Anhui Conch Cement 2008 Profit Rises on Cost Cuts

Anhui Conch Cement Co. (914), China’s biggest maker of the building material, said 2008 profit rose 4.5 percent as the company cut production costs by adopting energy-efficient technologies.

Net income climbed to 2.6 billion yuan ($380 million), or 1.55 yuan a share, from 2.5 billion yuan, or 1.7 yuan, a year earlier, the company said in a statement to the Shanghai stock exchange. Sales increased 29 percent to 24.2 billion yuan. The numbers were prepared under mainland Chinese accounting standards.

Demand for cement fell in 2008 as construction of commercial buildings and residential units eased in an economic slowdown. China’s government has pledged 4 trillion yuan of stimulus spending, which will benefit Anhui Conch and rival China National Building Material Co. (3323) as the country builds more infrastructure.

“The implementation of the stimulus policies will help drive demand growth for cement,” the statement said. “China’s economy will likely achieve about 8 percent growth in 2009.”

Still, competition in the cement industry will intensify in 2009 as new production capacities start, and prices may fall, the company said.

Anhui Conch intends to streamline its coal purchasing system to buy better-quality fuel and achieve lower production costs, it said.

Anhui Conch rose 25 percent this year in Hong Kong trading, beating the 6.5 percent decline on the benchmark Hang Seng Index. GF Fund Management Co. this month said it favors cement and construction stocks as they stand to benefit the most from the stimulus plan.

To contact the reporter on this story: Lee Spears in Beijing at lspears2@bloomberg.net.

To contact the editor responsible for this story: Teo Chian Wei at cwteo@bloomberg.net.

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