China“s largest float glass maker Luoyang Glass Co. is expecting profit to fall further in 1996, with reduced production and lower prices, after reporting a 3% drop in earnings to 244.6 million yuan …
China“s largest float glass maker Luoyang Glass Co. is expecting profit to fall further in 1996, with reduced production and lower prices, after reporting a 3% drop in earnings to 244.6 million yuan for 1995. The Chinese company, which has 14% of China“s float glass market, said turnover edged down 0.2% to 942 million yuan. Earnings per share dropped 24% to 36.9 fen and a final dividend of 7.4 fen will be paid. Chairman Guo Xiaohuan said 1995 saw a significant change in China“s float glass market. Production grew rapidly to exceed the increase in domestic demand, which presented a great challenge. The profit drop primarily reflected falling product prices due to fierce competition, despite a 13% increase in production to 420,000 tonnes and a 15% drop in costs. Last year, Luoyang Glass saw its domestic product prices cut 2.7% on average, but prices of exports surged 28% because of strong demand for green glass. Export of glass products earned foreign exchange of US$20 million, rising 268% to represent 14% of turnover. Director Guo Hongtai said profits could fall in 1996 and might not even meet forecasts of 241 million yuan because of excessive supply in the market. Luoyang Glass plans to produce 350,000 tonnes of float glass this year, down 17% from last year. “We will focus on upgrading production lines this year so we can capitalise on a resurgence of market demand when the economy recovers next year,” Mr. Guo said. The company will start to overhaul its first production line in July, after completion of similar enhancement for the third line last year and the second one early this year. It is expected that about 400 million yuan will be spent on expanding the first line, which would have double annual production capacity, at 120,000 tonnes. Total production capacity for the com-pany would increase to 540,000 tonnes next year.