The mainland’s largest cement producer Anhui Conch Cement expects a stable fourth quarter this year after a sharp rise in energy costs brought what analysts call a "disastrous" performance between July and September.
Company secretary Zhang Mingjing said yesterday that energy costs shot up a quarter-on-quarter 19 per cent in the three months to September as four production lines with lower efficiency and utilisation came on stream. Energy costs - coal and electricity - accounted for 59 per cent of the group’s total costs, which forced its net profit down 31.49 per cent to 131.63 million yuan in the third quarter from the same period last year, she said.
"We feel demand is picking up in eastern China after the government relaxed its grip on macroeconomic measures recently," Ms Zhang said. "And the decline in cement prices has halted."
Anhui Conch’s disappointing results announced on Monday shocked investors and analysts, with the stock tumbling 9.84 per cent to HK$8.70.
Brokerages China International Capital Corp (CICC) and Cazenove cut forecasts and downgraded their recommendations on the stock.
Meanwhile, China Resources Cement Holdings showed a contrast in fortune, with sales of cement growing in the first nine months of this year to 2.66Mt and sales of concrete to 800,000m3, according to vice-chairman and general manager Shi Shanbo.
The group aims to raise its production capacity by 32 per cent to 3.4Mm3 by the end of this year and has spent almost 20m yuan taking over a plant in Foshan, which could produce 500,000m3 annually.