LONDON (Thomson Financial) - China-based petrochemicals company, Haike Chemical Group Ltd., said the latest increase in the guideline selling prices by Peoples Republic of China National Development and Reform Commission for gasoline and diesel by 1,000 yuan per ton to 6,980 yuan and 6,520 yuan, effective June 20 2008, will enhance the company's ability to generate further revenue and profits going forward, helping to offset the reduction in petrochemical margins and profit.

Company executive chairman Yang Xiaohong, said 'We strongly welcome this latest announcement by the NDRC and believe it will have a positive impact, improving margins and profit for both the petrochemical business and the company as a whole.'

The company earlier on Friday reported a dip in first-quarter pretax profit as the ongoing rise in oil prices continued to put pressure on the company, however total revenues nearly doubled for the period.

The company said the incremental selling prices of its petrochemical products compared with the lower material costs in the petrochemical sector weighed on the company's gross margin profit in the period with sales and distribution expenses up 117 percent to $1.3 million.

For the quarter to end-March, the company posted pretax profit of $1.4 million from $3.9 million in the same quarter last year with total revenues up to $141.7 million from $73.9 million.

It said market conditions for the petrochemical sector remain tough, adding its focus going forward will be on the development of its speciality chemical facilities and improving the flexibility and scale of its petrochemical activities.

It added it is confident of achieving further growth in both revenues and gross profits for the remainder of 2008 despite the high oil price.

Source：TFN.newsdesk@thomson.com