Tue, Nov 19, 2019 - Page 12 News List

Taiwan Cement upbeat as profit rises more than 10%

By Natasha Li  /  Staff reporter

Taiwan Cement Corp chairman Chang An-ping, front, second right, hosts an investors’ conference in Taipei yesterday, accompanied by Taiwan Cement president John Li, right, and International CSRC Investment Holdings Co president Huang Po-sung, front, third right.

Photo: CNA

Taiwan Cement Corp (TCC, 台灣水泥) yesterday gave a positive outlook for this quarter after it said net profit last quarter rose 10.17 percent annually to NT$6.54 billion (US$214.4 million), or earnings per share (EPS) of NT$1.2.

Net profit in the first three quarters of this year increased 11.14 percent to NT$17.72 billion, a record, translating into EPS of NT$3.24, thanks to stable cement prices and a stronger contribution from the company’s coal-fired Ho-Ping Power Plant in Hualien on the back of falling coal prices.

However, revenue declined 3.51 percent to NT$87.56 billion during the January-to-September period.

The company was in 2017 ranked the 11th-biggest cement maker globally in terms of production capacity at 74.7 million tonnes, and it has been expanding its production capacity since, TCC president John Li (李鐘培) told an investors’ conference in Taipei.

“We have added 19 million tonnes to our production capacity from our Turkish unit since November last year, while another 7.6 million tonnes came into play from our Portuguese unit,” Li said, adding that overall production capacity is 101.5 million tonnes.

TCC last year invested US$1.1 billion to set up a joint venture with Turkey’s OYAK Cimento AS, named Dutch OYAK TCC Holdings BV, in which TCC has a 40 percent stake.

The venture allows the company to manage the Turkish company’s domestic cement business and also enables it to tap into the European and African markets, as OYAK has since acquired Cimpor Portugal SGPS SA’s Portugal and Cape Verde operations.

Underlining the company’s ambition to expand its business across the globe, Li voiced strong optimism in TCC’s latest overseas ventures, comparing them to the evolution of the Silk Road connecting the East and the West.

While TCC looks to expand its horizons, China remains home to one of the company’s biggest markets, where it sold 40.5 million tonnes of cement last quarter, generating revenue of 12.51 billion yuan (US$1.78 billion), up from 12.49 billion yuan a year earlier.

Gross margins of cement operations in China declined from 37.2 percent to 35.6 percent due to higher labor and transportation costs, higher raw material prices as well as higher costs related to implementing environmentally friendly measures, Li said.

Business should hold steady in China, despite declining cement prices in southwestern Guizhou Province, Li said, pointing to strong demand in regional markets, including Guangdong, Guangxi and Jiangsu provinces.

Li said he expects the company to continue enjoying stable prices in these provinces over the next few quarters as the Chinese government tightens controls of nitrogen oxide emissions.

“The prices are driven higher as smaller companies cannot afford to abide by these regulations,” he added.

Such environmental regulations further benefit the company, as PC32.5R-grade cement is eliminated, Li said, while replacements, such as PC42.5 and M32.5-grade cement, yield a higher gross margin.

Separately, TCC subsidiary International CSRC Investment Holdings Co (國際中橡), which specializes in carbon black, gave a dim outlook for this quarter as it posted a 49.59 percent decline in net profit to NT$514.26 million for last quarter on the back of poor vehicle sales in China and India.

EPS dipped to NT$0.53, it said.

While demand for carbon black in the US would continue into next year, sales will likely be hampered by the International Maritime Organization’s upcoming low-sulfur regulations and pricing uncertainties, CSRC president Huang Po-sung (黃柏松) said.

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