Displaying items by tag: Sumitomo Osaka Cement
Japan: Sumitomo Osaka Cement has announced plans to lift sales of power generated in-house at its Tochigi Prefecture plant using wood biomass fuel. The current fuel mix is 85% wood chips and 15% coal, 20% more wood chips than previously.
The group's operating profit is expected to surge by 41% to US$144m in the fiscal year ending March 2013. Sumitomo Osaka Cement does not disclose power-related earnings, but the steady advance of power sales is expected to become a factor that boosts operating profit by US$12.5-25m.
The power generation facilities at the Tochigi plant were completed in February 2009 and went into full operation in April 2009. Current output is 25,000kw.
Sumitomo Osaka Cement suspended operations at one of the plant's two kilns in January 2012 as part of restructuring measures, giving it capacity to supply more of its leftover power. It aims to contribute to the power supply by selling the excess electricity, especially with Japan's nuclear plants remaining offline due to the aftermath of the Fukashima radiation leak following the March 2011 earthquake and tsunami disaster.
Taiheiyo results highlight 'attractive' Japanese cement industry
09 February 2012Japan: Taiheiyo Cement Corp. has released interim results for the first nine months of its current fiscal year, which ended on 31 December 2011. The results showed a group revenue of US$7.0bn, slightly up on the first nine months of the previous fiscal year.
Its operating profit was reported as US$242m, more than double the US$111m seen in the previous fiscal year. Its pretax profit was US$134m and its net profit for the period was US$14.2m, a turnaround from a US$72.1m loss made in 2010.
Taiheiyo forecast that the whole of the 2012 fiscal year (ending 31 March 2012), would see a revenue of US$9.3bn, an operating profit of US$350m and a net profit US$146m.
Taiheiyo's results come after a decision by Morgan Stanley MUFJ Securities to increase its rating for the Japanese cement sector to 'attractive,' the highest ranking on its three-tier scale. Shares in major companies such as Taiheiyo and Sumitomo Osaka Cement jumped sharply with the new rating.
Analysts at the brokerage said that profits at cement firms will rise in line with their ongoing efforts to cut costs. It also said that higher prices, an increasingly balanced supply and demand relationship and rising demand related to earthquake reconstruction efforts will also support profits in the cement industry.
The analysts also said that investors have undervalued shares of Sumitomo Osaka Cement and Taiheiyo Cement despite expectations that their earnings will improve in the 2012 fiscal year.
Producers split coal purchases to avoid high prices
17 June 2011Japan: Major cement makers are dispersing their coal purchases to hedge against the risk of buying when prices are high. Traditionally, cement companies purchase a year's worth of coal in the month of April because price changes have tended to be small. With coal prices becoming more volatile, however, they are keeping a close eye on the market to gauge favourable times to buy.
Producers are hoping to keep costs in check in this way because coal purchases account for at least half of their materials expenses. Taiheiyo Cement has procured only about 30% of its coal supply for the current fiscal year, while Sumitomo Osaka Cement Co. and Mitsubishi Materials Corp. have each purchased around 60%. Sumitomo Osaka Cement, which began spreading out its purchases in the previous fiscal year, is reportedly considering whether or not to disperse costs even further.
Coal prices began rising in 2010 after major floods in Australia and the jump between January and March 2011, which served as the basis for purchase prices in April 2011, was particularly steep. Consequently, Taiheiyo Cement and Sumitomo Osaka Cement are believed to have paid nearly USD 150/t, an increase of 30% on April 2010. Wholesale coal prices are currently at around USD 135/t.
Tsunami reconstruction demand calculated
09 June 2011Japan: Post-earthquake reconstruction demand is expected to boost pre-tax profits at four major Japanese cement firms by a combined USD 411m until 2016.
Assuming that their market shares remain the same, reconstruction demand will push up pre-tax profits by USD 187.2m at Taiheiyo Cement Corp, USD 100m at Sumitomo Osaka Cement Co., USD 62.4m at Mitsubishi Materials Corp. and USD 62.4m at Ube Industries Ltd.
The Japan Cement Association estimates that 10Mt of cement will be used for reconstruction projects. The figure was arrived at based on damages estimated by the Cabinet Office and how cement sales increased in the aftermath of the 1995 Kobe earthquake. The trade group believes that full reconstruction will take about five years.
Cement firms each book an operating profit of about USD 50/t of cement sold. Taiheiyo Cement controls almost 40% of the market in Japan's north-eastern Tohoku region. Reconstruction demand will push up the firm's cement sales by nearly 4Mt, translating to a USD 37.4m contribution to pre-tax profit annually for the next five years.