Displaying items by tag: China

China: Following a recent trend for declining profits in the Chinese cement sector, Henan Tongli Cement Co Ltd has announced that it expects to record a poor performance for the first quarter of 2013. It says that its net profit will drop by 88.5-99.6% year-on-year to between US$16,100 and US$484,000 in the first quarter of 2013.

Last week's news that Sinoma is considering European acquisitions may seem a little odd considering that Sinoma saw its profit halve in 2012. Yet the Chinese cement equipment builder and cement producer's income (US$3.42bn) puts it level with the likes of European producers, like Italcementi (US$5.75bn) and Buzzi Unicem (US$3.58bn), and the company still made a sizeable profit (US$123m).

Now what really seems odd is the amount by which each of the major Chinese cement producers' profits fell in 2012. Each of the top five producers by capacity, including Sinoma, saw their profits decrease by 40% to 50%. CNBM 'forgot' to report its profit drop but in November 2012 it recorded a 40% fall. Anhui Conch Cement's profit fell by 45.6% to US$1.03bn. Jidong Cement hasn't released any figures but was expecting a 50% drop in late October 2012. China Resources' profit fell by 44.4% to US$300m. Compare that with the diversity of profits reported by the top five European cement producers.

As has been clearly signposted by the Chinese government, the country is overproducing cement. Just how much we can't be sure but the Ministry of Industry and Information Technology declared that 220Mt/yr of 'obsolete' capacity was eliminated in 2012. The country's entire output was placed at 2.18Bt in official figures.

Outmoded capacity is being shut down and industry consolidation encouraged for the main players. Given the state-owned nature of Chinese heavy industry some level of coordination between bad results is to be expected. To give readers an idea of the challenge facing Chinese central planners, Anhui Conch added 28.3Mt/yr of additional cement production capacity in 2012. This is equivalent to the entire capacity of Nigeria or Germany!

Of interest here are China's cement export figures that the government's General Administration of Customs recently released. Exports hit a peak of 33Mt in 2007 and then declined by 68% to 11Mt in 2011. In 2012 they increased slightly to 12Mt. That's 20Mt of cement not leaving the country any more. Plus, the 'Shenzhen sea-sand in concrete scandal' can't be helping the industry's reputation abroad either.

Also of note last week, a Kyrgyzstan minister proposed restricting imports of Chinese cement to his country. Cement produced at Chinese-owned plants will be much harder to block. The next prong of the Chinese plan to tackle its cement industry is direct overseas expansion and this is what we're seeing from the likes of Sinoma and Anhui Conch. Sinoma, as mentioned above, appears to have cash to spend and in 2012 Anhui Conch began its first international project in Indonesia.

China: Shanghai's municipal government has announced that it will stop cement production when air pollution reaches 'heavy' or greater levels. The plan may affect at least three cement plants in the Shanghai area. The move follows a similar plan in Beijing that was introduced in 2012.

According to the plan, emergency measures will be taken when the PM_2.5 air quality index rises above 200µg/m³ for 18 hours and looks likely to continue. PM_2.5 refers to the measurements of particulate matter smaller than 2.5μm and the World Health Organization considers the safe daily level to be 25µg/m³. The average density of PM_2.5 in Shanghai for the first three months of 2013 was 73 µg/m³. China's daily limit is 75µg/m³ and its yearly limit 35µg/m³.

Other emergency measures include alerting the public, restricting production in highly-polluting industries and reducing the number of vehicles on the roads. In addition power plants will be required to use high-quality coal to reduce pollution, vehicles transporting construction materials and waste will be ordered off the roads and any construction work causing dust will be shut down.

China: China Sinoma International Engineering will increase its capital expenditure by 29% to US$1.81bn some of which may be spent on acquiring European companies.

The Chinese state-owned cement equipment manufacturer and cement producer has set aside US$80.5m to acquire mostly foreign cement equipment companies, said chief financial officer Yu Kaijun as reported by the South China Morning Post. "We are in talks to acquire some European cement equipment companies, including German ones."

