Taiwan Cement ‘cautiously optimistic’

Taiwan Cement ‘cautiously optimistic’
Published: 03 April 2012

Taiwan Cement Corp (TCC), which is fast-expanding in the China cement market, expects demand to pick up gradually this year in its two main markets, after it reported a 20 per cent decline in 4Q12.

Speaking to the Tapei Times, chairman Leslie Koo, said:  “We are cautiously optimistic about the business outlook [this year] after a below-trend fourth quarter when the unfavorable macroenvironment softened demand and pushed down selling prices.”

Political uncertainty over the leadership reshuffle in China is likely to settle by the end of the first half, allowing public construction works to resume, he said, adding that the landscape elsewhere is also expected to become clearer in the second half.

In the fourth quarter of 2011, TCC reported a 22.2 per cent QoQ fall to TWD2bn (US$67.69m). For the full year, net profit rose 7.3 per cent to TWD8.62bn as the company expanded its capacity.

“China’s plan to increase social housing will offset the pain of continued efforts to curb property speculation,” spokesman Edward Huang, said.

Beijing’s moves to strengthen infrastructure facilities in rural areas should also help boost demand for cement, Huang said.

Overall capacity in China grew rapidly to 60Mt last year, from 40.4Mt in 2010, with plants in the southern provinces of Guangdong and Guangxi contributing 45.5 per cent, he said.

In Taiwan, the introduction of anti-dumping tariffs has benefited the company’s sales and lifted its gross margin to 9.8 per cent, the report showed.

In the export market, the company expects strong demand from emerging economies, given limited supply from main rival countries, such as China, Japan and Thailand, Koo said.

“We have signed [sales] contracts for this year, with selling prices increasing 20 percent from last year,” Koo said.