HONG KONG, Mar 30, 2015 – (ACN Newswire) – China Shanshui Cement Group Limited ("Shanshui Cement" or the "Group"; HKEx: 00691), the largest cement enterprise in Shandong and Liaoning Provinces in China, has announced its audited annual results for the twelve months ended 31 December 2014, prepared in accordance with International Financial Reporting Standards.
During the year, the Group recorded sales revenue of RMB15,596 million. Gross profit was RMB3,347 million. Profit from operations was RMB1,813 million. Profit attributable to equity shareholders of the Company was RMB348 million. The decrease in profit was mainly due to the fall of selling prices. Basic earnings per share were RMB0.12. The Board does not recommend dividend payment for the year ended 31 December 2014.
Mr. Zhang Bin, Chairman and General Manager of Shanshui Cement, said "Due to the slowdown in China's economic growth and deceleration in the growth rate of fixed assets investment, in particular, the decline in the growth rate of investment in real estate development, the national aggregate volume in cement production only increased 1.8% in 2014 as compared with the previous year. The sales revenue and profit growth of the cement industry also showed a corresponding sluggish trend. In the face of the weak market demand and the stagnant prices, the Group has been actively preparing for the in-depth expansion along the industrial product chain, improving and refining fundamental internal management and enhancing the quality of production and operational performance to maintain sustainable profitability."
During the year, the sales volume of concrete of the Group increased by 21.2% to 3.47 million cubic meters, while the sales volume of commercial clinker increased by 6.5% to 9.82 million tonnes. The sales volume of cement decreased by 0.5% to 53.15 million tonnes. The sales volume of high grade cement rose 12.5% to 39.98 million tonnes, and sales volume of low grade cement dropped 26.4% to 13.17 million tonnes.
The average unit selling price of cement of the Group was RMB235.4 per tonne, representing a year-on-year decrease of RMB14.5 per tonne or 5.8%. The Group's operating companies in the Shandong Region recorded a sales revenue of RMB10,479 million, accounting for 67.2% of the Group's total sales revenue. The operating companies in the Northeast Region reported sales revenue of RMB4,028 million, accounting for 25.8% of the Group's total sales revenue. The commencement of operations for its operating companies in Shanxi will make greater contributions to the Group's sales revenue.
Through establishing nine new production lines and acquiring two production facilities, the Group added both new cement and clinker production capacity (including production lines in test run) of 8.40 million tonnes and 3.58 million tonnes respectively. As at the end of 2014, the total capacity of the Group's commercial concrete production lines amounted to 18.40 million m3; all suitable clinker production lines had been equipped with residual heat generation facilities, and the total installed capacity amounted to 247.0 MW. As more new projects commence operations, the Group is further strengthening its position and standing out in the cement markets in Shandong, Liaoning and Shanxi provinces, as well as in eastern Inner Mongolia and the Kashi region of Xinjiang.
The Group has implemented strict measures to control costs and expenses. During the year, the proportion of the Group's total cost of sales to revenue was 78.5%, representing a year-on-year increase of 1.7 percentage points. Of which, the proportion of raw materials costs to revenue was 26.4%, an increase of 0.9 percentage points over last year. The proportion of coal costs to revenue was 20.1%, remaining flat over last year. The Group's average unit purchase price of coal in 2014 decreased by 9.2% year on year to RMB521.2 per tonne. As for cost reduction, output of residual heat power generation was 1,178 million KWH in 2014, thus reducing the cost of clinker by RMB429 million.
Looking at the operating environment in 2015, Mr. Zhang believes that the increase of infrastructure investment by the government will boost demand in cement. On the other hand, the imposition of more stringent emission standards in the cement industry, the rise in environmental compliance costs, and the gradual elimination of low-end cement products will speed up the elimination of obsolete production capacity. This will in turn facilitate industry consolidation, further increase market concentration, and gradually resolve the imbalance of supply and demand in the cement market as the competitive advantages of large enterprises will become more apparent.
Mr. Zhang concluded, "Shanshui Cement will further consolidate its market share in core regions, stabilize the price of cement, optimize centralized procurement and supply systems in order to effectively reduce the costs and enhance operational efficiency. We will spare no effort to maintain the healthy development of the Group and strive for fruitful returns for our investors to reward their continued trust and support."
About China Shanshui Cement Group Limited
Shanshui Cement is the largest producer of cement in Shandong and Liaoning Provinces and one of the largest cement producers in China. The Group operates production lines and cement grinding lines that adopt the most advanced suspension pre-heater dry process. The Group will continue to expand its business through acquisitions and construction of its production lines. As of 31 December 2014, the Group's total production capacity of cement and clinker reached 102.60 million tonnes and 48.93 million tonnes respectively. Shanshui Cement is currently a constituent stock of the Hang Seng Composite Index Series, Hang Seng Composite MidCap Index Series and Properties & Construction Industry Index Series. For more information, please visit www.shanshuigroup.com.
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