China’s Anhui Conch Cement 2007 net profit up 64.23 on strong sales

China’s Anhui Conch Cement 2007 net profit up 64.23 on strong sales
Published: 28 March 2008

Anhui Conch Cement Co Ltd said 2007 net profit (under Chinese accounting standards) rose 64.23 per cent to CNY2.49bn, driven by strong sales and higher selling prices. In its annual report filed with the Shanghai Stock Exchange, the company said it produced 64.1Mt of cement and 69.87Mt of clinker last year, up 12.59 per cent and 15.76 per cent respectively. At the end of 2007, the company’s cement production capacity was 69Mt, with clinker capacity at 69Mt. It sold 86.52Mt of cement and clinker in 2007, up 14.57 per cent, with selling prices rising 5.97 per cent. Operating revenue in 2007 rose 16.65 per cent to CNY18.78bn, it said. Anhui Conch said its strategy to explore the southern China market has paid off, with sales from Guangdong and Guangxi provinces surging 59.64 per cent to CNY3.63bn.  
Sales from its core market - eastern China, including Shanghai and Jiangsu, Zhejiang, Fujian provinces - rose 11.31 per cent to CNY7.325bn. However, the company said the export environment was unfavorable in 2007 due to reductions in the export tax rebate, the yuan’s appreciation and rising shipping costs.

Exports of cement in 2007 were flat, with export sales down 11.76 per cent at CNY2.92bn, the company said. Earnings per share stood at CNY1.70, up from CNY1.19 a year earlier.

Under international accounting standards, 2007 net profit was CNY2.48bn compared to CNY1.54bn in 2006.

Looking ahead, the company projected China’s fixed asset investment will be driven by construction in new rural areas and some large scale key construction projects, such as high speed railways, highways, airports and port and nuclear power plants. Sales volume is expected to exceed 100Mt in 2008 with growth in revenue being maintained. The reduction in enterprise income tax to 25 per cent will also be beneficial to profits, it noted. However, rising prices of oil and coal, as well as the strong yuan, will have certain adverse effects on cost controls and international operations, it said.

In 2008, the company will start building eight production lines with daily capacity of 5,000t of clinker each, a production line with daily capacity of 2,500t of clinker and 20 cement mill systems. Anhui Conch set capital expenditure target for 2008 of about CNY7bn, up from CNY5.817bn in 2007, and part of the expenditure will be funded by the proceeds from a new-share issue.

In late January, China Securities Regulatory Commission approved the company’s plan to sell up to 200m additional A shares this year to fund projects worth CNY12.04bn.