CCM: Henan Billions: revenue rises against backdrop of recession in 2015 03-17-2016

Henan Billions released its 2015 financial report last month, which showed that the company had achieved great YoY growth in both its total revenue and net profit and managed to rise amidst the general recession in the industry. This is because the company’s industrial structure transformation projects have gradually reached the designed capacity and because it has good control over production costs, according to CCM.

 



On 27 Feb., 2016, Henan Billions Chemicals Co., Ltd. (Henan Billions) released its 2015 financial report, which showed that the company achieved

  • a revenue of USD403 million (RMB2.64 billion) in 2015, up by 28.43% year on year
  • a total profit of USD20.80 million (RMB136 million), up by 85% year on year
  • a net profit of USD16.98 million (RMB111 million), up by 76.49% year on year


It is worth noting that its sale volume reached 228,600 tonnes in 2015, up by 25.85% over that in 2014, of which domestic sales of TiO2 were 131,700 tonnes, up by 41.35% year on year, and exports 96,900 tonnes, up by 9.53% year on year.


2015 witnessed a slowdown in the Chinese economy, a short supply in the downstream market of the domestic TiO2 industry, and a decrease in exports for the first time in recent years. Under these circumstances, the TiO2 price on the domestic market plunged to an all-time low. The price of sulfate grade rutile TiO2 stood at USD1,449.52/t (RMB9,500/t) in late 2015, causing many producers to operate at a loss. Of the other A-share listed TiO2 companies that have released their financial reports, both Anhui Annada Titanium Industry Co., Ltd. (Anhui Annada) and CNNC Hua Yuan Titanium Dioxide Co., Ltd. (CNNC TD), which obtained small profits in 2014, suffered from net losses of hundreds of millions in 2015.


Under the same bleak conditions, Henan Billions, with a 76.49% increase in net profit in 2015, contrasts starkly with CNNC TD, Anhui Annada, and other major domestic producers. This is mainly because Henan Billions’ industrial structure transformation projects have gradually reached the designed capacity in 2015 and because it has good control over production costs and a variety of marketing strategies, according to CCM.

 

1. Key projects of high-end transformation of product structure gradually reached design capacity

 

In 2015 the high-end capacity TiO2 production lines Henan Billions had previously constructed were gradually put into production.


In relation to sulfate grade TiO2, Henan Billions declared that, in collaboration with the Sherwin-Williams Company, it had developed BLR-696, and also independently developed BLR-688 and BLR-681 specially for plastics, which were all recognized by key domestic clients such as LESSO Group and Jiangsu Hongmei Plastics Color Concentrate Co., Ltd. In addition, Huntsman TR52 TiO2, a product acquired by Henan Billions which is used specially for printing ink, became the principal product of the Huntsman factory in France, which smoothly began operation in 2015, with a total sales volume of about 15,000 tonnes and at a stable price of about USD2,371/t (RMB15,500/t) throughout the year.


In regards to chloride grade TiO2, Henan Billions successfully developed BLR895 and BLR896 products in 2015, which were publicly appreciated by PPG Industries, Inc. (PPG).


As for special TiO2 products, Henan Billions doubled its growth rate in sales of denitrating and denitrificating TiO2 in 2015, and has begun to prepare its new battery grade TiO2 for the market.

 



2. Low costs bring profits

 

Henan Billions has a robust titanium industry chain ranging from raw materials such as ilmenite, high titanium slag and sulfuric acid, to TiO2, processed rich grade titanium material (titanium slug or artificial rutile with TiO2 content no less than 75%) and titanium gypsum etc. The all-inclusive industry chain enables Henan Billions to assert substantial control over production costs.


Henan Billions has strengthened the regulation of purchasing, production, sales and logistics etc., and reduced production costs before tax from USD1,545.06/t (RMB10,102.40/t) to USD1,444.40/t (RMB9,444.23/t). Released financial reports show that Henan Billions’ gross profit margin in 2015 was 18.51%, almost the same as that of the previous year, only up by 0.5 percentage points year on year, but its net profit margin rose to 4.52%, up by 1.38 percentage points year on year under the general condition of falling prices in China’s TiO2 industry.


3. Differentiated marketing strategies open sales channels

 

Henan Billions' total TiO2 sales volume in 2015 was 228,600 tonnes, up by 25.85% year on year. Of that, domestic sales accounted for 131,700 tonnes, up by 41.35% year on year, and sales for export totaled 96,900 tonnes, up by 9.53% year on year, according to the financial report.


In domestic sales, Henan Billions, based on the market distribution and demands from downstream industries, has allocated distribution personnel to take care of market differentiation, actively promoted itself at large events related to TiO2 downstream applications, such as China Coat Exhibition in 2015, quickly improved the brand value of the company and realized a big increase in revenue by acquiring Sichuan Lomon Titanium Co., Ltd., the domestic leading enterprise in the industry.


In overseas sales, Henan Billions started using innovative marketing methods such as consignment so as to expand its export business in 2015, and improved its branches in Europe and America and got the operation on track in 2015. 



About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailingecontact@cnchemicals.com or calling +86-20-37616606.


Tag: Henan Billions, TiO2



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