Displaying items by tag: China
Chinese producers announce more profit slumps
11 July 2012China: Following on from other Chinese cement producers, which have reported large slumps in their half year profits, Xinjiang Tianshan Cement Co Ltd, based in the Xinjiang Uyghur Autonomous Region, has announced a first half net profit of US$18.9m, a drop of '60-80%' year-on-year.
The company stated that the decline in its half-year net profit is largely due to lower cement selling prices and rising financial expenditure. Other companies have stated that rising costs have included higher fuel prices, although this was not specified by Xinjiang Tianshan.
Meanwhile China's Sichaun Province announced that its cement sector had seen a near-60% plunge in its profitability in the five months to 31 May 2012, despite an 11% improvement in revenue in the entire building materials sector in that Province.
In addition the Hong Kong-listed Taiwan Cement International Holdings Ltd., has also warned that its net profit will decline by an estimated 50% year-on-year in the first half of 2012 due to China's strict macroeconomic controls and shrinking budgets for infrastructure projects.
TCC International reported that its net profit for the first half of 2011 was US$120.23m, although the corresponding figure for the first half of 2012 is likely to have dropped to less than US$60m.
While the slumps in profit have been dramatic, producers believe that they may be short-lived. China's cement market is expected to pick up at the end of the third quarter or early in the fourth quarter of 2012 as the country relaxes its macroeconomic controls, loosens its monetary policy and will give more rapid approval to infrastructure projects.
Update - 13 July 2012: Jiangxi Wannianqing Cement Co Ltd has announced that its first half net profit will plummet by about 80% year-on-year to US$8.5-9.9m.
4Mt/yr plant enters commissioning
11 July 2012China: Two kilns at a plant owned by Taiwan Cement (Anshun) have entered commissioning. The plant, which is located in Chengguan Town, in the Anshun region is one of the key projects of Guizhou Province and adds to the rapidly-growing new capacity being set up in China to replace older and less efficient plants.
The 4Mt/yr project will be fitted with low-temperature combined heat and power facilities, which are expected to produce around 130 million kWh. The project is expected to generate over 800 employment opportunities and will greatly promote economic growth in the local area.
Chinese halftime profit warning
04 July 2012Cement industry results from China have all told an alarming story this week: profits for the first half of 2012 look set to fall by more than 50% year-on-year.
China Resources Cement Holdings warned that its first-half earnings were down sharply. China National Materials Co. Ltd. (Sinoma), the cement equipment and engineering services provider, and Gansu Qilianshan Cement, a small Shanghai-listed cement producer, have both forecast similar drops. Sinoma blamed its drop in profit partly on an overseas project but 'interestingly' no further information was released detailing which project.
Previous to this in June 2012 Anhui Conch Cement warned that its net profit would fall by more than 50% due to weak demand and falling product prices. In May 2012 China National Building Material Co Ltd (CNBM) reported that its net profit for the first quarter of 2012 was down by 45% year-on-year. In April 2012 Jidong Cement reported an increase in its net loss for the first quarter and a year-on-year revenue drop of 14%.
Each of the Chinese big players in the cement industry have issued profit warnings of a similar scale suggesting that the Chinese market faces a uniform downturn or that a slowdown is being centrally managed. Official signs that the Chinese industry faced a slowdown emerged in March 2012 when the national growth target was lowered, analysts' predictions were released forecasting weakened profits for the nation's main producers and government officials admitted that overcapacity loomed within five years.
According to OneStone Research data on the Chinese market in 2010 CNBM, Anhui Conch, Jidong and Sinoma represented over 20% of Chinese capacity. To give these figures some perspective, in 2011 CNBM's profit was US$1.7bn. Holcim's operating profit for the same period was US$2bn and Lafarge's operating income was US$2.74bn. Even halved, CNBM's profit is a massive figure for a company with less of an international presence than the European multinationals.
Sinoma forecasts massive drop in net profit
04 July 2012China Resources shares feel the slowdown
28 June 2012China: Shares in China Resources Cement Holdings fell by as much as 5% on the Hong Kong stock-exchange today after the cement maker warned of a sharp fall in first-half earnings. Its losses demonstrate that weaknesses in the world's second-largest economy are starting to hit corporate profits. An increasing number of companies are feeling the pinch of a slowdown in consumer demand and the economy as a whole.
China's central bank cut its policy rates in June 2012 for the first time since the onset of the global financial crisis because economic data for April and May 2012 suggested that growth was weakening more than previously thought.
Yesterday, Gansu Qilianshan Cement, a small Shanghai-listed cement producer, forecast that its net profit would decrease by at least 50% year-on-year in the first half of 2012. In the first half of 2011 it made a net profit of US$38.9m.
