China Sky Q3 net profit up 69.4% on rising demand

18 October 2006 05:25  [Source: ICIS news]

SINGAPORE (ICIS news)--China Sky Chemical Fibre recorded a 69.4% rise in its third quarter net profit from a year earlier due to strong demand for high-end nylon fibre and capacity expansion, it said late on Tuesday.

The China-based, Singapore-listed chemical fibre maker reported a net profit of CNY157.5m ($19.9m/€15.9m) for the three months ended 30 September, compared to pro forma earnings of CNY106.6m for the year-ago period, as total revenues rose 60.1% to CNY548.8m.

Looking ahead, the company expects to maintain growth performance achieved in the third quarter throughout the rest of the year.

However, it noted that parts of its plants are scheduled for a shut down for around two weeks in the fourth quarter and this is expected to have an impact on its production capacity.

The rise in third quarter revenue was due to an expansion in production capacity by 33,000 tonnes to 72,000 tonnes at the end of June 2006, a higher efficiency achieved in conjunction with the capacity expansion, and a wider product mix, China Sky said in a statement.

Continued demand for high-quality nylon fibres by textile and fabric makers to meet rising domestic Chinese and export demand for high-nylon content products, also played a significant role in the growth of the company’s revenue and net profit, it added.

In the first three quarters of 2006, the company was able to maintain gross profit margin at 34.57% due to increasing crude oil prices, although raw material costs were higher, as it had been able to adjust selling prices according due to strong demand, China Sky said.

Now on its next phase of expansion, the company is currently constructing a new factory in China and plans to introduce two higher-end nylon products by the first half of 2007. The new facility will house two production lines that will boost China Sky’s annual capacity to 88,000 by the first half of next year, it said.

The company also revealed that it could expand its business through acquisitions to complement its business strategies.

Established in 2002, China Sky Chemical Fibre manufactures chemical fibres and supplies high-end nylon fibres to textile and garment makers in China. It was listed on Singapore Exchange on 3 October 2005.

By: Jeanne Lim
+65 6780 4359

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