Displaying items by tag: China Resources Cement
Li Fuli appointed chairman of China Resources Cement
16 December 2020China: China Resources Cement has appointed Li Fuli as the chairman of its board of directors and the chairman of its nomination committee. He suceeds Zhou Longshan and Ye Shukun respectively in the roles.
Li, aged 54 years, is currently the deputy general manager and chief accountant of China Resources Group. He joined the organisation in mid-2018. Prior to this he worked for China Minmetals Corporation, a Beijing-based metals and mineral trading company, from 1991 to 2018. He holds degrees in economics and business administration.
China: China Resources Cement’s nine-month profit for the period that ended on 30 September 2020 was US$954m, up by 28% from US$747m in the corresponding period of 2019. Reuters has reported that the company’s turnover was US$3.51bn, up by 1.7% from US$3.45bn.
China: China Resources Cement (CRC)’s first-half net profit increased by 11% year-on-year to US$541m in 2020 from US$481m in 2019. This was in spite of a 3% fall in revenues to US$2.18bn from US$2.25m. CRC said, “The gradual stabilisation of infrastructure construction and the real-estate market - as well as the steady progress of urbanisation and rural construction - will be conducive to the stable development of the cement industry."
CRC reports on first quarter of 2020
27 April 2020China: China Resources Cement (CRC)’s profit in the first three months of 2020 was US$144m, down by 25% year-on-year from US$192m in the corresponding period of 2019. Sales were US$722m, down by 26% from US$969m. CRC sold 11.2Mt of cement over the period, down by 27% from 15.2Mt, although prices hadincreased. Cement sales constituted 82% of total revenue at US$589m, down by 22% from US$752m.
Third quarter update 2019 for the major cement producers
13 November 2019As most of the larger cement producers have released their financial results for the third quarter of 2019 it’s time to see how they are doing so far this year.
Graph 1: Revenue from major cement producers, Q1 - 3 2019. Source: Company reports.
Graph 2: Cement sales volumes by major cement producers, Q1 - 3 2019. Source: Company reports.
LafargeHolcim is looking good, with rises in both its net sales and earnings on a like-for-like basis. The sale of its assets in South-East Asia earlier in the year and in 2018 may have appeared to reduce its figures, but the like-for-like growth suggests that the strategy its working. This has been driven by markets in Europe and North America as its other big market, Asia, has continued to slide. The latter vindicates the group’s decision to partly leave the region, in the short term at least. It’s also interesting to note that at the macro-scale LafargeHolcim’s ready-mixed concrete (RMX) sales fell by 1.3% on a like-for-like basis to 7.4Mm3 in the first nine months of 2019. What does this mean for a building materials company that has been moving towards the whole supply chain and concrete?
Anhui Conch Cement reported cement and clinker sales volumes of 202Mt in the first half of 2019, a 42% year-on-year growth for the same period in 2018. Its revenue increased by 42% year-on-year to US$15.9bn in the first nine months of 2019 from US$11.1bn in the same period in 2018, putting it ahead of Germany’s HeidelbergCement in sales terms. The group was coy on how it actually managed to boost its sales so fast in a country where cement sales only rose by 5% in the first half of the year. Yet, it did admit to slowing sales growth in West China in the first half. A 5% fall in fuel and power costs no doubt helped its profit margins also. Notably, its overseas sales nearly doubled to US$143m in the first half of 2019 or 2% of its total revenue.
HeidelbergCement’s financials were solid, with growing revenue, earnings and profits. This was balanced by falling cement and clinker sales volumes. Cement sales fell in all group regions with the exception of North America. However, it was able to boast about ‘positive results in all group countries in the third quarter except for Egypt’s. Company head Bernd Scheifele summarised the sitaution by saying that, “price increases and strict cost discipline more than compensated for the slightly weaker demand for our products in the third quarter.”
Of the building materials companies with larger revenues, Cemex has had a tougher time of it so far in 2019 with declining sales, cement volumes and earnings. In part this has been due to a poor market in Mexico, although chief executive officer (CEO) Fernando A Gonzalez said that the group believed that weak demand for their products was ‘bottoming out’ and that a new infrastructure program made them hopeful looking forward. The group’s Middle East and Africa region also caused concern with a 3% drop in sales volumes in the Philippines, one of its key South-East Asian territories.
