China’s Anhui Conch sees 1Q profit steady

China’s Anhui Conch sees 1Q profit steady
Published: 07 April 2009

Anhui Conch Cement said on Monday it aims to sell 20 per cent more cement in 2009 and will focus on markets in central and western China as Beijing increases infrastructure investment.

The cement maker is focusing on projects in western China, such as in Sichuan and Chongqing, in a bid to meet cement demand from redevelopment after an earthquake which killed thousands in May last year, executive director Guo Jingbin told reporters.

It will also continue to expand rural markets in central China and its capital expenditure for 2009 would increase by more than half to CNY8bn (US$1.17bn) from CNY5.1bn a year ago.

"About 50 percent of our capital expenditure (in 2009) will go to central and western China," Guo said, adding the company aims to expand the production capability in the areas. He said demand for cement is expected to expand six per cent as fixed asset investment grows 15-20 per cent.

China’s cement industry has been clouded by concerns over rising capacity and slower economic growth that could depress demand.

"Cement prices have bottomed out in the first quarter," Guo said. "We expect the price will continue to go up and will post quarter-on-quarter increase over the rest of year or into 2010."

Guo said the company sold 15 per cent more cement in volume terms in the first quarter when price remained soft, and profit for the first quarter is expected to remain steady. But the company may be able to save some CNY1.6bn of costs in 2009, thanks largely to lower coal prices.

Anhui Conch posted a 5 percent rise in 2008 profit to CNY2.6bn (US$380.4m) last week.

It also planned to issue up to CNY9.5bn worth of corporate bonds in China, raising capital to repay loans and improve its financial structure.