West China Cement (2233) H1 2024 earnings summary

Executive summary

• Revenue for 1H2024 declined 15.8% year-over-year to RMB3,701.8 million, with gross profit down 20.2% to RMB985.1 million and EBITDA down 15.4% to RMB1,283.9 million; profit attributable to owners fell 27.3% to RMB386.9 million, and basic EPS dropped 27.6% to RMB7.1 cents.

• Cement and clinker sales volume fell 8.3% to 8.75 million tons, with notable declines in Shaanxi, Xinjiang, Guizhou, Mozambique, and Ethiopia.

• Maintained leading cement producer status in Shaanxi with 34.3mt installed capacity as of June 2024, expanding internationally with new Uzbekistan plant commissioned in May 2024.

• Margins remained stable through efficiency enhancements and cost-cutting, despite lower ASPs and challenging market conditions.

• No interim dividend declared for H1 2024.

Financial highlights

• Revenue: RMB3,701.8 million (down 15.8% year-over-year); gross profit: RMB985.1 million (down 20.2%); EBITDA: RMB1,283.9 million (down 15.4%); profit attributable to owners: RMB386.9 million (down 27.3%).

• Gross profit margin declined to 26.6% (down from 28.1%); EBITDA margin at 34.7% (flat year-over-year).

• Total assets increased 9.3% to RMB35,953.5 million; net debt rose 3.6% to RMB8,896.3 million.

• Net gearing at 60.1% as of June 2024, stable from 60.4% at end-2023.

• Cash and cash equivalents increased to RMB2,860.4 million as of June 2024.

Outlook and guidance

• Infrastructure-led demand in Shaanxi remains robust, supported by major ongoing and planned railway, expressway, and hydraulic projects.

• Infrastructure investment in China is expected to support cement demand, but property market weakness may persist.

• Overseas projects in Mozambique, D.R. Congo, and Ethiopia expected to see stable or improving sales volumes and ASPs; new production lines in Ethiopia (Lemi) and Uzbekistan (Andijan) to boost capacity.

• Continued focus on cost control, energy efficiency, environmental upgrades, and digital transformation.

• Expects continued supply to large-scale infrastructure projects in 2H2024, with significant cement demand anticipated.