China Resources Cement sales grow but costs eat into margin
China Resources Cement Holdings saw sales of its core cement and concrete products grow in the first two months of this year, but gross profit margin shrank as raw material costs increased.
During the period, sales of its cement products jumped about 13 per cent year on year to 460,000 tonnes, while the selling price slipped 5 per cent, vice-chairman and general manager Shi Shanbo said.
Sales for its concrete doubled to 300,000 cubic metres but the selling price dropped about 3 per cent from the same period last year, he added.
Mr Shi gave no actual figures, however.
He said gross profit margin dropped by one to two percentage points to about 24 to 25 per cent in the first two months. This compared with its gross profit margin of 26 per cent last year.
'Raw material costs, especially coal prices, have surged about 30 to 40 per cent year on year so far,' Mr Shi said after the company's annual general meeting yesterday.
'This has some negative impact on our margin. However, we hope to maintain our profit margin at last year's level through cost control and production expansion.'
Chief financial officer Robert Lau Chung-kwok also hoped profit margin would improve through business expansion, which could offer the company a better economy of scale.
China Resources Cement plans to inject 419 million yuan into a joint-venture plant in Guangxi province to boost output amid growing demand in the Pearl River Delta region.
The capital injection would double the venture's annual production capacity to 3.8 million tonnes of cement.
The deal is pending shareholders' approval on Monday.
Cement firm hopes to improve margin through cost control
Business expansion could also offer economy of scale
The firm targets growing demand in the delta region