ACHC 3Q15 results

Asia Cement Holding Corporation, together with its subsidiaries, has reported unaudited revenue of RMB4 614 500 000 for the first nine months of 2015. Even with shrinking demand and high competition, ACHC still achieved a sales volume of 21 420 000 t of cement products by 30 September 2015.

During 3Q15, the Company continued to achieve full disposal of all output and expanded its import volume. The company also extended its industry chain, thereby improving its overall efficiency.

Mr. Hsu Shu-tong, Chairman of Asia Cement (China), said: “We optimised our production process with the aim to reduce cost, and strove to overcome the negative impact of declining industry demand and unhealthy competition. We also tightened account receivables management. All these helped effectively improve our overall operating results.”

Between January and September 2015, the year-on-year growth of the national fixed asset investments declined by 5.8% when compared to the same period the previous year. This led to shrinking demand and intensified market competition and resulted in decline in the cement industry’s profitability. Demand shrank further during the period, as July and August are traditionally the industry’s off-season. Additionally, due to lack of consensus among industry players, a number of plants decreased prices to scramble for market shares, which sent the price in late August to the lowest point it has reached in ten years.

With the number of infrastructure projects commencing construction having increased since September, and rural market activities also picking up, demand has gradually recovered. Growth in infrastructure developments is expected to continue to accelerate, with the construction of railway, city railway transportation and hydraulic engineering projects in China reaching a peak in 4Q15.

Regarding supply, the abolishment of 32.5-grade composite cement effective from 1 December will reduce market supply of low-standard composite cement, while further implementation of environmental standards will accelerate the phase-out of small-to-medium cement producers who cannot meet the environmental standards. This is expected to ease the supply pressure further.

With cement prices in east China and south central China beginning to rebound from mid-September, market confidence appeared to have gradually recovered, and the industry was trending upward.

During 3Q15 ACHC reported a net loss of RMB262 600 000, largely caused by the decrease in the average selling price of the company’s products that had resulted from the slowdown of economic growth in China.

Mr. Hsu emphasised: “The fourth quarter remains the industry’s traditional peak season, so growth of cement demand is expected to accelerate. Such combined with increasing consensus among industry players will enable the market as a whole to head in the direction of a more positive and robust development. The Group’s total target sales volume of cement products in 2015 remains 30,000,000 t. The management remains optimistic and confident about the outlook for its profitability in 4Q15.”

Adapted from press release by Rebecca Bowden

Read the article online at: https://www.worldcement.com/asia-pacific-rim/03112015/achc-3q15-results-897/