Red Sun’s 2018 net profit down 10.81%, however industry chain production being realized step by step
Date:04-16-2019
On the evening of 8th April,
Red Sun reported its 2018 annual report. According to the report, the company saw business income of Yuan5.908 billion, which is a 16.49% increase year on year and net profit attributable to shareholders of Yuan637 million, which is a 10.81% decrease year on year.
Pesticide products growing steadily
In 2018, while transforming from conventional pesticides to biochemical pesticides, the company continued its effort in industry chain development for the purpose of expansion of its product line. During the reporting period, Red Sun’s annual 10,000-ton biochemical diquat, annual 10,000-ton biochemical VB3 and annual 25,000-ton biochemical pyridine base projects were brought on stream. Of these, the biochemical diquat brings the company an obvious cost advantage, the biochemical VB3 provides a strong influence for the company in the VB3 market, and the biochemical pyridine base forms the dominant position of the company in the world biochemical pyridine base market.
During the reporting period, Red Sun’s incomes from biochemical businesses (pesticides including environment-friendly biochemical pesticide, biochemical animal nutrients and intermediates) reached Yuan5.883 billion, up 20.14% year on year. However, due to the rising material costs and production expenses, the gross profit rate decreased 3.07% over the previous year. In addition, the company’s other business incomes were Yuan24.9941 million, an 85.71% decline year on year.
Red Sun says that China’s stringent environmental compliance regulations are actually a benefit to the company. Also, due to the company’s gradual increase of production of biochemical diquat, biochemical VB3 and biochemical pyridine base, the company could maintain the sales of paraquat, diquat and Dursban, which were on a high growth rate in the previous year. This contributed greatly to reaching the growth goals and the realization of main indicators in the report period.
2018 business commitment achieved by Chongqing Zonbon
During the reporting period, Red Sun completed acquisition of 100% equity of Chongqing Zonbon, which was consolidated in the financial statement of the company. According to an audit report, Chongqing Zonbon saw had profits after deducting non-recurring profits and losses of Yuan68.2049 million, which exceeded the committed amount of Yuan64.4898 million, thus having reached the 2018 business target.
Red Sun officials said the related party acquisition enables the company to consolidate important resources, including the intermediate 2,3-Dichloropyridine used for the fifth generation green pesticides, which could strengthen the synergistic effect among the company’s superior industry chains.
Besides the acquisitions and mergers, in the reporting period the Life Health Industrial Park Investment Frame Agreement was executed in the company’s seventh largest production base - Chongqing Changshou Production Base, where a new glufosinate facility was being set up. In the meantime, Red Sun’s wholly owned subsidiary Chongqing Huage Biochemical, using its own funds, launched the wholly owned subsidiary Chongqing World Village Biochemical in Changshou District of Chongqing. With the establishment of Chongqing World Village Biochemical and the establishment of associated projects at later dates, Red Sun’s business chain deployment will become more complete, which is expected to constantly enhance the competitiveness of the company’s main businesses.
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