Taiwan Cement and Asia Cement’s Chinese profits fall

Taiwan Cement and Asia Cement’s Chinese profits fall
22 August 2012

Decreasing cement prices and shrinking infrastructural work in China has impacted the profits of Taiwan Cement Co (TCC) and Asia Cement, two Taiwan-based cement makers operating in China.

Taiwan Cement International Holdings Ltd, a subsidiary of TCC, posted 70.4 per cent YoY net profit decline to HKD269m (US$8.97m) in the first half, while Asia Cement (China) Holdings Co, an affiliate of Asia Cement, saw profits drop 81 per cent to CNY122m (US$19.154m).

A representative of TCC pointed out that, due to the merger last year and increasing production capacity, the firm saw sales up 19 per cent YoY to 18.4Mt in the first half, with the average sales price dropping 14 per cent YoY, lower than market average, and earning up 2.4 per cent YoY to CNY5.32bn (US$835.24m). In addition, the gross profit margin slipped from 27.6 per cent last year to 17.2 per cent this year, due to price declines.

Meanwhile, Asia Cement saw earnings in China fall 20 per cent YoY to CNY$3.072bn (US$482.3m) in the first half, mainly due to gradually decreasing average sales prices. The gross profit margin was down from 30 per cent last year to 16 per cent this year. Asia Cement is expected to see cement prices in China rebound, starting the third quarter, as rising infrastructural work and railway building is projected.

An institutional investor noted that, despite massive profit shrinkage in the first half, the two cement makers still made profits, and expect improving revenues and profits in the second half due to the peak season and growing supplies of downstream inventories.

Published under Cement News