In the cement equipment sector, Sinoma International would explore opportunities in Africa, the Middle East and Southeast Asia, said Sinoma chairman Liu Zhijiang. "It will secure its footing in long-term strategic markets, including Russia and South America and enhance its influence in India," he said.

In 2013 Sinoma International aims to secure more than US$4.83bn of orders for cement equipment with about two-thirds of these originating from outside of China. So far Sinoma International has secured US$1.61bn of orders since January 2013, mostly from abroad. Sinoma will also invest US$956m in expanding cement production capacity in China, a decrease from the US$1.13bn it spent in 2012.

China: China Sinoma International Engineering, one of China's leading providers of cement engineering and integration services, has said that its net profit plunged by 51.3% year-on-year to US$123m in 2012.

In 2012 the company saw its total operating revenue drop by 17.6% year-on-year to US$3.42bn. For its cement engineering and integration services business, the operating revenue fell by 15.5% to US$3.09bn.

The company's revenue from the China market plunged by 23.6% year-on-year to US$1.98bn in 2012. Its overseas market decreased by 8.65% year-on-year to US$1.41bn. As the end of 2012, the Shanghai listed company had US$3.34bn in total assets, up by 8.57% year-on-year.

China: Anhui Conch Cement, the biggest cement producer in Asia by output, has announced that its net profit fell by 45.6% to US$1.03bn in 2012 from US$1.87bn in 2011. The drop was attributed to a decline in the price of cement and a general slowdown in the growth of cement market demand in 2012.

Operating revenue for the company dropped by 6.41% year-on-year to US$7.25bn in 2012 from US$7.83bn in 2011. By market region, Anhui Conch's East China region saw sales fall by 15% in 2012 to US$2.58bn. Its Central China region fell by 19% to US$1.97bn. Its South China region fell by 2% to US$1.39bn, its West China region rose by 59% to US$1.08bn and exports rose by 40% to US$223m.

In 2012 the company sold 187Mt of clinker and cement in 2012, a year-on-year growth of 18.3%. The cement producer added 20.8Mt of clinker production capacity and 28.3Mt of cement production capacity in 2012. At the end of 2012, the group's clinker production capacity and cement production capacity amounted to 184Mt and 209Mt respectively, with a total residual heat electricity generating capacity of 881MW. During 2012 the group also began its first overseas investment project with the start of construction of PT Conch South Kalimantan Cement in Indonesia, with a clinker production line of 3200t/day.

For 2013 Anhui Conch expects 'excessive' production capacity and structural adjustment in the cement industry to continue. However demand will remain stable and government pressure to increase environmental regulations and encourage industry consolidation should benefit the group. The group expects to increase its clinker and cement production capacity by 15.4Mt and 22.5Mt respectively in 2013. For its three major risks for 2013 the group included a volatile construction industry, fuel costs and the risks of further government environmental regulation.

China: Asia Cement Corp, one of Taiwan's leading cement suppliers, said that its subsidiary in China, Asia Cement (China) Holdings Corp, saw its net profit plunge year-on-year by 71% in 2012 to US$63.7m, due to an oversupply in China.

Asia Cement (China) posted a revenue of US$1.08bn in 2012, a year-on-year drop of 18.6%. Asia Cement blamed falling product prices in the Chinese market. Asia Cement (China) had a cement production of 24.9Mt in 2012 and its cement sales were 22.7Mt.

The China-based manufacturer sold 3.8Mt of cement in the Nanchang-Jiujiang district of Jiangxi Province, accounting for 31% of the district's total cement sales in 2012, while the company took a 27% share of the Wuhan market in Hubei Province, selling 5Mt in 2012. It accounted for 21% of the total cement sales in Chengdu, Sichuan Province and accounted for 30% of the cement market in Jiangsu Province's Yangzhou in 2012.

