LONDON (ShareCast) - Rising material costs and higher freight charges caused profits to tumble at China-based petrochemical firm HaiKe Chemical during the first quarter.
Pre-tax profit for the three months to 31 March 2008 fell to $1.41m from $4m a year earlier despite a 92% surge in revenue to $141.7m. Petrochemical revenue more than doubled to $116.8m.
Increased sales volume and a significant increase in material costs pushed cost of sales up 107% to $134.7m, while sales and distribution expenses grew 117% to $1.3m, blamed on increased freight charges and promotion costs.
Sales of speciality chemicals excluding biochemical rose 43% to $24.3m, but biochemical revenue slumped 25% to $600,000 due to the temporary restriction on the export of heparin-based products imposed by the Chinese government in February.
“Market conditions for the petrochemical sector remain tough but demand for our products continues to increase,” said the company.
“We are confident of achieving further growth in both revenues and gross profits for the remainder of 2008 despite the high oil price.”
