Displaying items by tag: China Resources Cement

China: Jing Shiqing has been appointed as the chair of China Resources Cement (CRC) and Xie Ji has been appointed as the CEO. Jing was previously the CEO of the company and Ji Youhong was previously the chair.

Jing, aged 43 years, has worked as the CEO of CRH since 2023. He joined the group in 2003. He became the Deputy General Manager of the Human Resources Department of China Resources Group in 2018 and the Vice President of the company in 2021. He holds a bachelor’s degree in engineering from the Changsha University of Science and Technology, China and a master’s degree in business administration from the Nanjing University. He is currently the Vice President of the Fifth Council of the Guangdong Building Materials Association.

Xie, aged 52 years, previously worked as the Deputy General Manager of the Strategic Management Department at CRC. He joined the group in 1993. Notable roles include working as a Vice President in the early 2010s and Chief Strategy Officer from 2021 to mid-2024. He holds a bachelor’s degree in civil engineering from Tongji University and an executive master’s degree in business administration from China Europe International Business School.

China: Ji Youhong has retired as the chair of China Resources Cement as he has reached retirement age. He has also stepped down as an executive director, the chair of the company’s strategy and investment committee and the chair of its nomination committee. CEO Jing Shiqin will chair the board on an interim basis until a successor is appointment.

Ji was appointed as the chair of the board of China Resources Cement in 2022 and an executive director in 2016. He originally joined the group in 2003 and has worked in various positions including the general manager of various cement and concrete subsidiaries, the marketing controller from 2008 to 2012, the Regional General Manager (Guangxi) from 2012 to 2016, and the CEO from 2016 to 2023. JI holds a bachelor’s degree in engineering and a master’s degree in inorganic and non-metallic materials. He is currently the vice chair of the China Building Materials Federation and the executive vice chair of the China Cement Association. Previously he was the Vice President of the Eighth Council of the China Concrete and Cement-Based Products Association.

China: China Resources Cement (CRC) has rebranded to China Resources Building Materials Technology (CRBMT). The producer says that this reflects its business positioning and development strategy, and marks the launch of its transformation into a building materials group around its existing cement business.

The first half of 2023 has continued to be a tough period for the major China-based cement producers, with revenue and profits down for many. As CNBM put it, the sector is facing production overcapacity, weak demand, high inventory, low prices and declining profits. However, not every company has followed this trend, with a few such as Anhui Conch, Huaxin Cement and Tapai Group managing to hold operating income up and the latter somehow even managing to increase its net profit. The China Cement Association (CCA) in its financial coverage has memorably described these companies that have bucked the national picture as ‘dark horses.’

Graph 1: Sales revenue from selected Chinese cement producers. Source: Company financial reports. Note: For CNBM, cement revenue shown only.

Graph 1 above summarises the situation for a selected group of cement producers. Anhui Conch avoided the fate of CNBM by managing to grow its non-cement revenue, specifically from aggregates and concrete. Yet it too was unble to avoid its net profit falling by 32% year-on-year to US$928m in the first half of 2023 from US$1.37bn in the same period in 2022. Huaxin Cement pulled off the same trick by raising its concrete and aggregates revenue domestically and by growing its overseas revenue. As well as its subsidiaries in Africa, the company also added Oman Cement to its portfolio, completing the acquisition of a majority stake in April 2023. The CCA has a wider roundup of how well the local cement companies have done.

Graph 2: Cement output in China, 2019 to first half of 2023. Source: National Bureau of Statistics of China.

Data from the National Bureau of Statistics of China suggests that the cement sector is stagnating rather than actively declining. This is an improvement of sorts from the decline in the first half of 2022, at least. Cement output in the first half of 2023 rose ever so slightly to 980Mt from 979Mt in the same period in 2022. On a rolling annual basis cement output has been gently falling below 1% each month since November 2022, although it rose by nearly 1% in March 2023.

The underlying problem for the Chinese cement sector remains the local real estate market. Developer Country Garden has been the latest company to warn of potential losses – of up to US$7.6bn – in the first half of 2023. It is also currently attempting to ask for more time to repay a bond. This follows the financial problems that Evergrande has faced since 2021. Financial analysts have been monitoring the situation for several years and warning of what a larger collapse in the sector could mean for the wider economy, such as the implications for the banks that hold the debts of the developers. Commentary by Goldman Sachs in August 2023, for example, suggested that the real estate sector needs to manage its inventory on a large scale, with over US$2Tn in liquidations, in order to restructure debts in the property sector. It estimated that the whole situation could reduce the country’s entire gross domestic product (GDP) by 1.5% in 2023, although this would be the trough of the downturn in its view.

Cement producers in China continue to be held hostage by the conditions in the real estate market and the effect this has in turn on demand for building materials. Yet all is not lost, as the examples of the CCA’s ‘dark horses’ show, buoyed by business diversification, overseas expansion or even regional differences. How much longer the rest of the other cement companies can cope in this environment remains to be seen. A less regulated market would certainly expect to see mergers and acquisitions taking place as the financial pressure mounts. China, for now at least, remains steadfastly different. With luck the real estate market may reach its lowest point in 2023 and a recovery could follow.