Asia Cement (China) said it aims to boost production capacity in its production line in Jianxi Province in an effort to boost its production to 30Mt/yr. In addition, the company said it will seek targets for acquisitions in a bid to further lift production to 50Mt/yr to rank among the top 10 cement suppliers in China.

China: Huaxin Cement Co Ltd, a Hubei Province-based cement producer, announced on 25 March 2013 that the company's net profit came to US$89.5m in 2012, a year-on-year decrease of 48.3%. Huaxin Cement saw its operating revenue for 2012 slide by 0.93% year-on-year to US$2.0bn.

The company attributed the drop in its profit to falling cement prices caused by overcapacity in the Chinese cement market during 2012.

China: West China Cement has reported that its gross profit fell by 23.7% to US$109m in 2012 from US$142m in 2011. The Chinese cement producer attributed the shortfall on a decreasing selling price, increases in electricity costs and higher overheads due to lower productivity.

The company's revenue rose by 10.5% to US$567m from US$513m. Earnings before interest, taxes, depreciation and amortisation (EBIDTA) fell by 9% to US$170m from US$187m. Cement sales volumes rose by 22% to 14.3Mt in 2012 from 11.7Mt in 2011.

In its annual report West China Cement reported that it is consolidating its position as the largest cement producer in Shaanxi Province as well as expanding into Xinjiang Province, where economic and infrastructure growth promoted by the Chinese government's Western Development Policy remains a key feature of the 12th Five-Year Plan. For 2013 the company expects the recovery in infrastructure demand in the second half of 2012 to continue. However, increased overall capacity in Xinjiang Province is expected to continue impacting upon cement prices in that region.

Production: China saw cement output increase by 10.8% year-on-year to 237Mt in the first two months of 2013, according to recent data released by the National Bureau of Statistics.

45 companies in Xinjiang Uyghur Autonomous Region produced a total 466,000t of cement and 2.67Mt of clinker in the first two months of 2013, a year- on-year decrease of 9.28% and 37.27% respectively, according to sources quoted by China Business Newswire.

Guangdong Province produced 118Mt of cement in 2012.

Company news: China Shanshui Cement has reported that its net profit fell by 31.8% to US$245m in 2012. Its revenue fell by 4.2% to US$2.6bn in 2012. Total sales volume of cement and clinker rose by 3.5% to 56.9Mt. It attributed the decrease in net profit to the fall of selling prices as a result of decline in demand.

West China Cement has reported that its net profit rose by 44.9% to US$57.9m in 2012. Operating revenue grow by 10.5% to US$566m. The company saw cement sales rise by 22.2% to 14.3Mt.

Fujian Cement has reported a slump in net profit of 76.9% to US$4.63bn in 2012. Operating revenue fell by 13.7% to US$261m. The company expects to earn US$359m in operating revenue in 2013.

Gansu Qilianshan Cement Group sold 15.3Mt of cement and cement clinker in 2012, a year-on-year increase of 29.2%. Currently the company has a cement production capacity of 21.3Mt/yr and it aims to reach a capacity of 45Mt/yr by the end of 2015. Gansu Qilianshan Cement Group Co has announced in its annual report for 2012 that the company saw its net profit drop by 47.8% year-on-year to US$28m in 2012. The company's operating revenue rose by 17.28% year-on-year to US$684m in 2012.

Xinjiang Tianshan Cement Co Ltd has reported that it saw net profit drop by 71.8% year-on-year to US$51.3m in 2012. The company attributed the net profit drop to overcapacity in the cement industry in 2012. Tianshan Cement's operating revenue for 2012 fell by 6.99% year-on-year to US$1.24bn.

Shenzhen-listed cement producer, Sichuan Shuangma Cement Co has announced that it earned a net profit of US$1.37m in 2012, a year-on-year decline of 90%. The company's operating revenue for 2012 decreased by 8.3% on-year to US$301m.