China Tianrui Announces 2013 Annual Results

HONG KONG, March 26, 2014 /PRNewswire/ --

China Tianrui Group Cement Company Limited ("China Tianrui" or the "Company" and, together with its subsidiaries, the "Group") (stock code: 01252), a leading clinker and cement producer in Henan and Liaoning provinces, today announced its audited annual results for the twelve months ended 31 December 2013 (the "Period").

During the Period, the Group achieved revenue of approximately RMB8.66 billion, up 14.1% from 2012. Underpinned by robust sales performance of cement and clinker, it sold 36.9 million tons of cement and 3.3 million tons of clinker in 2013, representing 40.3% year-on-year growth and 8.3% year-on-year decrease, respectively, which was above the market average of the areas in which the Group operated. Nevertheless, gross profit margin retreated about 4 percentage points from 25.0% for 2012 to 21.9% for 2013 due to lower average selling prices of cement and clinker, with a gross profit stayed flat at approximately RMB1.89 billion when compared to 2012. Profit attributable to owners of the Company declined 28.8% to approximately RMB560 million from 2012.

Marketing Strategies Bore Fruits With 2H Results Improved Steadily

Management of the Company commented, "The operating environment of the markets in which the Group operated was very tough in the first half of 2013 due to oversupply problems and a slowdown in local investments. As a result, cement prices in both of Liaoning and Henan dropped considerably. However, as fixed asset investments in Henan accelerated in the second half, the cement sector has picked up gradually since the fourth quarter, and cement and clinker prices staged a bigger rebound. In the face of the complex and ever-changing market conditions, the Group closely tracked the latest development of the industry and formulated marketing strategies accordingly on a timely basis, hence successfully expanded our shares in Henan and Liaoning and reinforced our leadership in both markets. The utilization rate of our facilities was further enhanced, enabling us to benefit from greater economies of scale. Besides, through centralized procurement and other measures, the unit production costs were further reduced. Thanks to these initiatives, the Group maintained relatively higher profitability."

Cement sales for 2013 amounted to approximately RMB7.99 billion, up 18.8% from a year ago with their contribution to the Group's total revenue increasing to 92.3%. Meanwhile, clinker sales for 2013 decreased 22.8% year-on-year to approximately RMB660 million.

In terms of geographical segment, the Group generated approximately RMB6.27 billion of revenue from Central China in 2013, up 13.4% from the previous year. Revenue from Northeastern China was approximately RMB2.39 billion, up 16.0% year-on-year.

Addressed Market Needs and Pushed for Market Consolidation Plan

The Company's management added, "The new leadership of central government took the lead to map out the overall strategy for its future work: to grow steadily. While ensuring stable economic growth, it attaches considerable importance to the adjustment of economic structure and the economic reform. To address the oversupply issues of cement industry, it encourages the market consolidation through elimination of outdated and small enterprises so as to boost its competitiveness. In October 2013, the State Council published the 'Guiding Principles to Eliminate Overcapcity', in which it stressed the importance of improving and implementing fiscal, financial and land policies to facilitate mergers and acquisitions in the market. In response to the government's initiatives, the Group carried out acquisitions accordingly and completed the acquisitions of seven cement and clinker producers, thereby increasing its annual clinker capacity by 1.2 million tons and annual cement capacity by 5.3 million tons. These acquisitions helped the Group to lay a solid foundation for its sustainable development.

The acquired enterprises produced an aggregate of RMB615 million of revenue and operating profit of RMB41 million in 2013.

Adequate Capital Resources for Future Development

As at 31December 2013, the Group had cash of approximately RMB1.02 billion, up approximately 100% from the end of June 2013. The increase was mainly due to the net cash inflow from operating activities and the cash inflow from financing activities. The Group possesses adequate capital resources for future development.

Operating Environment of Cement Industry Improves on Urbanization and Elimination of Obsolete Capacity

Looking ahead, the management of the Company believes that the central government's promotion of urbanization will create enormous opportunities for the cement industry. The "National New-type Urbanization Plan (2014-2020)" recently promulgated by the State Council calls for all regions and government authorities in the country to implement the Plan vigorously. Such policy is expected to boost demand from infrastructure development, slum rebuilding projects and property construction.

Moreover, as the government is committed to eliminating obsolete cement production capacity, price pressure arising from overcapacity will be further alleviated. Premier Li Keqiang indicated in his annual government work report that another 42 million tons of cement production capacity will be shut down in 2014. In addition, according to the estimates of China Cement Association, the total number of newly added capacity for this year will decrease by 30%, thereby improving the demand-supply situation and fostering a healthy development of the cement industry.

The acceleration of urbanization is expected to drive demand for cement. With further elimination of obsolete capacity, the market will enjoy a more balanced supply-demand situation. Enterprises with more advanced production technology and scale will benefit from the market consolidation. Being a leading clinker and cement producer in Henan and Liaoning, the Group will continue to adopt a pragmatic strategy to expand production capacity, optimize operation management, strictly control risks, improve works on energy saving and emission reduction, as well as production safety, with a view to strengthening the Group's leading position and to maximizing shareholder value.

About China Tianrui Group Cement Company Limited

China Tianrui is a leading clinker and cement producer in Henan and Liaoning provinces. The businesses of China Tianrui range from excavation of limestone, to the production, sales and distribution of clinker and cement. Recognized as one of 12 national cement producers, the Group is entitled to government support in the form of priority with respect to project approvals, land use right grants and credit approvals when undertaking mergers, acquisitions and project investments in the cement industry. China Tianrui is also the only non-state-owned enterprise designated by the China's Ministry of Industry and Information Technology as one of the five leading cement companies that the PRC government supports for undertaking cement industry-specific mergers and consolidation in the central China region.

Please visit http://www.trcement.com for more details.

Investor and Media Enquiries:
China Tianrui Group Cement Company Limited
Li Jiangming / Yu Chunliang / Richard Cai
Tel: 852-3521 1125 / 852-3521 1221 / 86-375-6056006
Email: [email protected]

PRChina Limited
Karl Cheung / Henry Chik / David Shiu
Tel: 852-2522 1368 / 852-2521 2823
Email: [email protected] / [email protected] / [email protected]

SOURCE China Tianrui Group Cement Company Limited