Keyuan Petrochemicals Inc. announces third quarter 2012 financial results
Wednesday, Nov 21, 2012

NINGBO, China, Nov. 20, 2012 /PRNewswire-FirstCall/ -- Keyuan Petrochemicals Inc. (OTCQB: KEYP), ("Keyuan" or "the Company"), an independent manufacturer and supplier of various petrochemical products in China, today announced the Company's financial results for the third quarter ended September 30, 2012.

"We are pleased that our first nine months 2012 revenue benefited from solid customer demands and the improvement of production efficiency," commented Mr. Chunfeng Tao, Chairman and Chief Executive Officer of Keyuan Petrochemicals Inc. "Although our margins were negatively impacted by extreme fluctuations in international oil prices and the industry environment, I believe Keyuan's core earnings potential will continue to improve as a result of our engagement with research institutes, our initiatives on major projects, and our SBS facility ramping into commercial production."

Sales for the three months ended September 30, 2012 were approximately $164.3 million compared to sales of $164.7 million for the three months ended September 30, 2011, a decrease of $0.4 million, or 0.2%. The decrease was due to the decrease of sales volume as a result of market downturn coupled with production lost of 30,000 metric tons (MT) caused by a suspension of production This suspension was due to a 15-day facilities shutdown for routine inspection and maintenance. During the three months ended September 30, 2012, we sold 155,249 MT of petrochemical products at an average price of $1,059 per MT, compared to sales of 162,552 MT at an average price of $1,013 per MT in the three months ended September 30, 2011. This represents an increase of approximately 4.5% in the average sales price and a decrease of approximately 4.5% in overall products sold.

Sales for the nine months ended September 30, 2012 were approximately $532.1 million compared to sales of $462.3 million for the nine months ended September 30, 2011, an increase of $69.8 million, or 15.1%. The increase in our sales was due to the increase of sales volume coupled with the higher average sales price of our products. During the nine months ended September 30, 2012, we sold 482,210 MT of petrochemical products at an average price of $1,103 per MT, as compared to sales of 447,706 MT at an average price of $1,033 per MT in the nine months ended September 30, 2011. This represents an increase of approximately 6.8% in the average sales price and an increase of approximately 7.7% in overall petrochemical products sold.

Overall cost of sales was approximately $160.5 million for the three months ended September 30, 2012, or 97.7% of sales, as compared to cost of sales of approximately $168.0 million, or 102% of sales for the three months ended September 30, 2011. For the three months ended September 30, 2012, our average cost of finished product was $1,034 per MT, the same as three months ended September 30, 2011.

Our overall cost of sales was approximately $512.3 million for the nine months ended September 30, 2012, or 96.3% of sales, as compared to cost of sales of approximately $451.2 million, or 97.6% of sales for the nine months ended September 30, 2011.  For the nine months ended September 30, 2012, our average cost of finished product was $1,062 per MT, as compared to an average cost of $1,008 per MT for the nine months ended September 30, 2011, an increase of 5.4%. The increase was mainly caused by the increase in raw material prices. We use fuel oil as raw material for production, which is a product of heavy crude oil. For crude oil, the average Brent oil price for the nine months ended September, 2012 was $110 per barrel, as compared to the price of $100 during the same period of 2011, an increase of 10%.

Gross profit for the three months ended September 30, 2012 was approximately $3.9 million as compared to gross loss of $3.4 million for the comparable period in 2011. Our gross margin increased from negative 2.1% for the three months ended September 30, 2011 to positive 2.4% for the three months ended September 30, 2012. Even though both periods are negatively impacted by the suspension of production, the average price in 2012 is a little higher compared to the same period in 2011, while the average cost was similar.

Source: Keyuan Petrochemicals, Inc.

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