70% of Kazanorgsintez’s 2018 profit to be allocated for dividends

Tatarstan president visits Kazanorgsintez production site

Before the beginning of the annual meeting of Kazanorgsintez PJSC shareholders about the performance in 2018, Tatarstan President Rustam Minnikhanov visited the enterprise’s modernised and new facilities, which were put into operation last year. First of all, he looked over a carbon black concentrate unit. The complex was launched in late 2018 instead of the old one in the low-density polyethylene production and processing plant. Carbon black concentrate is used as a natural black dye for black types of polyethylene designed to make pipes and fittings in gas distribution networks, standpipes and fittings. 

_{The complex was launched in late 2018}

Director of the low-density polyethylene production and processing plant Rustem Muzafarov told that Kazanorgsintez’s need for carbon black concentrate is 17,000 tonnes a year. The launch of the new unit not only allows to meet the enterprise’s current needs but also augment the production of LD PR for pipes or in case of necessity to sell carbon black concentrate to external purchasers. The cost of the carbon black concentrate unit is 686m rubles.

_{Technip pyrolysis furnaces were the second site the president visited}

Technip pyrolysis furnaces, which were put into operation by the 60^th anniversary of Kazanorgsintez, were the second site the president visited. Four new furnaces substituted ten old ones. They are part of the E-200 complex in the ethylene plant. The total production capacity of the furnaces is 72 tonnes an hour. It should be noted that last year Kazanorgsintez PJSC allocated 12bn rubles to finance major overhaul facilities, substitute and upgrade equipment, which is 1,5 times more than in 2017.

Costs on feedstock, material and energy resources account for 72,6%

Director General of Kazanorgsintez Farid Minigulov delivered a speech about the performance in 2018 at the shareholders’ annual meeting. The enterprise’s successes are impressive: sales revenue exceeded 79bn rubles, which is by 9,7% more than in 2017, while net profit was 19,9bn rubles, which is by 31% more than in 2017. Prices in the polyethylene and polycarbonate market had a major influence on the higher revenue.

In 2018, Kazanorgsintez manufactured 989,000 tonnes of commodities. The indicator of the utilisation of production capacities is 94%. The total volume of polyethylene production is 716,000, which is by 1,5% lower than last year’s level. At the same time, over 512,000 tonnes of low-density polyethylene was made, which is by 4,500 tonnes more than last year’s level. 77,000 tonnes of polycarbonate was made, which is by 8,700 more than last year. The growth was possible because the factory didn’t close for repair.

_{77,000 tonnes of polycarbonate was made, which is by 8,700 more than last year}

A reduction in ethylene supplies by 15,000 tonnes compared to 2017 didn’t let the enterprise’ use polyethylene production capacities to the full. It wasn’t possible to cover the deficit even by increasing its own ethylene production.

The domestic market remains the main outlet for Kazanorgsintez PJSC’s products – 82% of revenue. Exports amount to 18%. In 2018, the enterprise’s products were supplied to 32 countries of the world. Companies from Kazakhstan, Ukraine, Belarus, China, Singapore, Lithuania, Serbia, Uzbekistan were the key purchasers. Supplies to South America began: Uruguay, Chile and Brazil.

Cost of sales in 2018 made up 54,6bn rubles, growth reached 5,3% compared to 2017. The enterprise associated the changes in growth in prices for feedstock, material and higher tariffs on energy resources. Feedstock, material and energy resources account for 72,6% of costs. Tax payments to all budget levels were 9,7bn rubles in 2018. 6,1bn rubles were sent to the consolidated budget of the Republic of Tatarstan.

Over 450m rubles invested in environmental protection

In his speech, Farid Minigulov paid attention to ecological issues, process safety and occupational safety and health. Kazanorgsintez traditionally carefully evaluated possible consequences when developing new projects, a negative environmental impact isn’t permitted. The total gross emission of harmful substances into the atmosphere, water consumption, the disposal of contaminating substances into water bodies, waste generation are strictly controlled. Last year, their volumes were considerably lower than established standards. Current environmental protection costs totalled over 450m rubles a year, which is by 2,3% higher than the 2017 level. Occupational safety and health costs reached 544,7m rubles, working conditions of 1,531 workers improved. Process safety costs were 2,5bn rubles, which is by 8,1% higher than last year’s indicator.

Kazanorgsintez goggles comply with Customs Union requirements

In 2018, the share of certified products accounted for 94,9% of the total volume of commodities. The company annually participated in 100 Best Products of Russia competition. Last year, low-density polyethylene became a laureate in Novelties of the Year. Polycarbonates received diplomas of the competition.

