this year, under the influence of the decline in demand, the contradiction of excess capacity has been further intensified, the market competition has been extremely fierce, the price of cement has dropped significantly, and the profits of the industry have shrunk sharply again. The loss situation of the whole industry in the first half of this year also means that the development of the industry has entered an unprecedented difficult period.
In this case, the state ministries and commissions have repeatedly issued documents to encourage leading building materials enterprises to carry out resource integration and merger and reorganization, improve industry concentration, optimize industrial structure and competition pattern, and promote the industry to achieve high-quality development.
"Merger and reorganization is the inevitable trend of the industry in the future, but it is very difficult for the cement industry to carry out merger and reorganization at present." A senior person in the industry told China Cement Network that the main reasons are:
First, enterprises with poor competitiveness have not yet reached the "end of their tether" : Since 2016, the cement industry has experienced a period of high-profit plateau, and many cement enterprises have accumulated considerable wealth. Even in the current tough market environment, these companies have not yet exhausted their financial reserves, so they are not motivated to sell themselves or seek mergers and acquisitions, while still holding high expectations for their market value.
Second, some leading enterprises lack confidence in promoting mergers and reorganizations. From a strategic point of view, the merger and reorganization aims to promote the capacity optimization of the whole industry by integrating and eventually eliminating inefficient capacity. However, for leading enterprises, the use of large amounts of capital to acquire backward production capacity and then eliminate it may lead to doubts and accountability from shareholders and relevant departments. They may question whether this way of capital operation is in line with the long-term interests of the company, and worry about whether it will involve the improper loss of state-owned assets.
Third, who will reorganize who? Usually, the mode of merger and reorganization tends to be the acquisition of smaller enterprises by large enterprises, in order to achieve the optimal allocation of resources and market integration. However, according to the financial performance in the first half of this year, the profitability of some leading enterprises is not optimistic, and even sustained losses have occurred. In contrast, some small and medium-sized enterprises with strong competitiveness have shown more robust business performance.
In this unusual situation, the traditional logic of merger and reorganization has been challenged- whether we should continue the previous "big fish eat small fish" model and let large enterprises acquire small enterprises, or we should break the rules and let financially healthy and profitable enterprises acquire those large enterprises in a loss state? This not only tests the strategic decision-making ability of the enterprise leadership, but also puts forward new thinking on the restructuring mode of the whole industry.
Generally speaking, although merger and reorganization is the trend of the times, in practice, due to the existence of various complex factors, it is not easy to advance smoothly. This may involve the constraints of capital, policy, market environment, coordination of interests among enterprises and other factors. How to overcome these obstacles and create favorable conditions has become the key to promote the success of mergers and reorganizations in the industry.
