Net profit at China Glass Holdings, the largest flat-glass producer on the Chinese mainland, fell 79.1% to CNY 16 million in 2005, the company said 28 April 2006, as turnover fell 10% to CNY 386 milli…
Net profit at China Glass Holdings, the largest flat-glass producer on the Chinese mainland, fell 79.1% to CNY 16 million in 2005, the company said 28 April 2006, as turnover fell 10% to CNY 386 million largely due to lower glass prices and higher raw material costs. “The glass industry“s operating profits were adversely affected by falling glass prices and the soaring cost of raw materials such as heavy oil and soda ash. Very few firms were able to maintain profits”, said chief executive John Zhou. Nevertheless, Mr Zhou hopes to boost earnings in 2006 by expanding the company“s export business and cutting costs. He said the firm would boost sales of high-margin glass products such as those used in cars and electronics. In 2005, gross profit fell to CNY 61.6 million from CNY 126.3 million in 2004. The company declared a final dividend of CNY 0.0134 a share. “The group is striving to reduce its production costs”, Mr Zhou said. “However, the 14% increase in the costs of its production lines to CNY 104 million last year from CNY 91 million was far lower than the 50% increase in the average price of heavy fuel oil”. The group performed well in the three years before it listed in Hong Kong in June 2005. However, in its first report as a listed firm in September 2005, China Glass announced a 56.9% annual fall in profit. The industry has suffered as a consequence of austerity measures adopted by the central government in 2004. The measures are aimed at preventing growth from running out of control. Another Hong Kong-listed glass producer, Zhejiang Glass, has posted a 63.88% fall in profit to CNY 74 million as turnover fell 1.67% to CNY 118 million. Mr Zhou noted that despite the difficult domestic market, China Glass was able to boost its exports. “Export volume increased 13%, accounting for 33% of the group“s total sales volume last year”, he said, adding that export prices were generally more stable than domestic prices. “Regarding the domestic market, we will expand our operations through mergers and acquisitions”, Mr Zhou said. In February 2006, China Glass announced the acquisition of seven rival domestic glass makers for CNY 416 million.