Tianhe Chemicals Group reported yesterday that the gross profit for its lubricant additives segment decreased 7.2 percent in 2017 due to a drop in sales of additive components.
The company, which is based in Jinzhou, China, also advised that plans to begin selling finished lubricants in coming months and that is expanding its capacity to produce detergent and dispersant additives.
Tianhes lube additives business recorded a gross profit of 953.8 million in 2017, down from 1 billion in 2016, according to a statement filed with the Hong Kong Stock Exchange. Revenue for the segment slipped 7.1 percent to 2.2 billion, primarily because domestic customers bought less additive components.
Total domestic sales revenue for lube additives dropped 14.5 percent, but that was partially offset by a 29.8 percent increase in export sales, mostly for additive packages. The proportion of export sales in the segment rose from 16.7 percent in 2016 to 23.3 percent in 2017. Increasing export sales has been part of the strategy for the company, which believes that would improve profitability.
With the leadership of our newly appointed CEO of the lubricant additives segment, we expect our presence in the overseas markets will be further enhanced while maintaining our position in the domestic market, the filing stated.
Gross profit margin for lubricant additives was hardly changed at 43.9 percent.
Tianhes other main business, which supplies fluorochemicals, saw its profits fall 85 percent to 57 million due to disruptions caused by a move of its production facilities. Total profit and comprehensive income dropped 37.5 percent to 563 million.
Tianhe had previously announced plans to begin offering finished lubricants for agriculture and other niche industries. It expects to begin selling such products during the second quarter. Also during the second quarter it plans to finish expansions of production facilities that make what it refers to as T154 ashless dispersants and T106 detergent additives.
The financial results reported yesterday are unaudited, and Tianhe said it will not meet the stock exchanges deadline for publishing its 2017 annual report because it still has not published annual or interim results for 2015 or 2017 nor its annual results for 2014. Its reporting of such results was first interrupted in 2014 when the company was attempting to respond to questions that the stock exchange raised in the wake of a report by the shadowy corporate watchdog group, Anonymous Analytics, accusing Tianhe of fraud in the lead-up to its 2013 initial public stock offering.
Tianhe denied all accusations and has said for four years that it is working to address all of the exchanges questions and reporting requirements. The company remains suspended from the stock exchange.