Renminbi rise helps Taiwan producers

Renminbi rise helps Taiwan producers
30 August 2006

As mainland China’s currency renminbi has appreciated to hit over eight dollars against one US dollar. Taiwan Cement Corporation (TCC) will be able to secure more profits in the second half than the first half.  In addition, Chia Hsin Cement Corporation, which saw sharp decline in profits last year in the wake of the tight credit policy implemented by the mainland authority, will boost exports to gain bigger profits this year. 
An institutional investor predicted either TCC and Chia Hsin will see profits from mainland operations rise two per cent year-on-year in the second half of this year. Nevertheless, Universal Cement Corporation, which relies on loans in denomination of renminbi, will see expanded losses in foreign exchange remittance in the second half of this year. 
It is expected that renminbi will continue trending upward by the end of this year as the mainland economy is sure to hit a double-digit annual growth in the second half. 
Huang Chien-chiang, senior vice president of TCC, said his company would see remarkable profits from foreign-exchange remittance in the wake of a three per cent appreciation of renminbi over the past several months. The company will also benefit from the value rises in assets established in the mainland. 
Under the pressure of mainland’s tight credit policy, Chia Hsin has instructed its two subsidiaries-Jingyang Cement and Union Cement to boost exports. The company targets to export 3Mt of cement from mainland this year, up 248 per cent year-on-year. 
Universal said it is integrating its operations in the mainland so that it would be able to launch an initial public offering in 2008. To that end, the company would continue to invest in the mainland in the next three year. Accordingly, the appreciation of renminbi would have little impact on its profits in the mainland.  Over the past few years Universal has seen shrink in production capacity in Taiwan. The company scored NT$3.48 billion (US$106.09 million) in sales last year, down 5.01% year-on-year. In terms of production goal, the company will see output slashed to 600,000t this year from 1.3Mt posted a decade ago. 
Published under Cement News