Displaying items by tag: Japan

Japan: Taiheiyo Cement Corp has announced a net loss of USD67.7m from sales of USD2.14bn in the three months to 30 June 2011. The company's net loss was less than half the loss that it suffered in the same quarter of the previous fiscal year, which was USD140.6m. The closure of three domestic factories in the previous quarter and smaller payrolls boosted its bottom line.

While sales at the firm's mainstay cement operations were nearly unchanged from 2010, its operating loss totaled USD15.6m, far better than the USD49.5m operating loss logged in the same quarter of the previous fiscal year.

Cement demand in the Tohoku region fell in the wake of the massive earthquake that hit north east Japan in March 2011, but demand from construction of condominiums and commercial facilities rose in the Tokyo metropolitan area in particular, leading to the rise in sales.

Taiheiyo Cement expects its net profit through to the end of the current fiscal year (ending 31 March 2012) to jump by 150% to USD141.3m. The firm has also forecast that sales will drop by 2% to USD9.15bn and that operating profit will surge by 64% to USD351.5m for the full year.

Japan: Taiheiyo Cement Corporation has announced that it will install equipment at its Ofunato plant in Iwate Prefecture later in 2011 so that it can remove salt from the wood debris created as a result of the March 2011 tsunami.

Massive amounts of wood are currently being incinerated at the site but the resulting ash is being buried. This is because the debris was soaked in seawater by the tsunami, which results in ash with a very high salt content, potentially causing damage to the kiln when it is used for cement production.

Taiheiyo Cement will install machinery to pulverise and wash the debris to remove the salt, which will make its ash suitable for use in cement. It expects to be able to process 300-500t/day of debris a day in this fashion. This investment is significant, because it has been specifically brought about because of tsunami-derived waste materials.

Taiheiyo Cement expects to restore the other kiln at the plant and resume cement production by November 2011 and so will attempt to install the debris-processing equipment as soon as possible.

Both kilns at the Ofunato factory were damaged in the earthquake but since the end of June 2011, the least damaged plant has been put to use incinerating debris from Ofunato and nearby Rikuzentakata.

Japan: Major cement makers are dispersing their coal purchases to hedge against the risk of buying when prices are high. Traditionally, cement companies purchase a year's worth of coal in the month of April because price changes have tended to be small. With coal prices becoming more volatile, however, they are keeping a close eye on the market to gauge favourable times to buy.

Producers are hoping to keep costs in check in this way because coal purchases account for at least half of their materials expenses. Taiheiyo Cement has procured only about 30% of its coal supply for the current fiscal year, while Sumitomo Osaka Cement Co. and Mitsubishi Materials Corp. have each purchased around 60%. Sumitomo Osaka Cement, which began spreading out its purchases in the previous fiscal year, is reportedly considering whether or not to disperse costs even further.

Coal prices began rising in 2010 after major floods in Australia and the jump between January and March 2011, which served as the basis for purchase prices in April 2011, was particularly steep. Consequently, Taiheiyo Cement and Sumitomo Osaka Cement are believed to have paid nearly USD 150/t, an increase of 30% on April 2010. Wholesale coal prices are currently at around USD 135/t.

Japan: Post-earthquake reconstruction demand is expected to boost pre-tax profits at four major Japanese cement firms by a combined USD 411m until 2016.

Assuming that their market shares remain the same, reconstruction demand will push up pre-tax profits by USD 187.2m at Taiheiyo Cement Corp, USD 100m at Sumitomo Osaka Cement Co., USD 62.4m at Mitsubishi Materials Corp. and USD 62.4m at Ube Industries Ltd.

The Japan Cement Association estimates that 10Mt of cement will be used for reconstruction projects. The figure was arrived at based on damages estimated by the Cabinet Office and how cement sales increased in the aftermath of the 1995 Kobe earthquake. The trade group believes that full reconstruction will take about five years.

Cement firms each book an operating profit of about USD 50/t of cement sold. Taiheiyo Cement controls almost 40% of the market in Japan's north-eastern Tohoku region. Reconstruction demand will push up the firm's cement sales by nearly 4Mt, translating to a USD 37.4m contribution to pre-tax profit annually for the next five years.