Financial results for 1H13
West China Cement has released its results for the first six months of the year, ending 30 June 2013. The Group saw revenue rise from RMB15901.1 in 1H12 million to RMB1967.4 million in 1H13, an increase of 23.7% y/y. Gross profit improved by 14.9% y/y, coming in at RMB347 million. However, gross profit margins fell from 19% in 1H12 to 17.6% in the corresponding period this year. Meanwhile, the increase in high-grade cement volumes drove up material costs, which were 33.9% higher than in the first six months of 2012. This also impacted electricity costs, together with rising fixed electricity charges, leading to an increase of 38.6% y/y. On the other hand, declining coal prices helped to generate savings, with cost/t of coal dropping by around 18.1% y/y.
Cement sales and demand
Cement sales grew by 26.6% y/y during the period, reaching 8.1 million t. High-grade cement accounted for 42% of sales.
Cement demand in Shaanxi Province has been boosted by the gradual recovery of the infrastructure sector. Cement consumption in the region increased from 35 million t in 1H12 to 38 million t in 1H13. An improving property construction market has helped to drive urban demand, while growth in demand levels in rural areas remains stable. The acquisition of the Fuping and Shifeng cement plants last year helped the company to strengthen its presence in the Xi’an metropolitan market. Sales volumes in Xinjiang Province were relatively low in the first six months of the year, reaching just 415 000 t, most of which was low-grade cement. This has been attributed to a lack of infrastructure activity in the Hetian region, in addition to a prolonged winter. Cement sales volumes in the province are predicted to pick up in 2H13.
Expansion and investment in environmental technology
Two brownfield projects are underway. These comprise the Guiyang Linshan site in Guizhou Province and the 1.5 million tpa Yili cement plant in North West Xinjiang Province. The latter is due to be completed in 2014. Together, the two brownfield projects will help the cement manufacturer to increase its cement production capacity to 27 million t by 2015, up from the current 23.7 million t. The Group completed its expansion and acquisitions in Shaanxi Province by the end of 2012. According to the Group’s report, the Chinese government has not issued approvals for any new cement plant since October 2010.
By the close of 1H13, West China Cement had installed residual heat recovery systems on 12 of its 16 production lines, with another one to be completed in 2H13. Such systems will reduce electricity consumption by 30% and lower CO2 emissions by 20 000 tpa/1 million t of cement. The Group invested in De-NOX equipment for most its production lines in Shaanxi Province in 2012 and plans to install it at the Weinan Pucheng and Ankang Xunyang plants in 2H13, as well as at Shangluo Zhen’an next year. The technology will help to cut NOX emissions by around 350 mg/t of cement.
Adapted from company report by Louise Fordham
Read the article online at: https://www.worldcement.com/asia-pacific-rim/13092013/west_china_cement_1h13_results_171/