Taiwan Cement Corp (台灣水泥), the nation’s biggest cement maker, yesterday said that business has remained weak since last year, adding that it hopes to see a pickup in the second half of this year.
“We could say that our business in the first quarter of this year remained under pressure due to a pessimistic sentiment that has continued from last year,” Taiwan Cement chairman Leslie Koo (辜成允) said at an investors’ conference in Taipei.
“This quarter is to be critical for the company after last month’s shipments showed signs of stabilizing,” Koo said.
In the final quarter of last year, Taiwan Cement reported net income of NT$1.78 billion (US$55.02 million), down 31.3 percent year-on-year, with revenue dropping 17 percent from the previous year to NT$24.6 billion. The company has not released its earnings for the first quarter of this year, but its revenue for the quarter fell 17.3 percent from a year earlier to NT$17.73 billion.
However, the company said demand started to pick up last month driven by the infrastructure sector. Shipments to China reached 10.8 million tonnes in the first quarter, an increase of nearly 18 percent from the 9.2 million tonnes seen in the same period of last year, Taiwan Cement senior vice president Edward Huang (黃健強) said.
Huang said overall demand for cement and clinker this year should remain steady or improve from last year, citing contribution from transportation construction projects in Taiwan and potential infrastructure demand in China.
Last year, the company’s net income fell 46.7 percent to NT$5.78 billion from NT$10.83 billion a year earlier, with earnings per share decreasing from NT$2.93 to NT$1.56, while sales dropped 20.8 percent annually from NT$118.33 billion to NT$93.68 billion.
Taiwan Cement, which has a significant presence in China, attributed its loss last year to falling prices and lower demand as the economy slowed in China leading to oversupply.
Huang said capacity excess in the industry should come to an end this year, as the Chinese government has ordered the suspension of cement factories’ production in 15 provinces in northern regions since the end of last year, in a move to digest inventories.
In addition, a weak pricing environment is likely to improve this year, as Taiwan Cement has been able to raise its product prices several times since last month, Huang said.
In China, Jiangxu cement prices have risen four times for a total increase of 60 yuan per tonne (US$9.3 per tonne), while those in Guandong, Guanxi and Guizhou have increased by 20 yuan per tonne, he added.
“Prices are likely to increase again by the end of this month or at the beginning of next month,” Huang said.
The 7th-largest cement maker in China by capacity, Taiwan Cement yesterday maintained its target capacity of 100 million tonnes a year without giving a time schedule, Huang said.
The company plans to invest in four new production lines this year, Huang said. A new plant in Shaoguan, China, is expected to begin mass production in the first half of next year.
In addition, as anti-dumping duties toward China’s cement are to end next month, Taiwan Cement Manufacturers’ Association has officially filed an investigation request to the Ministry of Economic Affairs’ International Trade Committee, according to Huang. In May 2011, Taiwan levied a 91.58 percent anti-dumping tax on cement imported from China.
“The investigation would take about 10 months to a year to come to a conclusion. During this period, the anti-dumping duties will remain unchanged,” Huang said.
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