Recently, leading polyester companies such as Hengli, Rongsheng and Tongkun have successively released performance reports for the 2022 fiscal year. The report shows that the sales performance of these companies are still generally growing, but due to factors such as the global economic recession and high costs of energy and raw materials, the profits of some companies have been impacted.
Rongsheng Petrochemical achieved operating income of 289.095 billion yuan in 2022, a year-on-year increase of 57.91%; net profit attributable to shareholders of listed companies was 3.340 billion yuan, a year-on-year decrease of 74.76%.
Hengli Petrochemical will achieve operating income of 222.324 billion yuan in 2022, a year-on-year increase of 12.3%; net profit attributable to the parent company is 2.318 billion yuan, a year-on-year decrease of 85.07%.
Hengyi Petrochemical achieved operating income of 152.050 billion yuan in 2022, a year-on-year increase of 17.26%; the net profit attributable to shareholders of listed companies was -1.08 billion yuan, turning from profit to loss year-on-year.
Dongfang Shenghong achieved operating income of 63.822 billion yuan in 2022, a year-on-year increase of 21.13%; net profit attributable to shareholders of listed companies was 548 million yuan, a year-on-year decrease of 88.02%.
Tongkun’s operating income in 2022 was 61.993 billion yuan, a year-on-year increase of 4.79%; the net profit attributable to shareholders of listed companies was 130 million yuan, a year-on-year decrease of 98.26%.
Xinfengming’s operating income in 2022 will be approximately 50.787 billion yuan, a year-on-year increase of 13.44%; the net profit loss attributable to shareholders of listed companies will be approximately 205 million yuan, a year-on-year decrease of 109.09%.
Industry downturn drags down performance of listed companies
It is understood from the report that the performance of the domestic petrochemical sector will generally decline in 2022. In terms of sectors, the gross profit of the refining and chemical sector of the integrated enterprise is better than that of the chemical fiber sector. The profitability in the first half of the year was acceptable, but the year-on-year decline was obvious in the second half of the year.
Rongsheng Petrochemical stated in its annual report that the three major sectors of my country’s petrochemical industry, oil and gas, refining and chemicals, are increasingly differentiated, and the overall market demand is also showing a downward trend. From within the petrochemical industry, the operating income of the oil and gas sector increased by 32.9% compared with the previous year, and the profit increased by 114.7% compared with the previous year; the operating income of the refining sector increased by 18.6% compared with the previous year, and the profit decreased by 87.6% compared with the previous year; the operating income of the chemical sector An increase of 10.1%, and the profit amount decreased by 8.1% compared with the previous year. Affected by the high prices of crude oil and natural gas, the profit differentiation of the three major sectors has been significantly intensified. The profits of the upstream oil and gas sector increased by 1.15 times compared with the previous year, while the profits of the two major downstream refining and chemical sectors showed negative growth.
Through combing through, reporters found that the industry downturn was the main reason for the decline in the annual performance of listed companies in the petrochemical sector. Especially the sharp weakening in the second half of the year is related to the uncertain overseas situation, increasing crude oil price fluctuations, economic downturn cycle and other domestic and foreign macro-complex situations. It also adds to the pressure from the downstream consumer market.
In this regard, Zijin Tianfeng Futures analyst Liu Siqi also explained that after the Russia-Ukraine conflict, the sharp rise in crude oil prices has increased the costs of domestic refining and chemical companies, overseas interest rate hikes have been implemented, global consumption has slowed down, and the squeeze from both ends has caused the chemical industry and chemical fiber refining to The performance deviation of downstream products, especially PTA, ethylene glycol, polyester and other products, has poor profit performance. Refined products were affected by supply bottlenecks and good overseas travel demand, and their profit performance was acceptable. However, their performance also weakened due to macroeconomic influences in the second half of the year.
Taking the chemical fiber industry in the chemical sector as an example, Xin Fengming stated in the annual report that the international situation will continue to change in 2022, and the domestic economic situation will remain severe, which will bring huge challenges to the development of the real economy. From the perspective of the external environment, the conflict between Russia and Ukraine has led to supply chain shortages and further intensified conflicts. Prices in global energy, agriculture and other related fields have mostly remained at high levels, and domestic companies are facing greater pressure from imported inflation. From the perspective of the internal environment, the shrinking demand has a greater impact, especially the short-term stagnation of production activities in the fourth quarter, which has had a greater impact on the company’s production and sales. The upstream and downstream sectors of the industry are squeezed and the market environment is sluggish. “Hot upstream and cold downstream” has become the real status quo of the chemical fiber textile industry. In the face of new changes in the domestic and foreign market environment, new trends in economic development, and new requirements for energy management and control, the economic operation pressure of the chemical fiber industry has also increased significantly. Industry inventories are generally high and spread profits are compressed.
During the reporting period, Xinfengming achieved operating income of 50,787,330,600 yuan, an increase of 13.44% compared with the same period last year; net profit attributable to the parent company -205,058,900 yuan, a decrease of 109.10% compared with the same period last year.
Hengyi Petrochemical is also in the petrochemical and chemical fiber industry, and its raw materials come from petroleum or corresponding chemicals derived from petroleum cracking. During the reporting period, Hengyi Petrochemical’s raw material prices experienced significant changes compared with the previous reporting period, mainly due to the escalation of the geopolitical situation. Coupled with fluctuations in global crude oil inventory supply, crude oil prices in 2022 will rise in the first half of the year, fall in the second half, and rise overall throughout the year. According to CCF data, the average price of WTI crude oil in 2022 will increase by 38.73% compared with the average price in 2021, and the price of Brent crude oil will increase by 39.65%. At the same time, the rise in crude oil prices has also driven up the prices of downstream products in the industrial chain such as PX.
For the industry this year, there is still obvious pressure, and companies are facing the test of high costs, low demand, high inventory, low efficiency and other issues.
Shi Xiaohanlian, assistant to the director of Xinhu Futures Research Institute and director of energy and chemical research, said that the chemical industry will continue to be reshuffled, and leading companies will survive; but small companies with high costs and weak competitiveness will be eliminated. In Liu Siqi’s view, after experiencing last year’s macro and energy crises and risks, the petrochemical industry chain is expected to break through the difficulties and achieve an improvement in profits in 2023.