Listed biodiesel producer Chemrez Technologies Inc. on Wednesday reported a 22.5 percent fall in profits last year as soaring costs offset record-high sales.

In a statement, Chemrez said it recorded a net income of P372 million in 2008 against P481 million in the year ago, despite posting consolidated sales of P4.66 billion, an all-time high.

There was growth in almost all of the company's traditional product lines, except for resins and powder coatings.

Sales of biodiesel and other oleochemicals, which accounted for 51.9 percent of total sales, surged 65.9 percent while those of resins and powder coatings, fell 3 percent and 11.4 percent, respectively. Resins and other specialty products contributed 43.2 percent of total sales.

The weakness in the resin and powder coating segments reflects the business slowdown in the construction, appliance and packaging industries, which are target markets.

Also, Chemrez said the volatility in prices of raw materials resulted in lower profit margins as inventory costs surged and selling prices fell.

Chemrez said its cost of goods sold increased by 31.1 percent to P4.14 billion in 2008 compared to P3.16 billion in 2007.

Net profit margins, meanwhile, shrank from 12.7 percent in 2007 to 8 percent in 2008. Oleochemicals, mostly biodiesel, posted the biggest decline in margins from 22 percent to 10.3 percent.

Chemrez said this segment experienced increased competition, resulting in lower selling prices.

Currently, there are already 11 companies registered with the Department of Energy as biodiesel manufacturers, with a total production capacity of more than 300 million liters per year, more than double the projected requirements of the 2 percent mandatory biodiesel blend under the Biofuels Act of 2006.