West China Cement (2233) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 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 7.1 cents.

• Sales volumes of cement and clinker decreased 8.3% to 8.75 million tons, with notable declines in Shaanxi, Xinjiang, Guizhou, Mozambique, and Ethiopia.

• The Group maintained stable margins through efficiency enhancements and cost-cutting, despite lower average selling prices in China.

• No interim dividend declared for the period.

Financial highlights

• Gross profit margin decreased from 28.1% to 26.6%; EBITDA margin remained stable at 34.5%.

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

• Net gearing ratio was 60.1%, nearly unchanged from year-end 2023.

• Capital expenditure for the period was RMB1,635.7 million, mainly for maintenance and new facilities in Uzbekistan and Ethiopia.

• Net assets per share: 271 cents (up 4.2%).

Outlook and guidance

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

• The Group anticipates stable prices and moderate demand growth in Shaanxi, subdued conditions in Xinjiang and Guizhou, and improved sales in Mozambique, D.R. Congo, and Ethiopia.

• New production lines in Ethiopia (Lemi) and Uzbekistan (Andijan) are expected to enhance overseas growth.

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