Taiwan Cement Corp (TCC, 台灣水泥) on Tuesday reported strong quarterly profits, benefiting from cement price hikes in China and production cuts by peers, as well as contributions from its China-based subsidiary, TCC International Holdings Ltd (台泥國際), following its privatization in November last year.
The Taipei-based firm’s first-quarter net income and gross margin were both record highs for the company during the period, which is traditionally a slow season.
Net income was NT$2.95 billion (US$98.69 million), up 253.97 percent year-on-year, while gross margin per tonne was 101.1 yuan (US$15.85), up 161.24 percent annually, the company said.
Earnings per share (EPS) rose to NT$0.69 last quarter, from NT$0.23 a year earlier, it added.
Consolidated revenue rose 14.2 percent to NT$24.18 billion from NT$21.18 billion, while gross margin and operating margin grew to 23.95 percent and 19.23 percent respectively, up by 9.79 percentage points and 10.06 percentage points from a year earlier, it reported.
Taiwan Cement’s core business had its best quarter since 2014, riding a wave of increased prices driven by disciplined production by peers and solid Chinese demand that also aided other Taiwanese cement makers, including Asia Cement Corp (亞泥) and Hsing Ta Cement Co (信大水泥).
Taiwan Cement chairman Nelson Chang (張安平) told an investors’ conference that he is upbeat on market demand this year and expects revenue to peak in the fourth quarter.
The company might announce a potential acquisition of a European cement maker in November, part of its global expansion strategy, the Chinese-language Economic Daily News quoted Chang as saying.
Taiwan Cement president John Li (李鐘培) delivered a similar message to investors, saying the company’s business last quarter was mainly helped by strong earnings from its China operations, which more than offset losses from Ho-ping Power Co (和平電廠) in Taiwan.
The cement price outlook for this quarter is also positive, Chinese-language online news provider Cnyes.com quoted Li as saying.
Taiwan Cement shares yesterday rose 5.52 percent to NT$45.9 in Taipei trading. The stock has climbed 25.93 percent since the beginning of the year.
“We remain positive on TCC’s earnings momentum, given its strong first-quarter results, a likely expansion in gross profit per tonne in China this quarter and the improving operating profits of its non-cement businesses,” Yuanta Securities Investment Consulting Co (元大投顧) analyst Leo Lee (李侃奇) said yesterday in a client note.
“Overall, we expect second-quarter EPS of NT$1.27, up 84 percent quarter-on-quarter and 119 percent year-on-year,” Lee added.
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