Taiwan Cement Corp (台泥) expects demand to pick up gradually this year, after earnings declined more than 20 percent in the fourth quarter because of government efforts in Taiwan and China to curb property speculation, top executives said yesterday.
“We are cautiously optimistic about the business outlook [this year] after a below-trend fourth quarter when the unfavorable macroenvironment softened demand and pushed down selling prices,” Leslie Koo (辜成允), chairman of the nation’s largest cement producer, told an investors’ conference.
Political uncertainty over the leadership reshuffle in China is likely to settle by the end of the first half, allowing public construction works to resume, he said, adding that the landscape elsewhere is also expected to become clearer in the second half.
The Taipei-based company, which has been expanding its operations in China, posted NT$2 billion in net income last quarter (US$67.69 million), a fall of 22.2 percent from the third quarter and 24.1 percent year-on-year, the company’s report showed.
For the whole of last year, net profit rose 7.3 percent to NT$8.62 billion, or earnings per share of NT$2.33, as the company expanded its capacity to become the sixth-largest in China, spokesman Edward Huang (黃健強) said.
The company also aims to become the third largest through organic growth and acquisitions, Huang said.
Gross profit margin last quarter fell to 16 percent, from 17.9 percent three months earlier, but annual margin improved to 17.4 percent last year, from 11.2 percent in 2010, Huang said.
“China’s plan to increase social housing will offset the pain of continued efforts to curb property speculation,” he said.
Beijing’s moves to strengthen infrastructure facilities in rural areas should also help boost demand for cement, Huang said.
Overall capacity in China grew rapidly to 60 million tonnes last year, from 40.4 million tonnes in 2010, with plants in the southern provinces of Guangdong and Guangxi contributing 45.5 percent, he said.
“The company is on track to raise the target to 100 million tonnes a year in 2016,” Huang said.
Sales saw concrete improvement this month after emerging from the low season in the first two months, although selling prices remained weak, Koo said.
In Taiwan, the introduction of anti-dumping tariffs has benefited the company’s sales and lifted its gross margin to 9.8 percent, the report showed.
In the export market, the company expects strong demand from emerging economies, given limited supply from main rival countries, such as China, Japan and Thailand, Koo said.
“We have signed [sales] contracts for this year, with selling prices increasing 20 percent from last year,” Koo said.
Taiwan Cement closed up 0.44 percent at NT$34.55 yesterday, while the benchmark TAIEX gained 0.77 percent.
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