Shares of Taiwan Cement Corp (台灣水泥) yesterday closed up 1.53 percent, outpacing the TAIEX’s 1.12 percent increase, after the company on Monday gave a positive outlook for its core businesses this quarter and as the cement market appears to have emerged from the shadows of the COVID-19 pandemic in China.
Chinese construction started to resume in March and appeared to have mostly returned to normalcy last month, bolstering the company’s selling prices and output in the current quarter to levels similar to the same period last year, Taiwan Cement president John Li (李鐘培) told an earnings conference in Taipei.
The second quarter might turn out stronger than a year earlier, aided by lower coal prices, which should lift the company’s profit margin, Lee said.
Taiwan Cement posted revenue of NT$10.21 billion (US$340.9 million) last month, up 7.8 percent from March, but down 3.6 percent from a year earlier.
Net income fell 24.06 percent year-on-year to NT$2.99 billion, translating into a two-and-a-half-year low of NT$0.55 per share.
The company attributed the retreat to lockdowns in China, which halted construction on public works and real-estate projects, and a slump in demand for cement.
Li said core operations held relatively resilient, but non-cement businesses weighed on its overall performance. Taiwan Cement has investments in International CSRC Investment Holdings Co (國際中橡), Taiwan Prosperity Chemical Corp (信昌化工) and the coal-fired Ho-Ping Power Plant (和平電廠).
Taiwan Cement has focused on southern and southwestern China, where cement output has recovered faster than the sector average, senior vice president Edward Huang (黃健強) said.
China’s local governments are speeding up publicly funded construction to help reinvigorate domestic demand and the economy as a whole, which should be favorable to cement sales this quarter and beyond, Huang said, adding that the second half of the year is a high season.
Infrastructure construction is also expected to gain traction in Taiwan and overseas markets, such as Turkey, Portugal and the Ivory Coast, lending support to cement demand and prices, the company said.
Overall, Taiwan Cement is looking at flattish earnings this year in light of a high base last year and lingering virus fallout.
The outbreak has taken a serious toll on major economies, with GDP contractions of 6.8 percent in China, 4.8 percent in the US and 5.8 percent in France in the first quarter, Taiwan Cement chairman Nelson Chang (張安平) said.
Meanwhile, the number of jobless people hit 40 million in the US and 50 million in the eurozone, meriting a cautious outlook, he said.
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