Manufacturer seizes growth opportunities

PUBLISHED : Monday, 02 April, 2012, 12:00am
UPDATED : Monday, 02 April, 2012, 12:00am


China Shanshui Cement Group, the Hong Kong-listed firm with the largest cement enterprise in Shandong and Liaoning, revealed sharp revenue growth for the year ending December 31, 2011.

The cement manufacturer says the group achieved year-on-year revenue growth of 42.2 per cent to 16.86 billion yuan (HK$20.70 billion). Gross profit surged 99.2 per cent to 5.08 billion yuan and profit attributable to equity shareholders of the company soared 127.3 per cent to 2.23 billion yuan. Basic earnings per share reached 0.79 yuan, up 125.7 per cent compared with last year. The board recommended the payment of a final dividend of 24 HK cents per share for the year.

Zhang Bin, vice-chairman and general manager of China Shanshui Cement, says the firm seized the opportunities brought about by Beijing's policy of increasing investments in infrastructure, accelerating urbanisation and the construction in rural areas, and eliminating obsolete cement production capacity.

'We have leveraged our integrated competitive strength in market presence, scale of operations and cost effectiveness by adhering to a marketing strategy of 'clinker for profits and cement for market expansion'. Besides, the group vigorously implemented overall budget management to reduce costs and control expenditures, and achieved remarkable operating results,' Zhang says.

For individual product segments, cement revenue amounted to 14.12 billion yuan, a year-on-year growth of 52.3 per cent, and clinker revenue was 1.89 billion yuan, a fall of 2.8 per cent. Concrete revenue amounted to 243 million yuan, a year-on-year growth of 30.6 per cent.

The company benefited from industry consolidation and improved market control in the regions, as the price of cement and clinker soared. The average unit selling price of cement in Shandong was 299 yuan per tonne, a year-on-year rise of 25.6 per cent, while that in northeastern China was 282.7 yuan per tonne, a climb of 25 per cent, and the average unit selling price of cement in Shanxi was 298.3 yuan per tonne, a fall of 5.3 per cent.

The sales volume of cement was 47.94 million tonnes, a year-on-year growth of 21.9 per cent, while that of concrete was 0.94 million cubic metres, an increase of 19.4 per cent.

Several factors contributed to this growth in addition to the company's strong market presence and the expansion of production capacity. These included the government's restrictions on the addition of cement capacity, the phasing-out of obsolete cement capacity, and demand for cement from infrastructure construction projects and the property development industry.

China Shanshui sold 7 million tonnes of clinker, 28.9 per cent lower volume year-on-year. However, due to the sharp increase in unit selling price, sales revenues remained at a similar level.

The total capacity of the company's commercial concrete production lines amounted to 8.60 million cubic metres. Furthermore, several clinker production lines, equipped with residual heat power generation facilities, and a number of cement grinding production lines were under construction.

With new production lines starting operations, the group is expected to entrench its position in the cement markets in Shandong, Liaoning and Shanxi and eastern Inner Mongolia.