Taiwan Cement expects stronger 2H20

Taiwan Cement Corp gave a positive outlook for its core businesses this quarter 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 normality last month, bolstering the company’s selling prices and output in the current quarter to levels similar to the same period last year, said Taiwan Cement President, John Li.

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 TWD10.21bn (US$340.9m) last month, up 7.8 per cent from March but down 3.6 per cent from a year earlier. Net income fell 24.1 per cent YoY to TWD2.99bn.

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. Taiwan Cement has focussed on southern and southwestern China, where cement output has recovered faster than the sector average, Taiwan Cement's Senior Vice President, Edward Huang, said.

China's local governments are speeding up publicly-funded construction to help rejuvenate domestic demand and the economy as a whole, which should be favourable to cement sales this quarter and beyond, Mr 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 Côte d'Ivoire, 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 fall-out.