West Cement announced that it expects the net profit of the Group for the year ending 31 December 2023 to decrease by approximately 50% to 60% as compared to the year ending 31 December 2022 due to the following reasons:
1. The Shaanxi Market Supervision and Administration Bureau issued an administrative penalty order against the Group's violation of the relevant requirements of the Anti-monopoly Law in the Guanzhong market of the PRC, in which a provision of approximately RMB119.6 million (the same unit below) was recognized, and the provision for the administrative penalty order for the year ending 31 December 2022 was approximately RMB29.8 million;
2. For the year ended 31 December 2023, the Group recorded impairment losses on goodwill and intra-group receivables of approximately 319.3 million yuan, which mainly included the impairment losses on intra-group receivables of approximately 265.9 million yuan owed by Kangding Paomashan Cement Co., Ltd. (Paomashan). Paomashan has entered into bankruptcy liquidation and it is expected that the Group will not be able to repay all the receivables owed by Paomashan. As a result, the Group recorded an impairment loss of approximately 265.9 million yuan in respect of the intra-group receivables due from Pao Ma Shan; and an impairment loss of approximately 53.4 million yuan in respect of goodwill as the operating results of two subsidiaries of the Group fell short of expectations. For the year ending 31 December 2022, the Group has not recorded any impairment loss on goodwill.
3. For the year ending 31 December 2021, a subsidiary of the Group was notified by the government to close down its existing production plant due to the need to improve urban conservation. The subsidiary received about 502 million yuan from the local government in return for the demolition works and compensation for the losses incurred. For the year ending 31 December 2022, the demolition works were completed, from which the Group received government subsidies of approximately 308.5 million yuan for the demolition works. During the year ended 31 December 2023, the Group did not receive such government subsidy.
China Cement Network learned that in 2022, the total sales of cement (including clinker ) of Western Cement Company reached 19.3 million tons, down 4.9% year-on-year, aggregate sales of 4.61 million tons, up 4.8% year-on-year, and commercial mixed sales of 1.74 million cubic meters, up 29.9% year-on-year. The annual sales revenue was 8.49 billion yuan, an increase of 6.1% over the previous year, and the annual net profit was 1.215 billion yuan, a decrease of 23.4% over the previous year.
Cement industry has serious overcapacity, the impact of peak staggering production on the supply side has declined significantly, the "competition and cooperation relationship" formed over the years has broken down, and the pressure of industry operation has doubled. On March 28-29, China Cement Network will hold the " 13th China Cement Industry Summit and TOP100 Award Ceremony " in Hangzhou, during which awards will be given to top 100 cement and supplier enterprises, and experts and scholars will be invited. China Railway and other construction units jointly discuss the new development trend of the cement industry in the future, and work together to create the future!