_{Polycarbonates received diplomas in 100 Best Products of Russia competition}

In 2018, goggles made by Kazanorgsintez PJSC successfully got through a procedure of declaration for conformity of the technical regulation of the Customs Union on the safety of means of individual protection. They are made of its own polycarbonate.

Polycarbonate production to rise to 100,000 tonnes in two years  

Kazanorgsintez continues renewing equipment to economise on feedstock and energy resources, refuse the environmental impact, increase production outputs and improve logistics. In 2018, among big completed projects apart from the construction of four pyrolysis furnaces in the ethylene plant and black masterbatch unit, an LPG tank loading and receiving rack was reconstructed, C reactor was modernised and equipped with a system of recuperation of waste gases in the low-density polyethylene production and processing plant, autoclave reactors in the high-density polyethylene plant were substituted.

_{This year Kazanorgsintez plans to modernise a part of the ethylene plant}

This year Kazanorgsintez plans to modernise a part of the ethylene plant to augment capacities when substituting ethane for propane as feedstock in the ethylene plant, renew cumene production and a unit designed to remove trace contaminants from phenol in the bisphenol A plant. It’s also planned to build a water conditioning block in the shop of treatment facilities and external mains with an additional reservoir. The project is linked with a scheduled rise in filtered water intake in Rainbow Residential Complex.

Farid Minigulov said that the enterprise was going to increase production capacities in the polycarbonate plant to 100,000 tonnes in the next two years and reach 620,000 tonnes of ethylene production in 2019. 

 ''The task is to produce a million tonnes of plastics a year''

In his speech in front of the Kazanorgsintez shareholders, Rustam Minnikhanov noted that the enterprise’s results were positive. ‘‘A record revenue, almost 80bn rubles, net profit is almost 20bn rubles, big investments – 12bn rubles were invested in development,’’ the Tatarstan president noted.

‘‘Both the federal and regional budgets are feeling good when you have such results. A huge job of the staff, a systematic work of the board of directors and the team of the executive directorate allow to perform the tasks the enterprise has,’’ Rustam Minnikhanov added.

At the press conference, the president also paid attention to a rise in Kazanorgsintez capitalisation, which reached 182bn rubles in 2018, mentioned four new pyrolysis furnaces.

 _{Rustam Minnikhanov noted the rise in revenue, net profit and investments in KOS projects}

‘‘With the same feedstock volumes, we made a much bigger number of goods. The task is to produce a million tonnes of plastics a year. It’s a complicated task, but we should accomplish it. Now 77,000 tonnes of polycarbonate is manufactured instead of the scheduled production of 60,000 tonnes. The task is to reach 100,000 tonnes of polycarbonate. This requires serious technological solutions,’’ the Tatarstan president claimed.

He said that during a visit to Kazanorgsintez he paid attention to the culture of production, the state of the entrance lobby, which looks like a display, cleanliness in the factory.

70% of the enterprise’s profit to be allocated for dividends

The dividend policy of the enterprise was also mentioned at the press conference. This year, Kazanorgsintez will allocate 70% of the profit.

‘‘Shareholders take part in a joint-stock company to get dividends. Last year, after the shareholders’ proposal, we made changes to the charter in order to allocate at least 70% of the profit for dividends. In accordance with the charter of current legislation, Kazanorgsintez obeys the law. The shareholders aren’t against, the board of directors supported. In the future we will meet the requirements of current legislation, the charter and proposals of the shareholders they can express through their representatives in the board of directors. The final decision is always up to the shareholders,’’ Chairman of Kazanorgsintez PJSC Board of Directors Ruslan Shigabutdinov said.

_{This year, Kazanorgsintez will allocate 70% of the profit for dividends}

So this year Kazanorgsintez will pay 13,9bn rubles of dividends. In 2018, a common share was 7,79 rubles, a preferred share was 0,25 rubles. The roster of shareholders to receive the dividends will be made up as of 6 May.

The mass media representatives were also interested in the deadline for the tender to build GTU-250 electricity generating unit. Farid Minigulov explained that several contractors want to take part in the project, the tender is expected to end in June. The enterprise plans to create an electricity generating unit by using 85% of borrowed and 15% of its own money.

‘‘The issue is serious, it’s also important for the economy of the Republic of Tatarstan. Kazanorgsintez will notify you about the outcome of the tender. It’s complicated work, but we can do it, the operation of the CHPP-3 demonstrated it,’’ Ruslan Shigabutdinov added.