Kazanorgsintez ramped up profits and revenues with lower production output

19 April 2019

Kazanorgsintez ramped up profits and revenues with lower production output

On April 19, 2019, the annual General Meeting of Shareholders of Kazanorgsintez PJSC was held following the results of performance in 2018. Farid Minigulov, General Director of Kazanorgsintez PJSC, delivered a report on the results of the company’s performance.

In 2018, Kazanorgsintez PJSC achieved a significant increase in financial performance. Last year, revenue from the sale of marketable products exceeded 79 billion Rubles (9.7 % higher than in 2017.) The price situation on the market of polyethylene and polycarbonates mainly contributed to this increase to happen. At the end of 2018, net profit amounted to 19.9 billion Rubles (31 % higher compared to 2017.)

For 2018, the commercial output produced by Kazanorgsintez PJSC was 989 kilo tons. The capability utilization index was 94 %. The total polyethylene production output amounted to 715.6 kilo tons (1.3 % lower than last year). At the same time, our company produced over 512 kilo tons of HDPE, which is higher than last year. As the production had suffered from ethylene supply reduced by 15 kilo tons versus 2017, the company failed to maximally use the available polyethylene production capacity. Increasing its own production of ethylene did not help cover the ethylene shortage.

Kazanorgsintez PJSC mainly targets the domestic market (82 % of revenue), while export share is 18 %. In 2018, the company's products were delivered to 32 countries. The major customers were companies from Kazakhstan, Ukraine, Belarus, China, Singapore, Lithuania, Serbia and Uzbekistan. The company started deliveries to South America: Uruguay, Chile and Brazil.

Tax payments to all levels of the budget amounted to 9.7 billion Rubles in 2018, including 6.1 billion Rubles transferred to the consolidated budget of the Republic of Tatarstan.

Kazanorgsintez PJSC traditionally pays great attention to the HSE-related issues.

The process of development of all new projects regards the possible consequences of their implementation are carefully evaluated in order to prevent a negative impact on the environment. The total gross emission of harmful substances to the atmosphere, water consumption, the discharge of pollutants into water bodies, the generation of waste is strictly controlled. In 2018, their volumes were significantly lower than the standards. The current cost of environmental protection over the year exceeded 450 million rubles (2.3 % higher than in 2017.)

The labor protection charges amounted to 544.7 million Rubles in 2018. Working environment was improved for 1,531 employees.

The costs associated with the actions to ensure industrial safety amounted to 2.5 billion Rubles (in excess of last year's figure by 8.1 %.)

Kazanorgsintez PJSC systematically upgrades the equipment in order to save raw materials and energy resources, reduce the impact on the environment, increase production and improve logistics. In 2018, 12 billion rubles were allocated to finance capital construction projects, as well as to replace and upgrade equipment (1.5 times more than last year.)

Among the large projects completed in 2018 are the construction of four cracking furnaces at the Ethylene Plant to replace 10 outdated ones, modernization of the LPG filling rack, fitting of Reactor C with a dedicated vent recovery system and construction of a black master batch system at the HDPE Plant, replacement of autoclave reactors at the LDPE Plant.

Some of the projects continue in 2019: expansion of ethylene production in order to increase capacity when replacing ethane feed with propane at the Ethylene Plant, revamp of the isopropyl benzene production and the phenol fine purification system to remove trace impurities at the Bisphenol A Plant, expansion of the Polycarbonate Plant, upgrading the system of packaging, palletizing and storing the commercial products, modification of basic warehouses for storing propylene and butylene-butadiene fraction, construction of a water treatment for the wastewater treatment and external network facility with an additional tank. The latter is related to an expected increase in the consumption of filtered water by the Salavat Kupere residential complex.

Several major projects are expected to start shortly. These include expansion of Reactor B system at the HDPE Plant with installation of a dedicated vent recovery, construction of an EVA autoclave plant (actually new autoclave-based EVA production in place of obsolete and physically outworn facility), construction of CCPP-250 combined cycle power plant.

The shareholders approved the annual report, the annual accounting (financial) statements of Kazanorgsintez PJSC for 2018, and also elected the Board of Directors of Kazanorgsintez PJSC with the same membership.

The shareholders meeting approved the distribution of net profit of Kazanorgsintez PJSC. The resolution provides for the accrual and payment of dividends on the shares of Kazanorgsintez PJSC in the amount recommended by the Board of Directors:

– for preferred shares: at the rate of 0.25 Rubles per share;

– for ordinary shares: at the rate of 7.792 Rubles per share.

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