West China Cement (2233) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 6.3% to RMB9,020.9m and gross profit rose 12.8% to RMB2,460.0m; profit attributable to owners fell 65.3% to RMB421.3m.

• Cement and clinker sales volume increased 6.2% to 20.5m tons; higher African margins and cost controls helped offset weaker PRC prices.

Financial highlights

• Revenue RMB9,020.9m, up 6.3% YoY; gross profit RMB2,460.0m, up 12.8%; profit for the year RMB685.7m vs RMB1,344.1m.

• EBITDA RMB2,948.6m, down 7.2%; attributable profit RMB421.3m, down 65.3%; basic EPS RMB0.077 vs RMB0.224.

• Cement sales volume rose 7.0% to 19.8m tons; aggregates fell 12.2% to 4.05m tons; commercial concrete rose 9.8% to 1.91m m³.

• Gross margin increased to 27.3% from 25.7%; EBITDA margin declined to 32.7% from 37.4%.

Outlook and guidance

• 2024 PRC cement demand expected to remain subdued: infrastructure should grow reasonably, while low real estate investment remains a headwind; peak-shifting production continues but its supply-balancing effect may weaken.

• Shaanxi outlook anticipates stable prices under constrained supply; Xinjiang and Guizhou operations are expected to remain subdued, with special cement supporting Guizhou ASPs and margins.

• Mozambique sales volume is expected to increase with stable ASPs; Ethiopia outlook anticipates gradual volume and ASP growth, supported by infrastructure and major projects.

• New 5m-ton-per-year Lemi, Ethiopia, and 2.4m-ton-per-year Andijon, Uzbekistan, cement plants are expected to start production in Q2 2024.

• 2024 priorities include cost control, differentiated marketing, overseas risk management, emissions upgrades and intelligent manufacturing.