Shui On Construction and Materials Ltd plans to phase out cement production, possibly by selling its stake in an underperformed China joint venture to partner Lafarge, as it shifts focus to real estate, its chief executive said.
Established in 2005, the joint venture, Lafarge Shui On Cement Ltd, posted an 80 per cent fall in net profit for 2010 despite a strong recovery in China’s cement industry that fuelled earnings at rivals such as Anhui Conch Cement Co Ltd .
"We are extremely disappointed by the performance of the joint venture," Shui On chief executive, Philip Wong, told Reuters. "We will gradually phase out the cement business but its performance was bad and can’t be sold for good price," he said. "Selling back to Lafarge is an option."
However, no talks had been held on the possible sale and there was no timetable for any, Wong said, adding that Shui On’s management was exploring different channels to help improve operations at the joint venture.
Shui On has a 45 per cent stake in the joint venture. Lafarge owns 55 per cent. Lafarge Shui On is focused on southwestern China, but its ranking in the region fell below tenth place from fifth.