Taiwan Cement Corp said its operations in mainland China are expected to double their pretax profit to CNY200m in 2008 compared with a profit of CNY100m seen for this year and a loss in 2006.
However, the company did not reveal the extent of the losses made by their mainland-based units last year.
China operations have already managed profits of around CNY40-50m in the first half to June, while capacity expansion and the prospects of a cement price upswing will serve as a growth catalyst for its mainland units, Taiwan Cement senior vice president Edward Huang said.
"Our China operations launched products in the mainland in July of last year and incurred a loss in 2006 but they should be able to make nearly CNY100m of profits this year," he said.
Its mainland China units are mainly owned by Hong Kong-listed TCC International Holdings Ltd, which is about 73 per cent owned by Taiwan Cement.
Its mainland plants have an annual capacity of 8Mt but this is set to be raised to a combined 24Mt by the end of 2008.
"Our China operations’ annual shipment is projected to reach 8Mt this year before surging to 18Mt next year," Huang said.
He said an annual capacity of 24 mln tons in China will require a total investment of US$900m.
Besides capacity expansion, cement prices in mainland have been moving upwards due to its sizeable market and a healthy industry environment.
The Chinese authorities have also been encouraging mergers and acquisitions in the industry as well as phasing out old plants that produce low-quality cement.
Additionally, Taiwan Cement plans to boost its capacity in the mainland by an additional 20Mt between 2009 and 2012.
For its Taiwan operations, annual capacity stands at 10.60Mt and the company has no plans to increase it in its mature home market, in which it has a 50 per cent market share.
Its plants in Taiwan are seen shipping a full-capacity 10.6Mt of products this year at home and abroad.
Separately, Taiwan Cement’s Huang said its unit TCC International Holdings Ltd is still in the process of acquiring Chia Hsin Cement Corp’s Hong Kong-listed unit Chia Hsin Cement Greater China Holding Corp.
TCC International is offering to acquire Chia Hsin Cement Greater China shares through a voluntary general offer, with one share in TCC International to be exchanged for 2.2 shares in Chia Hsin Cement Greater China.
"The deal is anticipated to be completed early next month," he said.
He said Chia Hsin Cement Greater China will be delisted if TCC International can manage to acquire 90 per cent or more in the former.