Cementing a solid base to build on
China Shanshui Cement Group, the Hong Kong-listed cement enterprise with bases in Shandong and Liaoning provinces on the mainland, achieved high double-digit growth in revenue in its interim results for the six months ending June 30.
In its first-half results prepared in accordance with International Financial Reporting Standards, China Shanshui says the group achieved year-on-year revenue growth of 65.8 per cent to 7.83 billion yuan (HK$9.56 billion).
Gross profit increased by 155.4 per cent to 2.47 billion yuan and profit attributable to equity shareholders achieved remarkable growth of 206.5 per cent to 1.24 billion yuan.
Basic earnings per share reached 44 fen, up 214.3 per cent compared with the same period last year. The board did not recommend payment of an interim dividend for the six months ending June 30.
'In the first half of 2011, the group has benefited from the government's increase in the volume of infrastructure construction and the continued demand of the property sector for cement,' Shanshui Cement chairman Zhang Caikui says.
'At the same time, it has optimised its corporate strategy by building new production lines, as well as organisational restructuring. In addition to expanding production scale, the group has also been exploring development opportunities for the group, while strengthening internal control and effectively boosting operational efficiency. All of these strategies have delivered sustainable operating results during the period under review.'
During the first half, the group's revenue was mainly derived from the sale of cement, which occupied 82.5 per cent of total sales revenue, with clinker making up 12.2 per cent.
The group sold 22.3 million tonnes of cement, a year-on-year increase of 44.7 per cent, translating to sales revenue of 6.46 billion yuan, up 89.7 per cent.
Clinker sales volume was 3.6 million tonnes and sales revenue was 956 million yuan. Due to the strong demand for high-quality cement by government infrastructure projects and real estate projects, sales volume of high-grade cement increased by 67.7 per cent to 13.3 million tonnes, accounting for 59.5 per cent of the group's total sales volume of cement.
The group's businesses in Shandong province and northeastern China have made steady progress.
During the reporting period, sales revenue from its business in Shandong amounted to 6.25 billion yuan, accounting for 79.8 per cent of the group's total sales revenue and representing an increase of 56.6 per cent over the same time last year.
Sales revenue from its operation in northeastern China amounted to 1.55 billion yuan, accounting for 19.8 per cent of the group's total sales revenue and representing year-on-year growth of 112.4 per cent. The business in Shanxi began operation in 2010 and recorded revenue of 27.8 million yuan.
During the period, the group has strived to expand its business presence beyond Shandong and further enhance its profitability.
In January, Liaoning Shanshui Gongyuan Cement, a wholly-owned subsidiary, entered into an equity transfer agreement with Lande Cement in Inner Mongolia to acquire its entire equity interests.
Upon completion of the acquisition, new cement production capabilities are expected to increase by 600,000 tonnes.
Looking ahead, Zhang says: 'Amid the favourable conditions, such as continued strong support of the central government for construction ... we expect the demand for cement to remain strong in the second half of the year.'