European acquisitions on Sinoma's agenda

PUBLISHED : Wednesday, 27 March, 2013, 12:00am
UPDATED : Wednesday, 27 March, 2013, 5:40am

China National Materials (Sinoma) will increase its capital expenditure by 29 per cent to 11.23 billion yuan (HK$13.89 billion) this year, some of which may be spent on acquiring European companies.

The state-owned firm had set aside 500 million yuan to acquire mostly foreign cement equipment companies, said chief financial officer Yu Kaijun. "We are in talks to acquire some European cement equipment companies, including German ones."

Sinoma's Shanghai-listed subsidiary, Sinoma International, is the world's biggest cement equipment producer. Sinoma is the third-largest cement producer and one of the three biggest manufacturers of wind turbine blades on the mainland.

In the cement equipment sector, Sinoma International would explore opportunities in Africa, the Middle East and Southeast Asia, said Sinoma chairman Liu Zhijiang. "It will secure its footing in long-term strategic markets, including Russia and South America, and enhance its influence in India," he said.

This year, Sinoma International aimed to secure more than 30 billion yuan of orders for cement equipment, said Liu.

About two-thirds of the orders would come from overseas, said Yu. The unit had secured 10 billion yuan of orders since January, mostly from abroad, he added.

Sinoma will also invest 5.94 billion yuan in expanding cement production capacity on the mainland, less than the 7.02 billion yuan it spent last year.

The heavy capital expenditure pushed the firm's net gearing ratio to 81.76 per cent at the end of last year from 78.93 per cent previously.

Net profit plunged 67.6 per cent to 473.85 million yuan last year as cement prices slumped.