Hanfeng Evergreen, the Chinese fertilizer group which has attracted Agrium's interest, has reported a 42% surge in first quarter earnings despite government export duties wiped out foreign sales.

Hanfeng, which is listed in Toronto, reported earnings of Can$10.1m (US$8.63m) for the January-to-March period, on revenues up 36% at Can$75.8m.

Foreign sales, which typically account for 15% of group revenues, fell to zero thanks to export duties of between 150% and 185% of value imposed by the Chinese government last year.

However, the group, which raised production by 3.9% year on year to 133,000 tonnes, was able to sell all its increased output and more in the domestic market.

Sales by volume grew by 7.3% to 137,400 tonnes, albeit at lower prices and margins.

Hanfeng also noted a 23% rise in the renminbi against the Canadian dollar over the quarter, but declined to expand on the impact of currency movements on the results.

Debt review

The group added that it was reviewing its debt after being listed among companies eligible for favourable state loans.

"Hanfeng will explore new debt arrangements that can take advantage of the designation," the company said.

Hanfeng retained a net cash position at the end of the quarter despite a 69% rise in bank debt to $42.4m.

The company is 19.4% owned by Canadian fertilizer giant Agrium, which last month said it also planned to buy a 50% stake in a Hanfeng sulphur coated urea subsidiary.

Hanfeng shares closed down $0.20 at $7.45 in Toronto.