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Glass maker to adjust to cooler economy
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Zhejiang Glass says it will adjust its product mix to minimise the impact of central government measures to cool down the economy.
``The efforts to curb over-investment will have a big impact on the property market and demand for construction glass will drop this year,'' Zhejiang Glass chairman Feng Guangcheng said yesterday after the company announced earnings doubled in 2003.
The glass manufacturer will, however, maintain production of processed glass, which is used for construction, at 35 per cent of total output.
Flat glass production, the core business, is expected to account for 65 per cent of output this year.
Production of processed glass was started in the second quarter last year as an additional income stream and brought in 28.1 million yuan (HK$26.5 million) profit in 2003.
Feng said the average price of flat glass in the first quarter this year surged to 80 yuan per weight case, compared to the average of 65 yuan for full-year 2003.
He expected the higher cost of soda ash, a raw material for flat glass production, to add costs of 3 to 4 yuan per weight case, but the company would transfer some of the increase to the selling price. ``Our average price this year will not be lower than last year,'' Feng said.
To ensure sufficient supply of soda ash, the firm set up a production plant in Qinghai last July. ``The cost of soda ash we produce is only 550 yuan per tonne, against the market average of 1,150 yuan, which helps increase our competitive edge,'' he added.
The company has raised its 2005 production target for soda ash to 900,000 tonnes from 600,000 tonnes.
The glass maker also plans to boost flat glass output this year by 25 per cent to 15.5 million weight.
Zhejiang Glass reported a 111 per cent year-on-year growth in net profit to 182 million yuan for the year ended December last year. Net profit margin rose to 23 per cent, from 17 per cent in 2002. A final dividend of 0.0948 yuan was declared.
The stock, which has lost 29 per cent since the central government announced this month that it will curb over-investment, bounced back 2.9 per cent to close at HK$2.5 yesterday.
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April 27th, 2004
Source: The Standard |
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