China’s largest cement maker Anhui Conch Cement Co Ltd said its third quarter net profit fell 9.4 per cent year-on-year to 119.2 mln yuan, with market demand weakened by the government’s macroeconomic controls. Earnings per share stood at 0.09 yuan in the third quarter, down from 0.105 yuan a year earlier. Core revenue rose 30 per cent year-on-year to 2.68bn yuan.
Guo Wensan, chairman of Conch Cement, told reporters that the company has strong prospects despite the government’s tightening controls over the cement sector. Guo said the government hopes to promote healthier and sustainable development in the sector by implementing macroeconomic controls, which would allow major players to survive while culling less competitive companies.
"As China’s largest cement producer, we are encouraged by government measures to develop and expand capacity," he said. "The most difficult period for us is always the first quarter when sales are sluggish. And now it’s over and we’ll gradually recover," Guo said, adding that the company will shift to lower-cost production methods.
Conch has been granted 650m yuan in loans by the International Finance Corp (IFC), the World Bank’s investment arm, to improve its financial structure and upgrade production facilities. Guo said part of the loans will be used to fund a power generation facility using ambient heat from the company’s cement production.
"The waste-heat power generation facility will be in full operation in 2007, which will bring us a net annual profit of 500 mln yuan upon completion," Guo said, adding that the facility will also help Conch lower production costs, as cement production is a high-energy consuming industry.
"Conch has never suffered losses and is never short of funds," Guo said. The company sold a total of 38.45Mt of cement products in the first three quarters, up 56.17 per cent from the previous year.