Specialty rubber chemicals producer China Sunsine Chemical Holdings has reported a 69% drop in earnings for 1H20 ended June to RMB82.4 million ($16.3 million) compared to the RMB265.9 million posted a year ago.

This translates to earnings per share (EPS) of 8.46 RMB cents for the half-year period, compared to the 27.09 RMB cents in 1H19.

Group revenue for 1H20 fell 26% y-o-y to RMB1.0 billion due to the decrease in overall average selling price (ASP) and sales volume.

ASP fell 21% to RMB 13,560 per tonne in 1H20 as compared to RMB17,107 per tonne in 1H19 due to the lower raw material prices and the weaker demand for the company’s products. The weaker demand for the latter was primarily due to the lower production utilisation rate in the tire manufacturing industry on the back of the Covid-19 pandemic.

Sales volume for the first half of the year also declined 7% to 76,320 tonnes from 82,078 tonnes a year ago.

China Sunsine says its capacity utilization rate was at around 80% which was a relatively high level in the industry.

Gross profit fell 50% y-o-y to RMB241.9 million in 1H20. Gross profit margin decreased 11.3 percentage points to 23.2% for the half-year period.

As at June 30, cash and cash equivalents stood at RMB1.3 billion.

“Although the Group’s productions were affected by the unexpected COVID-19 pandemic, we had actively dealt with all the difficulties, and resumed our production as soon as possible. The Group also committed to social responsibility by not implementing job and wage cuts across our businesses,” says executive chairman Xu Cheng Qiu.

“The international situation remains volatile and economic recovery is fraught with difficulties. The COVID-19 pandemic outside China is still very severe; the relationship between US and China is getting more toxic, which causes greater uncertainties. Raw material prices are still hovering at low levels, and as such, the Group’s ASP is still under pressure. In addition, some players in our industry may have increased their production capacities which will result in greater competition in our industry,” he adds.

Shares in China Sunsine closed 0.5 cents lower, or 1.6% down, at 31 cents on Aug 12.