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Record Sales and Earnings
Addtime:2004-03-18Source:KingBoard 【Fonts:Large Medium Small
::Record Sales and Earnings in 2003 Posted on 18 Mar 04::

Hong Kong, March 18, 2004 - One of the world's largest laminates manufacturer, Kingboard Chemical Holdings Limited (SEHK: 148) today announced record sales and profits in 2003. In the year to December 2003, sales advanced to the record level of HK$4.4 billion on the back of improved market conditions in the second half. Net profit reached a new level of HK$472 million. The Board proposed a final dividend of HK10.0 cents per share, with total dividend payments for the full year amounting to HK15.0 cents per share. As a result of the robust demand for laminates, Kingboard aims to increase the monthly capacity by over 40% to around 6.7 million square meter by the end of 2004.

Mr Paul Cheung Kwok Wing, Chairman, Kingboard Chemical Holdings Ltd. noted: "The year was full of surprises with which our workforce coped extremely well. There was virtually no disruption in our plant operations and capacity expansion continued to progress. The second half saw the long overdue recovery in the electronics industry, driving strong sales demand and in turn selling price increases. We were able to take full advantage of this upturn with increased production capacity. The solid financial returns, I am sure, mark the 10th anniversary of our Group`s listing in Hong Kong with success. Our shareholders are also rewarded with the highest dividend payment since our listing."

In the laminate segment Kingboard Chemical continued to gain market share. Volume sales increased by over 30% and the average monthly shipment of laminates reached 4.4 million square meters. However, in the first half the cost of raw materials including copper, pulp and chemicals, surged on the average 15-20%. This coupled with the soft selling price trend had adversely impacted the Group`s EBIT (earnings before interest and tax) margin. From July onwards the electronics industry showed signs of sustained rebound. The Group`s order book for laminates started to consistently exceed its production capacity, supporting a firm uptrend for the selling prices as well as profitability. EBIT margin for the full year as a result was managed at around 16%, similar to the year 2002.

Mr Cheung continued: "During the three years` downturn, most industry participants were not able to make reasonable returns, leading to both shut-downs and lack of new investments in capacity. Hence the current recovery of the laminate demand is facing a number of bottlenecks such as the tight supply of glass yarn. Some of these bottlenecks will require at least one-year expansion lead time. Although our order book visibility again is limited to the next couple of months, I am increasingly convinced that the current upturn in the laminate market will be sustained for some time. Our laminate segment, with capacity expansion and increased vertical integration in the last few years, is therefore in a solid position to post strong performance in the current year."

The printed circuit board segment also posted strong sales growth. The new production plants were completed in late 2002 and became fully utilized in the second half. Hence the total volume output for the single-side and multi-layer PCB increased by 135% and 40% respectively. EBIT margin, however, was dragged down to around 7% (2002-11%) by start up losses of the new plants in the first half followed by a combination of increased material costs and soft unit selling prices in the second half. Nevertheless there has been a gradual improvement in the selling prices and shift to the sales of higher layer count products since the year end.

The chemicals segment continued to successfully serve two strategic functions, a reliable internal key material supplier as well as becoming one of the key players in the chemicals market in China. Last year the total volume sales of the current three main products i.e. formalin, hydrogen peroxide and epoxy resin grew over 20% and had 65% sold to over 500 external customers. EBIT margin was under pressure at around 6% (2002-11%) as feedstock costs across the board increased. Particularly the price of methanol, the major feedstock for formalin and hydrogen peroxide, jumped over 40% last year.

The Group believes its investments in the chemicals segment will see good returns in the next few years. In the last couple of months, based on new capacity and tightened cost measures, it has been seeing an improvement in profitability.

Last year Kingboard Chemical started to produce tetrabromobisphenol-A (TBBA) with a monthly capacity of 900 tonnes all of which is used for internal consumption. In September 2003 the Group acquired a caustic soda plant with a monthly capacity of 2,500 tonnes in Hengyan, Hunan province. The Group is in the process of doubling its capacity by early 2005. In addition Kingboard Chemical entered into a 40:60 joint venture with CNOOC`s chemical division targeting to produce 600,000 tonnes of methanol per annum in the Hainan Province from mid-2006 onwards. There is a guarantee of at least 65% methanol output sold to the Group. The construction of a coal-based methanol plant with an annual capacity of 120,000 tones in the Hebei province is also well on track. It is scheduled to complete by end 2004.

In the current year Kingboard Chemical has just completed a melamine plant of which the output, other than for internal consumption, has been sold out. It is also strengthening its position in the hydrogen peroxide market. In the next few months, a new plant of sodium hydrosulphite and hydrogen peroxide in Nansha, Guangdong will be completed. Furthermore it has recently acquired a hydrogen peroxide plant with a monthly capacity of 6,000 tonnes in Gaomi, Shangdong province, for RMB50 million in order to broaden the Group`s geographical coverage in China.

The Group continued to be in a healthy financial position. As at December 31, 2003, net current assets and current ratio of the Group were approximately HK$1,413 million (31 December 2002: HK$940 million) and 1.82 (31 December 2002: 1.69). The net working capital cycle had improved from 132 days as at 31 December 2002 to 127 days as at 31 December 2003. Gearing ratio in terms of interest bearing borrowings net of cash to shareholders` funds improved marginally to around 46% (December 2002: 49%)

"I am proud to report that, for four years in a row our Group has been chosen by Forbes Global as one of the best 200 companies with annual sales below US$1 billion outside the US in October 2003. This came as a great encouragement to our team as it represents investors` recognition of our concerted efforts in advancing our enterprise," concluded Mr Cheung.

Financial Highlights

  12 months to Dec 31, 2003 9 months to Dec 31, 2002*
  HK$`000 HK$`000
Turnover 4,435,503 2,552,300
Profit before tax 559,994 375,764
Net profit attributable to shareholders 472,366 301,288
Basic Earnings per share HK80.9 cents HK56.0 cents
Full-year dividend per share HK15.0 cents HK10.0 cents
- Interim dividend per share HK5.0 cents HK4.0 cents
- Proposed final dividend per share HK10.0 cents HK6.0 cents


" The Group has changed its year-end date from March 31 to December 31.

Issued by :
Kingboard Chemical Holdings Limited