BaoSteel update on Q1 performance
Author: ChinaFastener.com
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Date:
5/10/2009
Source: Steel Guru
Ever since this year, Baosteel Co Ltd. has been carrying out operations with focuses on product management, cost improvement, management reform and system capability enhancement and completed 4.72 million tonnes of iron production, 5.126 million tonnes of steel production and realized a consolidated gross profit of CNY 140 million in the Q1. This is the information disclosed in the 18th session of the 3rd board of directors of Baosteel Co Ltd held on April 28th.
In the Q1 this year, the domestic steel market continued the trend from the end of last year, and showed in general a situation of low market demand and low product price. Due to the depressed demand in the international market, the domestic steel price in general is higher than the steel price in main export destinations, leading to difficulties for export and increasing pressure for import. In the Q1 the government worked out 11 industrial revival plans including the one for steel industry and the export rebates for some steel products are increased. These policies and measures have active impact on the steel industry but the effect of the policies remains to be released gradually.
Confronted with the harsh market, Baosteel Co Ltd puts emphasis on curtailing costs and expenditures, the mechanism to press inversely production and sales with market demand as the base point and improving the proportion of advantageous products. Baosteel Co Ltd. attaches much importance to inventory management and the inventory went down to CNY 35.6 billion at the end of last year from CNY 52.1 billion at the end of the Q3 last year. On that basis, the inventory of Baosteel Co Ltd dropped to CNY 29.2 billion at the end of Q1 this year. Now Baosteel Co Ltd is making efforts to reduce the days of turnover of products and puts forward the target for challenge, striving to go back to the turnover level in 2006.
Mr Xu Lejiang chairman of Baosteel Group Corporation and Baosteel Co Ltd said in his answer to the reporter's questions that in the 2008 general meeting of shareholders of Baosteel Co Ltd held on April 28th in the coming years it will be very difficult to change the situation of more supply than demand in the steel industry, so the domestic steel industry will be confronted with more intensified competition, and the industrial structure will face major adjustment under the support of industrial revival plan. In the background of depressed demand in the domestic steel market, no change to the situation of overcapacity in the steel industry and the plummeting export, Baosteel Co Ltd. estimates according to the operations in the Q1 and the judgment for the steel market in the second quarter this year that, the net profit for the first half of this year will drop considerably compared with that for the same period of last year. He also indicated that Baosteel Co Ltd will do its utmost to change the crisis into opportunity and improve the cost competitiveness and profit level.