China: China Resources Cement’s turnover was US$1.69bn during the first half of 2023, down by 27% from US$2.23bn during the first half of 2022. Reuters has reported that China Resources Cement recorded a net profit of US$86m, down by 66% year-on-year from US$250m.

China: China Resources Cement has applied to the National Association of Financial Market Institutional Investors (NAFMII) to register an issuance of notes, Reuters has reported. Under the application, China Resources Cement seeks to register an issuance of US$2.08bn in medium-term notes.

China: China Resources Cement (CRC) has appointed Jing Shiqin as its chief executive officer. He succeeds Ji Youhon, who will continue to work as the chair of the board, an executive director, the chair of the strategy and investment committee and the chair of the nomination committee.

Jing, aged 42 years, joined China Resources Group in July 2003 and worked as the Deputy General Manager of the Human Resources Department of China Resources Group from 2018 to March 2021, as well as a non-executive director of both the company and of China Resources Gas Group at around the same time. He joined CRC in mid-2021 and was its Vice President until April 2023. Other roles have included being responsible for the management of the Marketing Management Department, the Smart & Information Technology Department and the Technology and Innovation Department. Jing holds a bachelor’s degree in engineering from the Changsha University of Science and Technology and a master’s degree in business administration from the Nanjing University.

China: China Resources Cement has forecast a loss of US$4.46 – 5.73m during the first quarter of 2023, which ended on 31 March 2023. Dow Jones Institutional News has reported that the group attributed the anticipated scale of the loss to a year-on-year decline in its cement prices.

The Chinese cement sector had a tough time in 2022. This was confirmed this week as the large domestic cement producers released their financial results. Revenue was down, profits fell and cement sales volumes tumbled. The key causes included the continuation of the country’s zero-coronavirus policy, the declining real estate market and rising input costs for raw materials such as coal. Demand for cement withered and so did the fortunes of the cement companies.

Graph 1: Cement output in China, 2018 to 2022. Source: National Bureau of Statistics of China.

Data from the National Bureau of Statistics of China shows that cement output fell by 9.8% year-on-year to 2.13Bnt in 2022 from 2.36Bnt in 2021. The greater decrease was in the first half of the year rather than the second. The China Cement Association (CCA) said that this was nearly the lowest output in the last decade and the largest decline since 1969 ! The National Bureau of Statistics of China also pointed out in a release that, despite investment in fixed assets increasing by around 5% in 2022 and national infrastructure spending growing by 9%, real estate development investment dropped by 10% to US$1.46Tn.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports.

Graph 3: Sales volumes of cement and clinker from selected Chinese cement producers. Source: Company financial reports.

The cement producers warned in their forecasts that the results for 2022 were going to be rough and so it came to pass. China National Building Material (CNBM)’s revenue fell by 16% year-on-year to US$33.4bn in 2022 and Anhui Conch’s sales fell by 21% to US$19.2bn in 2022. Although, Tangshang Jidong Cement and Huaxin Cement reported declines of income or revenue in single digits. Profits halved for all of the companies covered here. Various combinations of the reasons covered above were cited for the situation.

What is more interesting are the responses some of the producers are making and what has gone well. CNBM, for example, is pinning its hopes on better staggered peak production and infrastructure projects. Anhui Conch, meanwhile, appears to have been diversifying its business by increasing both its concrete and solar power production capacity significantly in 2022. It was also announced that it plans to spend US$2.81bn on capital expenditure projects in 2023. China Resources Cement (CRC) said it had optimised its presence in South China through selected acquisition and divestments. Huaxin Cement has continued its focus on overseas markets with its share of operating revenue originating from outside China rising to 13% of the group’s total in 2022 compared to 8% in 2021. It also mentioned a number of unnamed projects around the world steadily drawing nearer to action. Sure enough, the group announced earlier in March 2023 that it was buying a majority stake in Oman Cement.

As for 2023, the CCA forecast in January 2023 that cement demand would be flat or slightly down. However, at the same time, provincial changes to the real estate market are expected to improve market conditions and infrastructure development will further drive demand for cement. The CCA identified that the cement sector’s production overcapacity could become an issue with lower demand. In 2022 the national clinker production utilisation rate was 65%, a fall of 10% from that in 2021. It also pointed out that peak-staggered production had actually helped cement producers generally to cope with smaller declines in profits compared to less well regulated industries.

Problems such as the zero-coronavirus policy, the real estate market and rising raw material costs have made the country’s production overcapacity issue worse. Changes are being made such as the national abandonment of the coronavirus lockdowns in late 2022, and, as mentioned above, the real estate market is being modified. In addition to this, various environmental changes are on the way, as the government works towards its sustainability goals. The country remains the largest cement producer in the world. Yet the message here is that we should expect more of the same for the cement sector in China in 2023.

China: China Resources Cement (CRC) turnover fell by 27% year-on-year to US$4.10bn in 2022 from US$5.60bn in 2021. Its profit dropped by 75% to US$247m from US$989m. Its cement and concrete sales volumes decreased by 11% to 72.1Mt and 27% to 10.8Mm³ respectively. During the reporting year the group says it optimised its presence in South China by acquiring majority stakes in Hunan Liangtian Cement and Zhaoqing Jingang Cement, buying a minority stake in Fengqing County Xiqian Cement and by selling a majority stake in Shanxi China Resources Fulong Cement.