Financial News Agency, November 10 (Reporter Zhao Zixiang)In the first three quarters of this year, the cement industry was hit by poor demand and falling prices. Product profits generally narrowed, and industry leader Conch Cement (600585.SH) inevitably experienced “no increase in revenue and profit.” At the third quarter results briefing held today, the company said that the cement industry in the fourth quarter showed certain peak season characteristics. Overall, cement sales were better than in the fourth quarter of last year. Prices rebounded slightly month-on-month, and the year-on-year decline was significant.

Conch Cement also stated at the performance briefing that in the context of weakening demand and double carbon, the cement industry will usher in an integration window period, and the company will choose the opportunity to promote mergers and acquisitions of high-quality projects.

According to a report recently released by the China Cement Association, the overall operation characteristics of the national cement market this year were “continued contraction in demand, low prices, high costs, and a sharp decline in efficiency.” The country's cumulative cement production in the first three quarters was the lowest in the same period in nearly 13 years. It is estimated that industry profits will still drop by about 60% year on year, and corporate losses will expand.

According to Wind data, 14 of the 16 listed cement companies all experienced a year-on-year decline in net profit in the first three quarters of this year.

Conch Cement achieved total revenue of 99.043 billion yuan in the first three quarters of this year, an increase of 16.07% over the previous year, and net profit of 8.672 billion yuan, a decrease of 30.17% over the previous year. Looking at quarterly data, total operating income for the third quarter was 33.607 billion yuan, up 15.68% year on year, and net profit for the third quarter was 2.204 billion yuan, down 14.55% year on year.

Conch Cement explained the reason for the decline in net profit in its three-quarter report, which is that the sales price of cement business products fell, which led to a year-on-year decrease in total profit. At the performance briefing, the company further clarified the “increase in revenue without increase in profit”: the increase in the company's operating income in the first three quarters was mainly due to the increase in trade revenue, and the decline in profit was mainly due to the increase in prices compared to the reduction in costs.

In another revenue growth sector, Hailuo Cement said mixed sales in the first three quarters increased 45% year on year, and its contribution to the company's revenue and profit increased steadily. Commercial mixing refers to concrete produced by a merchant. It is a type of construction material made of various building materials such as cement, sand, and stone according to a certain ratio and mixed with a concrete mixer.

In recent years, leading cement companies have exploited the integrated cost synergy of cement, aggregates, and commercial mixtures, that is, the business model of establishing commercial mixing stations within cement plants or next to aggregate bases. Reduce the cost of concrete and enhance the competitive advantage of commercial mixed business. Conch Cement said at the performance briefing that in the future, the company will focus on the core market and carry out mixed business layout through various methods such as new construction, mergers and acquisitions, and leasing to enhance its control over the terminal market.

At the performance briefing, some investors raised questions about the long-term trend in gross margin of aggregates and future oversupply issues. Conch Cement said that in the long run, with the increase in aggregate production capacity, gross margin is on a downward trend, and overall production capacity tends to be saturated, but the competitiveness of enterprises with advantages in scale, resources and logistics will be further reflected.

Furthermore, on October 18, the Ministry of Ecology and Environment officially issued a notice on greenhouse gas emissions and verification work in key industries, and issued the cement industry's latest “Instructions for Enterprise Greenhouse Gas Emissions Accounting and Report Filing”. In response to questions from investors, Conch Cement stated that the introduction of the above documents means that the integration of the cement industry into the carbon market is progressing at an accelerated pace.