Things to note from the smaller producers featured here are as follows. India’s UltraTech Cement says it is the world’s third largest cement producer outside of China. With an installed production capacity of over 100Mt/yr in India this may well be the case. The vast majority of this is based at home in India. Alongside this, its financial figures seem buoyant as it continues to integrate new acquisitions such as Century Textiles and Industries into the business. By contrast Africa’s Dangote Cement has endured mixed fortunes so far 2019 with a modest rise in cement sales volumes and small drop in revenue and a larger decline in earnings in both Nigeria and operations elsewhere in Sub-Saharan Africa. At home this has been attributed to a subdued economy and elsewhere it has pointed to poor markets in South Africa, Zambia and Ethiopia. On the positive side though promotional marketing activity at home in Nigeria helped support an improved third quarter.
Summarising all of this is difficult given the very different nature of these large companies. Generally most of these companies are growing. One takeaway to consider is the emergence of two types of cement producer models at the top end: multinationals and large-local players. In recent years the rise of the large-local player has been a story mirroring the economic prominence of China and India. One can also see it in places like Indonesia and Brazil. The worry is that these kinds of companies are more exposed to regional economic risks than multinational ones. Yet in 2019 some multinational cement producers are also having problems. Whatever else happens, if fears of a new global recession come true, then these larger scale producer models will be tested, possibly to breaking point.
China: Huang Ting has ceased to be the chief financial officer (CFO) of China Resources Cement. He will remain as the company’s vice president and has been reassigned as chief procurement officer.
Duan Wanli, the general manager of finance department of the company will take on the duties of the CFO role on a temporary basis. She joined the finance department of the China Resources Cement in 2014. She holds a Master’s degree in accounting from the Macquarie University in Australia and is a member of CPA Australia.
China: China Resources Cement’s turnover fell by 6.7% year-on-year to US$957m in the first quarter of 2019 from US$1.03bn in the same quarter of 2018. Its profit fell by 16% to US$189m from US$226m. Its cement sales volumes dropped by 7.7% to 15.2Mt from 16.5Mt, clinker sales fell by 2% to 1.16Mt from 1.18Mt and concrete volumes declined by 15% to 2.58Mm3 from 3.03Mm3. Sales volumes fell in the company’s main markets in Guangdong and Guangxi.
China in 2018
27 March 2019Cement price rises by the major Chinese cement producers boosted sales revenue and profits in 2018. This is quite a trick, given that overall cement sales in the country have fallen by 11% year-on-year to 2.17Bnt in 2018 from a high of 2.45Bnt in 2014.
Graph 1: Cement sales in China, 2009 – 2018. Source: National Bureau of Statistics China.
On the corporate side most of the major Chinese producers issued positive profit alerts towards the end of 2018 and this has been followed up by (mostly) glowing financial reports. Data from the National Development and Reform Commission in February 2019 showed that the profits of local cement companies more than doubled to US$64bn in 2018 compared to 2017. As mentioned above, this has been fueled by price rises. In December 2018 the average price of cement was 10.6% higher than in December 2017.
This has translated into a 19% year-on-year rise in sales revenue at China National Building Material Company (CNBM) to US$32.6bn in 2018 from US$27.4bn in 2017 and its profit grew by 44% to US$2.09bn from US$1.46bn. Anhui Conch’s performance was even better. Its revenue grew by 70.5% to US$19.1bn from US$11.2bn. However, differences emerge between the two companies in terms of cement sales volumes. CNBM’s sales volumes fell by 2.4% to 323Mt. However, Anhui Conch’s sales volumes increased by 25% to 368Mt. This may not be in line with the government’s plans to scale down production but it does fit the industry consolidation model, as the company acquired Guangdong Qingyuan Cement in 2018. The results from other producers such as China Shanshui Cement, West China Cement, Tianrui Cement and China Resources Cement all tell similar tales.
If the figures from the National Bureau of Statistics China (NBS) above are accurate then this is a drop of over 300Mt of cement sales over four years. This is more than the cement sales of every other country except India. Indeed, it’s more cement than some continents make! It marks the deceleration of the Chinese industry since 2014 and represents a major achievement. However, whether it is enough remains to be seen. After all, sales of over 1500kg/capita are still way above the consumption curve for developed Western-style economies. Yet, imports of cement to China from Vietnam rose in 2018, suggesting that the price rises are being driven by shortages of cement!
China is undoubtedly an exceptional case, as its economic star has blossomed in the last few decades and it has literally built itself into history. Yet one might expect its consumption to be around 1Bnt/yr, a per-capita level more similar to Spain and Italy prior to the financial crash. In other words, even if the recently observed 5% year-on-year contraction is maintained, the Chinese industry would only reach this (still very high) level by the mid 2030s. However, continued national development, mega-infrastructure projects, a shift to more exports and China’s unique market could hold the consumption per capita figure higher.
