China Resources Cement profit up 236.8% to HK$2.04bn

The company extended the Company’s geographical coverage from Southern China to Shanxi and Inner Mongolia through acquisitions.

China Resources Cement Holdings Limited (“China Resources Cement”), one of the leading NSP (New Suspension Pre-heater Technology) clinker, cement and concrete producers in China, announced its unaudited interim results for the six months ended 30 June 2011.

During the period under review, the Group’s revenue rose by 97.3% year-on-year to HK$10,051.7 million and profit attributable to equity owners of the Company achieved a substantial growth of 236.8% year-on-year to HK$2,045.3 million. Gross profit increased by 135.2% year-on-year to HK$3,330.5 million while overall gross margin climbed to 33.1%. Basic earnings per share reached HK$0.314, up 237.6%. The Board has resolved to declare the payment of an interim dividend of HK$0.05 per share for the six months ended 30 June 2011 (2010 1H: nil).

Madam Zhou Junqing, Chairman and Executive Director of China Resources Cement, said, “We are pleased to achieve fruitful results in the first half of 2011. With the commencement of the Twelfth Five-Year Plan, China has implemented favorable policies and increased investment in infrastructure and affordable homes on a national scale in China which spurred the steady increase of demand for cement and concrete.”

Benefitting from the strong demand for cement and concrete driven by sustained growth in GDP and fixed asset investment in China, the Company sold a total of 2.3 million tons of clinker,19.4 million tons of cement and 6.2 million cubic metres of concrete during the review period, a year-on-year growth of 35.2%, 75.5% and 44.8% respectively. These volumes translated to sales revenues of HK$0.7 billion, HK$7.2 billion and HK$2.2 billion respectively. Meanwhile, the average selling prices of clinker, cement and concrete for the period climbed to HK$301.5 per ton, HK$371.7 per ton and HK$348.0 per cubic metre, representing increases of 19.4%, 21.2% and 16.5% respectively over the corresponding period last year. Despite the rises in coal price and other costs in the review period, with its strong bargaining power, the Company was able to transfer cost increments and upwardly adjust the selling price, hence achieving a healthy margin and profitability, according to a China Resources Cement report.

During the first half of 2011, in accordance with its business expansion strategy, the Company made a number of significant acquisitions and equity transfers in Guangdong, Fujian, Shanxi and Inner Mongolia. These acquisitions enabled the Company to further consolidate its leading position in Southern China and further advance its national expansion.

As at 30 June 2011, it had 29 clinker production lines and 64 cement grinding lines in operation, with annual production capacities of 37.6 million tons of clinker and 53.4 million tons of cement respectively. It also operated 49 concrete batching plants with an annual production capacity of 29.0 million cubic metres of concrete. It is expected that its annual production capacities for clinker, cement and concrete will increase to 44.2 million tons, 63.7 million tons and 36.8 million cubic metres respectively by the end of 2011. In addition, the total clinker, cement and concrete production capacity held through equity interest in associates and jointly controlled entities attributable to the Company will reach 6.5 million tons, 10.5 million tons and 0.3 million cubic metres respectively by the end of 2011. During the period, the Company managed to maintain the utilisation rates of its clinker, cement and concrete production lines at 116.7%, 83.8% and 42.8% respectively as compared with 110.1%, 80.0% and 45.9% for the corresponding period last year.

In line with China’s policy directives, the Company strived to practise the circular recycling economy during the production and research and development so as to lead the industry putting innovative and green ideas into practice. Currently, 100% of the Company’s clinker production lines are using NSP technology and are equipped with residual heat recovery generators. All clinker production lines and cement grinding lines are able to consume industrial waste during production. In addition, the Company has actively promoted energy savings, emission reduction and a circular recycling economy in the industry. In March 2011, the Company launched the China Resources Circular

Economy Industries Demonstration Project in Hezhou, Guangxi, which aimed to cultivate the circular recycling industry chain among the plants of the Company, China Resources Power Holdings Company Limited and the Snowflake Beer of China Resources. Moreover, the Company also established the China Resources Cement Technology Centre in Guangzhou whose mission is to research and develop new energy savings and emission reduction technology and new techniques to effectively reduce costs as well as emissions.

Looking ahead, as the Ministry of Industry and Information Technology issued both the “Entry Conditions for Cement Industry” and the order for the closure of a list of kilns with outdated technology of 153.3 million tons in total which involves 782 cement companies in 2011, it should strengthen the consolidation of the cement industry and speed up the elimination of production capacity with outdated technology. Being a leading player in the industry with advanced green technology, the Company is confident it can tap the expansion opportunities by providing high quality and competitive cement products.