Timken supplies bearings for CITIC mill
30 May 2012China: Timken Company has supplied bearings for one of China's largest vertical slag mills, featuring a 5.7m grinding table. The mill, one of several now utilising Timken bearings, was developed by CITIC Heavy Industries Co Ltd, one of China's top manufacturers of cement-producing equipment. According to CITIC, the new vertical slag mill produced by CITIC is expected to produce up to 1.2Mt/yr of ground slag for inclusion in cement and concrete products.
"Many sizable construction projects underway across China require large amounts of quality concrete," said Leong Fang, president of Timken China. "We work closely with CITIC and other customers in this important industry to make sure they can meet the growing demands of their customers for concrete and other construction materials. Our recent success is a testimony to teamwork and innovation for the two companies."
CRH set to build on stake in China
16 May 2012China: Irish building materials group CRH has said at its annual meeting that it planned to increase its stake in the Yatai cement business in China to 49% from 26% as part of a wider push into emerging markets.
Chief Executive Myles Lee said CRH was preparing to exercise an option, opening in January 2013, to raise the stake. "We are setting the scene at the moment for that and we are keen to increase that stake. Obviously in everything valuation is key, so it has to be at a valuation that makes sense for our shareholders," Lee said.
China cleared for landing
04 April 2012Friday saw the news that many have long suspected: China is producing too much cement. Liu Ming, an official with the department of industry within the National Development and Reform Commission, announced that China faces national overcapacity in the next five years.
For anyone used to reading the permanently good news from China's cement industry this is a massive jolt. The natural reaction to dealing with industrial news from a command-style economy is to assume that everything is 'airbrushed'. This then demands the question: how much trouble is the Chinese cement industry really in?
Despite persistent rumours querying how long China's unparallelled growth could last, official responses have only appeared in the last two months. First the environment ministry announced stricter rules regarding nitrogen oxide emissions from cement plants in February 2012. Commentators suggested that the move could wipe out a third of the industry's profits. Shortly afterwards FLSmidth, entered the Chinese environmental control technology market.
In early March 2012 Premier Wen Jiabao lowered China's growth target for 2012, signalling public political acceptance of an inevitable economic 'soft landing'. Then in late March 2012 analysts' reports emerged predicting that each of China's main producers would suffer weakened profits in 2012. Only CNBM, China's biggest producer, appears to have bucked this trend. It announced that it expected its net profit to jump more than 100% compared to 2011. However the general uncertainty regarding statistics from China throws doubt on how realistic this forecast may be.
Yet before we give up hope it's worth remembering that opportunity abounds in a market as gargantuan as China. The rest of 2012 will be an interesting period for the Chinese cement industry.
CNBM targets Shanghai listing
04 April 2012China: China National Building Material (CNBM) hopes to list in Shanghai in 2012 and be one of the biggest mainland initial public offerings of 2012. The Hong Kong-listed firm hopes to raise US$2.38bn from its Shanghai A-share listing according to Nomura analyst Luo Yang. Yang cautioned however, saying, "It is too optimistic. US$1.58bn should be the maximum, given the market."
The state-owned firm has applied to the China Securities Regulatory Commission for an A-share listing in Shanghai and is awaiting its approval, said CNBM chairman Song Zhiping. "If there is a good window, we hope to list this year," said Song.
Meanwhile, CNBM aims to increase cement sales by 40% in 2012. It hopes to achieve 30% profit growth across all of its businesses. Cement accounted for three-quarters of CNBM's revenue in 2011 and demand is expected to increase by 5-6% in 2012, a massive 100Mt. Again, Nomura's Luo cautioned the speculation, saying that, "This year demand is slowing down. Prices are under downward pressure due to overcapacity."
China to restrict capacity expansion in 2012
30 March 2012China: China intends to implement strict restrictions on the increase of new cement production capacity in 2012 to deal with a capacity surplus, said Liu Ming, an official with the department of industry within the National Development and Reform Commission.
Speaking at an industrial meeting, Liu said the main task for the time being is to contain the rapid increase of capacity. Currently China faces national overcapacity during the period of 2011-2015. Liu said the government will encourage mergers and acquisitions in the national industry, and increase financial support.
China's cement output increased by 11% to 2.09Bt in 2011 with an annual capacity of 2.9Bt. Liu added that China would roughly complete its task of phasing out out-dated capacity by the end of 2012. However, domestic producers remain optimistic about the growth of national consumption in 2012. The performance of China's cement industry will remain optimistic and annual output will reach new high with around 8% of growth, predicted Kong Xiangzhong, secretary general of the China Cement Association.
China's cement industry will see around 5% of growth in 2012 and 2013, said Cui Xingtai, chairman of the China United Cement Corporation. Cui said that the Chinese cement market will shake off its current weak performance from the second half of 2012 with the annual peak season. The decrease of cement demand in the first quarter of 2012 was directly related to the slowdown of construction projects in the railway, road and airport sectors and cement demand would have good performance in the second half, said Cui.