Home / News / China Lumena to expand PPS capacity to meet market demand

China Lumena to expand PPS capacity to meet market demand

05 Sep '12

6 min read

China Lumena New Materials Corp announces its interim results for the six months ended 30th June 2012. During the period under review, the Group's revenue amounted to approximately RMB2,203.1 million (2011: RMB2,236.1 million), representing a slight decrease of approximately 1.5%. Profit for the period attributable to owners of the Company amounted to approximately RMB820.1 million (2011: RMB774.5 million), representing an increase of approximately 5.9% as compared to the same period in the previous year, accounting for 65.4% of FY2011.

During the period, there were changes in business environment in the specialty thenardite market with a new competitor, and we managed to offset this situation by increasing proportion of revenue derived from medical thenardite and full line of polyphenylene sulfide (“PPS”) business to 84.2% (2011: 74.1%) of total revenue. In the “Twelfth Five-Year” Plan stipulated by the PRC government, favourable policies benefited the PPS industry. As a result, the PPS business achieved significant growth during the period and the proportion of PPS revenue increased to 64.5% (2011: 55.1%) of total revenue. Net profit margin increased by 1.7 percentage points to 37.2% (2011: 35.5%) as compared to the same period in previous year.

Mr. Zhang Daming, Executive Director and CEO of Lumena New Materials, said, “The PRC recorded a declining economic growth from the fourth quarter last year. Amidst the overall landscape of economic slowdown, the Group minimized the adverse effect on its business by taking various measures including the expansion in PPS production capacity and the acceleration in the optimization of the nardite product portfolio which have achieved remarkable results. Therefore, the Group's business developed steadily despite experiencing an economic slowdown in the first half of the year.”

In terms of PPS business, as the largest PPS resin producer in the world, the Group produces PPS compounds, PPS fibre and PPS resin. During the period, PPS products generated a total revenue of RMB1,421.8 million (2011: RMB1,232.3 million), representing an increase of 15.4%. At the same time, the average selling price of PPS products recorded a year-on-year increase of 4.9%. Actively encouraged and supported by the PRC government's industrial policies, PPS has been adopted as a kind of new material as set out in the fourth chapter of the “Guidelines for the Major Fields of High

Technology Industries Given Priority in Development at Present (2011)” and “New Materials Industries under the Twelfth Five-Year Plan”. Hence, the PPS segment benefits from the PRC government's dedicated support in its development.

In addition, PPS has also been recognized as one of the "Key products in the new materials industry under the Twelfth Five-Year Plan” by the Ministry of Industry and Information Technology, which is adopted to boost the development of strategic emerging industries including energy-saving and environmental friendly industries and new materials industries. According to the Twelfth Five-Year Plan, the market size for the new materials industry will reach RMB2 trillion with an average annual growth rate of over 25% during 2011 to 2015. The Group expects to fully develop PPS products by capitalizing on relevant favorable policies.

According to the Emission Standards of Air Pollutants for Thermal Power Plants (GB 13223-2011) promulgated by the PRC government, new environmental protection standards were required to be adopted for thermal power plants as of 1 January 2012 that the emission limit on particulates of newly built thermal power plants has been squeezed to 30mg/m3. PPS fibre is currently the most cost effective material, and can be used as environmental filters and filter bags due to its outstanding overall performance including high temperature resistance and corrosion resistance.

Against the macro background of increasingly stringent emission standards and strengthened enforcement measures, the implementation of relevant policies will drive the domestic sales of PPS fibre and promote the sustained and rapid growth of PPS sales.