Anhui Conch Cement, China’s biggest producer of the material, has been hit by a 95 per cent plunge in first-quarter profit amid falling prices in the sector and rising coal prices, and warned that earnings will fall by more than 50 per cent in the first half.
Conch said first-quarter net profit fell to CNY21.7m (HK$20.45m) from CNY443.2m a year earlier, based on mainland accounting standards.
Conch said China’s implementation of “proactive fiscal policies”’ and bad weather resulted in low demand for cement.
Despite sales volumes rising by 51per cent to 10.21Mt, turnover remained almost the same at CNY18.95bn on rising costs. The gross profit margin narrowed to 17 per cent from 21 per cent in the fourth quarter last year.
Conch expects cement prices to decline “acutely” in the coming months as Beijing cools the construction sector and says first-half earnings will fall by more than 50 per cent.