West China Cement sees improved operating environment

West China Cement Ltd and its subsidiaries reported on an improving operating environment in the first half of 2017 with sales volumes in the Shaanxi province remaining stable while volumes in the Xinjiang and Guizhou provinces registering slight increases.

Total group sales volumes of cement and clinker were 8.76Mt, up from the 8.39Mt recorded in 1H16.
group’s capacity as at 30 June 2017 has reached 29.2Mt of cement.

The group said it has maintained a strong market position in its southern Shaanxi core markets, where high levels of market share coupled with good infrastructure demand have resulted in continued average selling prices (ASPs) premiums and more stable margins.

"ASPs in central Shaanxi have significantly improved even under the continuing low demand scenario through the continuation of occasional voluntary production halts during low season periods and improved market discipline with lower supply among all producers since the fourth quarter of 2016," it said.

Moreover, the group has continued to implement efficiency gains and cost-cutting measures and has been able to maintain a stable cost in the first half of 2017 despite the trend of falling costs since 2015. Taken together, these have significantly improved the group’s margins in the first half of 2017.

EBITDA of CNY761.6m (US$114.2m) for the first half of 2017, which is much higher than the CNY449.6m recorded in the first half of 2016. Moreover, the group’s interim results at the net profit level have been significantly affected by the rise in the value of the CNY against the US$ in the first half of 2017. The group has recorded a foreign exchange gain of CNY60.6m mainly arising from the foreign exchange translation from US$ to CNY of the 2019 Senior Notes issued by the company in September 2014, compared to the significant foreign exchange loss of CNY55.7m in the first half of 2016.