate was approximately RMB 144 million, up 24% YoY mainly due to a 50% YoY increase in the sales volume. With the full relaxation of the COVID restrictions, downstream demand gradually shifted from anti-epidemic drugs to anti-hepatitis B virus and other drugs, and the Group's export volume increased on a pickup on demand in overseas markets.
In addition, revenue from automotive urea solution was approximately RMB 105 million, down 9% YoY mainly due to approximately 11% YoY decrease in the sales volume of automotive urea solution. In view of the market situations for automotive urea solution and urea fertilisers and taking into account the peak season for urea fertilisers in the first quarter, the Group voluntarily abandoned the orders for lower-margin automotive urea solution and increased the sales of urea fertilisers.
Looking ahead to the second quarter, the Company believes that international energy market will see a softer supply-demand balance with a significant drop in the coal price. Without sufficient support for chemical fertilizer prices, chemical fertilizer prices are expected to trend downwards. On the other hand, the prices of chemical products will pick up slowly on a gradual recovery of downstream industries. Although the prices of chemical fertilisers will remain volatile, their prices will be more stable than chemical products due to their rigid demand. During this low season, the Group will shut down the fourth urea production line at the Xinxiang Production Base for maintenance and repair, thereby laying a solid foundation for efficient production.
As for technological innovation and development, the Group boasts the first national nitrogen fertilizer research center. Through advanced scientific research platforms and R&D systems, it will team up with different research institutes like the Chinese Academy of Sciences to jointly develop and promote a variety of high-efficiency fertilizer products such as humic acid, loss-controlled fertilizer and polyaspartic acid urea. Leveraging advanced technology and enhanced proprietary R&D capabilities, it will increase its share in high-efficiency fertilizer market to align itself with the government's call for "reducing fertilisers consumption and increasing their efficiency". These initiatives will meet the market's increasing demand for green, environmentally friendly, and high-efficiency fertilizers. At the same time, the Group will also strengthen the technological development for the recycling of wastewater, exhaust gas and residues, continuously improve the circular economy benefits in its industrial parks, increase the automation level, build core competitiveness in R&D, and support the development goal of "low cost and differentiation". In terms of project construction, the urea project at the Group's Xinxiang Production Base with an annual production capacity of 700,000 tons is expected to be put into operation by the second half of this year. The first phase of the Liaoning Huludao Base project is expected to be completed and put into operation in the third quarter of this year.
Mr. Liu Xingxu, Chairman of China XLX, said, "The Group is one of the few chemical fertilizer companies in China with competitive edges in both of urea and compound fertiliser businesses. We took the lead in the market to position ourselves as the 'pioneer of high-efficiency fertiliser in China', and insist on promoting high-quality development of our industrial parks through technological innovation. In the future, the Group will further release chemical fertilizer production capacity to reinforce the competency of our core businesses."
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About China XLX Fertiliser Ltd.
China XLX Fertiliser Ltd. is one of the largest and most cost efficient coal-based urea producers in China. It is principally engaged in R&D, manufacturing and selling of related differentiated products such as urea, compound fertiliser, methanol, dimethyl ether, melamine, furfuryl alcohol, furfural, 2-methylfuran and pharmaceutical intermediates. The Company adheres to the development strategy of "retaining overall cost leadership with competitive differentiation". While reinforcing the core fertiliser business, the Company leverages the resources in Xinxiang, Xinjiang and Jiangxi to extend the product line to upstream new energy and new materials. Its shares are traded on the main board of the Hong Kong Stock Exchange (stock code: 1866.HK).
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