New | Citic Resources says operating profit strong, but impairment seen from Qingdao port
Citic Resources reported a stronger operating profit for last year due to higher oil output, although it had to book HK$320 million of inventory impairment provision due to a warehouse receipts financing scandal at Qingdao port in mainland China.
The oil and metals unit of state-backed finance-to-property conglomerate Citic on Sunday said its profit before interest, finance costs and asset impairment losses was HK$1.26 billion last year, up from HK$492.4 million in 2013.
The improvement was boosted by a HK$412 million financial asset fair value accounting gain on its investment in Australia-based Alumina, a bauxite miner, alumina refiner and aluminium smelter. The gain arose from its accounting reclassification as a financial asset in Citic Resources’ books.
It booked a net profit of HK$223.8 million for last year, compared to a loss of HK$1.47 billion in 2013.
Operating profit grew 177 per cent year-on-year to HK$665.7 million last year from HK$240.2 million in 2013, due mainly to a crude oil production profit of HK$503.2 million, versus a loss of HK$145.7 million in 2013.
The marked improvement was thanks to a 19 per cent rise in its average daily total oil output to 48,100 barrels although it was partially offset by oil prices dropping to near a 6-year low.
Its Karazhanbas oilfield in Kazakhstan posted an output growth of 4 per cent to 39,000 barrels per day, while its Yudong oilfield in northern China contributed 6,300 barrels last year. A cut in Yudong’s reserves estimate resulted in the booking of a HK$1.69 billion asset impairment loss in 2013.
Lower commodities prices and weak import demand meant Citic Resources’ revenues from this operation – its biggest revenue source - fell 61 per cent last year to HK$14.4 billion, while operating profit dropped 51.4 per cent to HK$193 million.
Operating profit from aluminium smelting jumped 55.2 per cent to HK$144.6 million last year, while operating losses from coal mining widened to HK$175 million from HK$104.7 million due to weak coal prices.
Citic Resources had to book the inventories impairment provision for its aluminium holding since it failed to get an asset protection order from the Qingdao Marine Court for 123,446 tonnes of the metal it kept at Qingdao port, after police launched an investigation into alleged fraudulent multiple use of warehouse receipts for some metal stored at the port.
