Taiwan Cement Corp hopes for improved 2H16

Taiwan Cement Corp, the nations biggest cement maker, yesterday said that business has remained weak since last year, adding that it hopes to see a pick-up in 2H16.

"Our business in the first quarter of this year remained under pressure due to a pessimistic sentiment that has continued from last year," Leslie Koo, Taiwan Cement chairman, said at an investors conference in Taipei.

In the final quarter of last year, Taiwan Cement reported net income of TWD1.78bn (US$55.02m), down 31.3 per cent YoY, with revenue dropping 17 per cent from the previous year to TWD24.6bn. The company has not released its earnings for the first quarter of this year, but its revenue for the quarter fell 17.3 per cent from a year earlier to TWD17.73bn.

Shipments to China reached 10.8Mt in the first quarter, an increase of nearly 18 per cent from the 9.2Mt seen in the same period of last year, Taiwan Cement Senior Vice President, Edward Huang, said.

Last year, the company's net income fell 46.7 per cent to TWD5.78bn from TWD10.83bn a year earlier, with earnings per share decreasing from TWD2.93 to TWD1.56, while sales dropped 20.8 per cent annually from TWD118.33bn to TWD93.68bn.

Taiwan Cement, which has a significant presence in China, attributed its loss last year to falling prices and lower demand as the economy slowed in China leading to oversupply.

"This quarter is to be critical for the company after last months shipments showed signs of stabilising," Mr Koo added.

Mr Huang said overall demand for cement and clinker this year should remain steady or improve from last year, citing the contribution from transportation construction projects in Taiwan and potential demand in China.

He added that capacity excess in China should come to an end this year, as the Chinese government has ordered the suspension of cement factories production in 15 provinces in northern regions since the end of last year, in a move to reduce inventories.

In addition, a weak pricing environment is likely to improve this year, as Taiwan Cement has been able to raise its product prices several times since last month, Mr Huang said. In China Jiangxu cement prices have risen four times for a total increase of CNY60/t(US$9.3/t), while those in Guandong, Guanxi and Guizhou have increased by CNY20/t, he added. Prices are likely to increase again by the end of this month or at the beginning of next month, Mr Huang said.

The seventh-largest cement maker in China by capacity, Taiwan Cement yesterday maintained its target capacity of 100Mta without giving a time schedule. The company plans to invest in four new production lines this year. A new plant in Shaoguan, China, is expected to begin mass production in the first half of next year.

In addition, as anti-dumping duties for Chinese cement are to end next month, Taiwan Cement Manufacturers Association has officially filed an investigation request to the Ministry of Economic Affairs International Trade Committee, according to Mr Huang. The investigation would take about 10 months to a year to come to a conclusion. During this period, the anti-dumping duties will remain unchanged.