Shenma Industry Co. Ltd., a publicly listed subsidiary of China's largest nylon 6/6 resin producer Shenma Group Co. Ltd., released disappointing preliminary earnings the day after the Chinese New Year holiday.
The Pingdingshan-based company reported a 45 percent decline in its 2011 net profit (25 million yuan or US$4 million) compared to 2010, on operating revenue of 15.3 billion yuan (US$3 billion).
The results are significantly different from the 60 percent growth in 2011 net profit that Shenma had forecast back in October.
Shenma cited a major decline in the fourth quarter caused by "changes in the domestic and international economic environment."
Shenma must have seen a decline larger than 100 percent in the fourth quarter, in order to drag the full year results down to negative 45 percent from positive 60 percent during the first three quarters.
Analysts questioned the possibility of that scenario, noting that even though nylon 6/6 prices dropped in the fourth quarter, feedstock prices also fell. Other nylon 6/6 makers have posted four-quarter decline in the range of 15-30 percent, according to the Daily Economic News.