Meanwhile, Chinese producers are commissioning more and more projects outside of China. Notably, CNBM saw its cement sales everywhere except for the Middle East and China. Success abroad is not guaranteed. The story in the years to come will be the balance between projects at home and those abroad.
2018 for the cement multinationals
13 March 2019All the major multinational cement producers reported growing sales in 2018. Yet, the big growth was found outside of Europe, with China Resources Cement (CRC), Ultratech Cement and Dangote Cement all posting sales revenue growth of above 10%. Similarly, cement sales volumes continued to rise. CRC and Ultratech Cement were the standouts here, with the latter benefitting from its acquisitions including, most recently, Binani Cement. Concrete sales volumes were the same, rising for all the companies with the exception of Buzzi Unicem. It suffered market issues in Italy and Germany.
Graph 1: Sales revenue from selected multinational cement producers in 2017 and 2018 (Euro billions). Source: Company financial reports.
Graph 2: Cement sales volumes from selected multinational cement producers in 2017 and 2018 (Mt). Source: Company financial reports.
Graph 3: Ready-mixed concrete sales volumes from selected multinational concrete producers in 2017 and 2018 (Mm3). Source: Company financial reports.
With the major Chinese producers, including CNBM and Anhui Conch, yet to release their annual results for 2018, CRC is included in this roundup to give an idea of how that market is performing. Both CNBM and Anhui Conch have released profit alerts anticipating bumper results in 2018 though. This is likely due to boosted local cement prices.
The major story for the European-based producers was one of asset sales and debt reduction. LafargeHolcim returned to positive income in 2018 with a focus on its Strategy 2022 programme. HeidelbergCement’s earnings were hit by poor weather in the US and insufficient divestments. Cemex, although based in Mexico, retains a significant European presence and so it included here. It suffered from poor sales outside of its base in Mexico and the US. CRH continued on its trajectory as the world’s biggest building materials company with solid sales and earnings growth. Interestingly though given its expansion strategy in recent years CRH’s debt to earnings before interest, taxation, depreciation and amortisation (EBTIDA) ratio remains better than the other three majors above, even after its purchase of Ash Grove Cement in mid-2018 taken into account. Although other financial comparisons are worth considering, such as EBITDA margin.
Despite Cemex’s relatively high net debt compared to its peers it has been cutting its debt the fastest, at 8% to US$10.4bn in 2018. Its current plan is to reach an ‘investment-grade’ balance sheet by 2020. LafargeHolcim and HeidelbergCement are in ‘cuts’ mode leading to all sorts of speculation about where they might sell next. The wilder rumours in the press include preparations by LafargeHolcim to sell its entire operation in the Middle East and Africa. Similar tales about a sale in the Philippines are more credible but remain unconfirmed. HeidelbergCement is keeping its cards closer to its chest but poor performing territories that might be up for sale include some of its Italian plants and parts of Africa.
Of the larger producers without a European presence, Ultratech Cement has been negatively effected by energy costs during the nine months to the end of 2018 with its income and EBITDA down. Dangote Cement’s performance in 2018 was driven by sales at home in Nigeria although earnings elsewhere continued to grow.
With all of this in mind the scene appears set for a breakout by a major Chinese producer to buy a big bolt-on acquisition or expansion by regional or national players along the lines of that seen by Semen Indonesia or UltraTech Cement. Taiwan Cement has been ahead here with its purchase of a 40% stake in Turkey’s Oyak Cement but what we’re really waiting for is a majority position within a country or territory. At which point CNBM and the like will have earned its place in the 2019 version of this article. Perhaps the age of truly multinational cement producer is coming to an end as regional players become more prominent.
China Resources Cement benefits from price rises in 2018
11 March 2019China: China Resources Cement’s turnover rose by 29.5% year-on-year to US$4.94bn in 2018 from US$3.82bn in 2017. Its profit jumped to US$1.02bn from US$0.46bn. Its cement sales volumes grew by 9% to 82.6Mt from 75.9Mt. Cement sales volumes grew in all regions except for Hainan and Yunnan, where they declined slightly. Its concrete sales volumes increased by 5.7% to 14.2Mm3 from 13.5Mm3. No reason for its growth in 2018 was given but the producer’s average sales price of cement grew by 25%.
The cement producer is upgrading 106 cement bagging machines in the reporting year as part of its ‘digital’ cement-bagging project. It completed the construction of three sets of wet-process desulphurisation systems and 11 sets of composite desulphurisation systems. It launched co-processing projects in Changjiang County in Hainan, Tianyang County in Guangxi, Midu County in Yunnan and Fengqing County in Yunna.