Wanhua Chemical's first-half net profit fell by more than 40% MDI prices declined significantly

foreword
on the evening of August 20, Wanhua Chemical announced its half-yearly report, with first-half revenue of 31.539 billion yuan, down 15.35 percent yoy;Wanhua Chemical said the profitability of its products in the first half of the year was affected by the slowdown in global economic growth, falling prices of main products and higher export costsMDI price decline is evident
polyurethane series (MDI, TDI, polyol) is the main source of revenue for Wanhua Chemical, especially MDIAt present, the company's multi-set MDI device product quality and unit consumption have reached the international advanced level, is one of the world's leading MDI suppliersIn the first half of the year, the revenue was RMB16,484 million, accounting for more than half of the revenue, and the revenue of petrochemical series, fine chemicals and new materials series was RMB7.513 billion and RMB3.238 billion, respectivelythe price of MDI in the first half of 2019 fell sharply compared to 2018, with pure MDI falling by five or six thousand yuan per ton year-on-year, and the price of aggregateMDI falling even moreIn January, for example, the distribution of aggregate MDI prices was RMB12,500/tonne, down more than half from Rmb28,800/tonne in the same period last yearAugust, Wanhua announced that the price of pure MDI is 20,700 yuan / ton, 700 yuan / ton higher than the July price, but still the second lowest price since 2019can say that MDI prices have fallen significantly this year compared with 2018In addition, the company's petrochemical industry is not very prosperousBecause of the decline in MDI prices, Wanhua Chemical's first quarter report was not very satisfactory, with first-quarter revenue of 15.952 billion yuan, down 8.3% YoY, and net profit of 2.796 billion yuan, down 45.98% YoYthe diversification of the layout
the chemical industry cycle fluctuations have also been troubling the industry's enterprisesWanhua Chemical started with MDI, and the volatility of a single product had a greater impact on the companyIn order to cope with cycle fluctuations, Wanhua in recent years laid out petrochemical series, fine chemistry and new materials series products, these two sectors have become An important source of revenue and profit spree for Wanhua, but also become Wanhua in the MDI cycle when the buffer zone for a long time, 2017 and 2018 were the years of Wanhua Chemical, with revenues of 53.123 billion yuan and 60.621 billion yuan, respectively, and net profit attributable to the deduction of 10.71 billion yuan and 10.035 billion yuan, compared with 30.1 billion yuan and 3.676 billion yuan in 2016 In 2018, the company's gross profit margin of 50.03 percent, which is also 5.11 percentage points lower than in 2017, the company's petrochemical series, fine chemistry and new materials products plus other products totalling 28.91 billion yuan, although the gross margin is lower, almost catch up with the polyurethane series of 30.952 billion yuan of revenue, become an important sector driving the company's performance growth in the first half of this year, the two new sectors also accounted for about half of revenue affected by crude oil prices and end demand, the company's petrochemical products in the first half of the year showed a downward trend The average price of acrylic in Shandong was RMB7308/tonne, down 10.35% compared with the same period last year, and the average price of propylene oxide in Shandong was RMB9825/tonne, down 16.82% compared with the same period last year management costs fall
in the second half of 2019, Wanhua Chemical will continue to strengthen production management, actively respond to the adverse impact of changes in the external environment on product sales, actively study market trends, formulate reasonable sales strategies to ensure the realization of sales volume and profits The company will continue to carry out the process optimization work to improve the efficiency of the installation operation, reduce production costs, while strengthening the research and development investment in independent development projects, the development of new technologies and products is worth noting that although Wanhua Chemical's revenue and net profit decreased, the company's research and development expenses continued to maintain a high growth rate, the first half of 833 million yuan, an increase of 45.14% year-on-year In addition, the company's administrative expenses are declining, with 693 million yuan in the first half of the year, down 10.44 percentage points from the previous year