TIDMGTS
RNS Number : 8324T
GTS Chemical Holdings PLC
23 July 2015
23 July 2015
GTS Chemical Holdings plc
("GTS" or the "Company" or the "Group")
Trading Update
Group Revenue up 34.5%; Maiden Dividend being paid 31 July
GTS Chemical Holdings plc, the specialty chemicals producer and
China's largest producer of ammonium sulfite, reports to the market
today following continued strong growth during the first half of
2015.
Highlights:
-- Unaudited Group revenue up 34.5% to RMB 415.4 million (H1 2014: RMB 309.0 million)
-- Specialty chemicals revenue up 30.8% to RMB 280.1 million
-- Lubricant oils revenue up 60.7% to RMB 101.0 million
-- Construction of new, higher capacity specialty chemicals production line remains on track
-- Construction of new lubricant oils line progressing which
will increase capacity from 10,000 tonnes per year to 40,000 tonnes
per year (single shift basis)
-- Maiden full year dividend to be paid 31 July - CEO and major
shareholder, Cheng Liu, reinvesting dividend cash received into the
business through a 10 year loan
Segmental Sales Analysis
6 months 6 months Increase
to 30 June to 30 June
2015 2014
Sales (RMB millions)
Specialty chemicals 280.1 214.2 +30.8%
Lubricant oils 101.0 62.8 +60.7%
Recarburizer 34.3 32.0 +7.5%
Total 415.4 309.0 +34.5%
Specialty Chemicals
GTS' largest division has continued to perform strongly in the
first half, with growth in revenues of 30.8% against increasingly
tough comparatives. Sales continue to grow across the division's
spectrum of end users.
Lubricant Oils
Sales in the lubricant oils division have continued their strong
growth during the period. Further additions to the distribution
network and marketing activities have helped to further drive this
division and the Group anticipates that lubricant oil sales will
continue to progress well. Growth has been spread across each of
the Group's principal brands Ogistar, Changyun and Qiaoke.
Recarburizer
Modest growth has continued in this division. While the
Directors do not anticipate that growth in this division will be as
strong as for the Group's principal Specialty Chemical and
Lubricant Oils divisions, the Recarburizer division generates good
margins and a positive contribution to Group profits.
Investment
Construction of the Group's new specialty chemicals production
line on its existing site continues to progress well. The new line
will enable the Group to produce higher quality specialty chemicals
and to control the chemical reactions even more closely. The line
remains on track to be commissioned in Q3 2015, upon which the
Group's production capacity of liquid ammonium sulfite and liquid
ammonium bisulfite will be increased from 300,000 tonnes per year
to 480,000 tonnes per year, based on an 8 hour shift six days a
week.
The construction of a new lubricant oils production unit on the
land acquired in December 2014 also continues to progress well and
is expected to be completed by the end of 2015.
Dividend
The Company's maiden dividend for the full year ended 31
December 2014 is due to be paid on 31 July 2015. As noted in the
Group's annual report, the Group's CEO and major shareholder, Cheng
Liu, has decided to reinvest his portion of the dividend (amounting
to RMB12.7m net of tax) back into the Chinese operating subsidiary
and has entered into an agreement for a 10 year loan at 3% per
annum with interest being payable at the end of the term. Mr Liu's
decision is welcomed by the board as it allows the Company to
invest and expand its operations at a faster rate than otherwise,
and underlines his commitment to the business and its success for
all shareholders.
The Company remains committed to paying dividends in the future,
which will reflect the Company's profitability taking into account
its investment needs.
Mr. Cheng Liu, Chief Executive Officer of GTS Chemical Holdings
plc, said:
"I am delighted that the Group continues to build upon its
strong start to the year. GTS' main business divisions continue to
perform in line with expectations with the Group's outlook for the
full year remaining unchanged.
"I would like to thank our employees and shareholders for their
continued support"
Enquiries:
GTS Chemical Holdings plc
Mr Roy Su, CFO Tel: +86 159 5935 8899
www.gtschemical.com
SP Angel Corporate Finance Tel: +44 (0) 20 3470 0470
LLP
Nominated Adviser and Broker
David Facey / Stuart Gledhill
Yellow Jersey PR Limited Tel: +44 (0) 7768 537
739
Dominic Barretto / Alistair
de Kare-Silver
About GTS Chemical Holdings plc
GTS is the largest Chinese producer of ammonium sulfite, a
specialty chemical used in the paper, chemical engineering, food
and pharmaceutical industries. GTS is also the second largest
producer of ammonium bisulfite, a preservative and reducing agent
used in the petroleum drilling, water treatment and chemical
engineering industries. The manufacturing of these two specialty
chemicals comprises the Group's core business segment, Specialty
Chemicals. This division manufactures its high quality products
mainly from recycled waste materials. Additionally, GTS has a
rapidly growing lubricant oil division, which services the
automotive and industrial markets. Trading in recarburizer is its
third division, which accounts for less than 10% of Group
revenue.
The Group is located in Shandong Province, one of the largest
provinces in China, ranked by GDP, and an area rich in downstream
industries. GTS' location also means it is close to several
chemical plants and paper factories, which gives it a distinct
advantage over its competitors.
The Company is exposed to structural growth in the paper
industry and chemicals sector, and market research estimates that
from 2014 to 2020, China's demand for ammonium sulfite, led by the
paper industry, is set to grow at an annual compound growth rate of
12%. The Company's two main divisions continue to benefit from
government backed environmental changes that are currently taking
place in China. GTS' biggest product, ammonium sulfite, is in
increasing demand as the production of paper from straw continues
to grow. The Company believes that the increase in production of
paper from straw will continue to exceed the overall increase in
demand for paper in China as smaller, less environmentally
friendly, producers leave the market.
The Group has a history of strong profit growth and consistently
high operating margins.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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