NINGBO, China, June 5, 2013 /PRNewswire-FirstCall/--Keyuan Petrochemicals Inc. (OTC: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced the Company's financial results for the twelve months ended December 31, 2012.
"Our 2012 revenues benefitted from solid customer demand and expanded production capacity," declared Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "Although our margins were negatively impacted by higher raw materials costs and labor cost, I believe Keyuan's core earnings potential continues to improve as a result of the operation of the SBS facility and a series of initiatives on major projects."
Full Year 2012 Financial Results
Keyuan sales for the year ended December 31, 2012 were $750.6 million compared to sales of $626.7 million for the year ended December 31, 2011, an increase of $123.9 million, or 19.8%. The substantial increase in sales was due to higher production volume of products, increased working days and the operation of our SBS facility. In 2012, Keyuan sold 675,484 MT of chemical products, including 28,730 MT of SBS products, at an average total price of $1,111 per MT, as compared to sales of 588,976 MT of chemical products at an average price of $1,064 per MT in 2011. This represents an increase of approximately 14.7% in sold products. Compared with 44 days production suspension in 2011, Keyuan lost 15 days of production for inspections during 2012. With the commencement of the second production line in August 2012, the SBS facility achieved 41% of its designed capacity (full capacity should be 70,000 tons/ year) in the first year which brought an additional 28,730 MT of finished products and sales of $71.0 million.
Keyuan did not incur any sales to related parties for the year ended December 31, 2012 as compared to approximately $92,772,000 of sales to related parties for the year ended December 31, 2011.
Business Expansion Plan
In order to meet increasing customer demands, Keyuan has been working on expanding its manufacturing capacity by focusing on the following improvements to our infrastructure. In anticipation of the increase in both the market demand for the finished goods and environmental protection requirements, the Company has adjusted its original expansion plans and is currently working on refining its manufacturing capacity as follows:
a) An ABS production facility in Guangxi Province, which will have an annual production capacity of 400,000 MT of ABS. We began pre-construction activities in February 2012, and the first phase is expected to be completed by the fourth quarter of 2014.
b) An oil catalytic cracking processing facility as an extension of our catalytic pyrolysis processing equipment, as well as the feed way of the main raw materials to produce synthetic rubber. This facility can reduce production costs and the market risk in the purchase of raw materials, and improve the stability and efficiency of project production to 200,000 MT of heavy oil per year.
c) An increased annual design capacity of our ethylene-styrene facility from 80,000 MT to 200,000 MT, among which 120,000 MT can be used for producing synthetic rubber and 80,000 MT can be sold to downstream petrochemical companies. Ethylene-styrene is the main raw material (eg. Bezene) from the catalytic cracking oil processing facility to produce styrene. This facility can be considered the bridge between original products and high-value added products and will complete the integration of internal resources.
d) A transformer oil facility using hydrogen from the ethylene-styrene facility to complete a double hydrogenation process on original products (BTX Aromatic) for refining transformer oil, and producing high-value transformer oil, with a design capability of 100,000 MT per year.
e) An SSBR (Solution Polymerized Styrene Butadiene Rubber) production facility with a designed annual capability of 150,000 MT, which will use its own production process technology in synthetic rubber, combining styrene and butadiene, to produce SSBR. This product can be used as raw materials for tires, instead of imported Hexakis (Methoxymethy) Melamine ("HMMM").
Keyuan also registered its catalytic oil processing facility and transformer oil plant with the Ningbo local government in February 2013, and expects it to be completed and operational in late 2013, at which time, the Company will be able to produce medical use and edible products, such as tubes and chewing gum.
The total estimated cost of processing equipment for product refinement and the SSBR production facility is approximately $149.3 million, including $49.8 million for processing equipment and $99.5 million for the SSBR production facility. Keyuan is currently going through the governmental approval and design phase of the ABS production facility and estimating the related costs. Upon full completion of its expansion, Keyuan's total production capacity will reach 2,443,000 MT per year including, but not limited to, its current petrochemical production of 720,000 MT, styrene of 200,000 MT, catalytic cracking oil of 200,000 MT, ABS of 400,000 MT, SSBR of 150,000 MT and transformer oil of 100,000 MT.
For more information, please visit www.keyuanpetrochemicals.com