July 22 -- Shanghai Huafeng Ultra Filament Materials (300180), a producer of base fabric and suede leather, posted a 28.15 percent year-on-year drop in first half 2011 net profit to 33.45 million yuan, with earnings per share of 0.23 yuan, down 41.03 percent year-on-year, reports National Business Daily, citing a company filing.

Sales revenue rose 15.16 percent year-on-year to 241.08 million yuan.

The company attributed the decrease in net profit to higher raw material prices and to reduced government subsidies.

The high raw material prices caused Huafeng Ultra Filament’s total operating cost to increase 23.06 percent, higher than the growth of its sales revenue.

The gross margin of the company’s three major products fell 6.22 percent in the first six months.

The company received government subsidies of 124,000 yuan during the current reporting period. During the same period last year, government subsidies totaled 6.69 million yuan.

The company thus recorded a 95.56 percent fall in non-business revenue this year.

Huafeng Ultra Filament Materials had in March invested excess funds raised from its initial public offering to upgrade the technology of a polyurethane microfiber synthetic leather production line.

Funds were also invested in a production line to produce six million square meters of island microfiber synthetic leather per year.