West China Cement first-half revenue rises despite flat volumes

West China Cement reported higher revenue and gross profit margins for the six months to the end of June 2014, boosted by higher average selling prices (ASP) in its core markets in Southern Shaanxi province as overall sales volumes remained flat.

Revenue reached CNY1,997.7m an increase of 1.5 per cent from a year earlier. The gross profit margin increased to 19.3 per cent from 17.6 per cent for the same period last year. Profit attributable to owners for the six months ended 30 June 2014 dropped 4.8 per cent YoY to CNY160m.

Cement sales volume fell 2.2 per cent to about 7.98Mt during this period. Including clinker sales, total volume amounted to about 8.36Mt, essentially unchanged from the 8.38Mt sold in the corresponding period of 2013.

ASP recovery
Average selling prices(ASP) for cement during the first six months of 2014 were CNY239/t as compared with CNY233/t in the corresponding period in 2013. ASP recovery was led by plants in its southern Shaanxi core markets of Shangluo, Ankang and Hanzhong Districts, which account for just under half of the Group’s capacity in Shaanxi Province where infrastructure projects have been strong and supply tight. Conversely, plants in the Weinan and Xi’an Districts in the Central Shaanxi region have faced further competitive pricing by producers. This resulted in weaker ASPs and lower margins for the group’s plants in Central Shaanxi.

New capacity nearing completion
The group's cement capacity remained at 23.7Mt with no new builds or acquisitions completed during the period under review. It currently has two plants under construction and close to completion: the 1.5Mta Xinjian Yili plant in Northwest Xinjiang province, and the 1.8Mta Guiyang Huaxi plant in Guizhou province. "Kiln ignition and test production have commenced at both of these plants in July 2014 and full commissioning will commence towards the end of 2014, taking the group's capacity to 27Mt by year end," the company said in a statement.