Changjiang Fertilizer Holdings, the coal-based producer of nitrogenous fertiliser in Hunan Province, China, posted a net profit of RMB 78.96 million ($16.3 million) for the year ended 31 December 2009 (FY09).

The group’s revenue grew 10.5% year-on-year (y-o-y) to RMB309.2 million in FY09 due to the higher sales volume.

Gross profit increased 2.3% y-o-y to RMB92.9 million but gross profit margin decreased marginally by 2.5 percentage points to 30% in FY09. Gross profit margin was affected by higher electricity consumption at higher prices and lower gross profit margins gained from subcontracted orders. The group subcontracted a portion of their orders to a subcontractor in Hunan, in October 2009, to meet higher demand.

The group posted a marginal 1.2% decrease in net profit to RMB78.96 million in FY09. The decrease was due mainly to a one-off expense relating to the restructuring and placement exercise and remuneration due to executive directors according to the service agreements.

The group also announced today that it has entered into a Memorandum of Understanding (MOU) on the acquisition of land and building, plant & equipment in Hunan which boasts a capacity of 40,000 tonnes per annum of anhydrous ammonia and the acquisition is funded partially by proceeds from the compliance placement and internally generated funds. The acquisition consideration amount is about RMB 60 million subject to due diligence and final valuation. The Group also intends to upgrade the Acquisition Target’s capacity to 60,000 tons per annum after the completion of the acquisition.

Changjiang Fertilizer says the acquisition will help the group to enhance its market share of nitrogenous fertiliser in Hunan.