Taiwan producers invest further in China

Despite recording a decline in first-half net profits Taiwain-based cement producers Taiwan Cement and Asia Cement, have underlined their confidence in the Chinese market by planning to invest over TWD1.8bn (US$60m) in their respective operations.

Asia Cement reported 1H net profit of TWD4.088bn (US$136.27m) in net profits in the first half, with earning per share falling 30 per cent YoY to TWD1.27 (US$0.042). Meanwhile, TCC’s net profits decreased 2.5 per cent YoY to TWD$3.95bn (US$131.67m).

A representative of Asia Cement indicated that profits in the cement business in the first half increased multifold, but its reinvestment companies including Far Eastern New Century, U-Ming Marine Transport Corp., Asia Cement (China) Holdings Co. encountered an unexpected profit shrinkage due to global economic downturn.

Asia Cement’s business in China posted the largest profit decline in the first half, mainly due to serious oversupply in China and price reduction. TCC also suffered sagging profit due to unexpected performance in China, with organic profits in the first half already matching last year’s.

With rising infrastructural projects, a rebound in domestic cement price due to Taiwan government’s anti-dumping tariff on China-made cement, the two companies are both confident toward stable profits in the second half.

Optimistic towards the cement market in China, TCC and Asia cement keep expanding capacities. Taiwan Cement International Holdings Ltd, a subsidiary of TCC, invested over TWD2bn (US$66.67m) to build two production lines in Jiangxi, targeting 50Mt of cross-strait capacity by 2015. Meanwhile, Asia Cement announced to invest US$60m in its plants in Chongqing (Sichuan Province), Anshun (Guizhou Province).