Taiheiyo Cement sales exceed expectations, Japan

Japan’s leading cement producer Taiheiyo Cement is expected to report a 260 per cent YoY rise in consolidated pretax profit for the six months ended 30 September on earthquake rebuilding.

A Nikkei report shows states that cement sales have exceeded targets due to reconstruction efforts relating to the Great Japan Earthquake in March 2011, and costs for coal have also been lower than expected.

The cement producer had also projected a net loss of JPY3.2bn in part on the disposal of production facilities but the actual loss is likely to be smaller or the company could see a net profit.

Overall sales are expected to have grown two per cent to around JPY355bn, slightly above the JPY252bn projected. Cement sales for roads and railways increased, mainly in notheastern Japan, the area hit hardest by the disaster. Redevelopment projects in large cities such as Osaka also lifted demand.

Operating profit is expected to be up by 60 per cent to roughly JPY9bn. The firm received shipments of disaster debris, boosting its business of recycling cement materials. Small price hikes on cement in Hokkaido and elsewhere also increased profit.

Earnings also improved in the  US, where its unit logged a smaller loss than a year ago thanks to a recovery in housing starts. Although Taiheiyo Cement's Chinese business suffered from falling prices, Vietnamese and Philippine operations were solid.

South Korean affiliate Ssangyong Cement Industrial Co. posted a net loss for the April-June quarter, socking Taiheiyo Cement with a JPY2.8bn equity loss for that period. But the South Korean firm swung to the black in the following quarter.

With Japanese cement demand seen continuing to grow in the second half on the back of reconstruction demand, Taiheiyo Cement will likely upgrade its full-year earnings forecasts.

For 2012, the Japan Cement Association sees cement consumption rising 2.14 per cent YoY led by the government’s post-earthquake reconstruction efforts.