Revenue Down, Profit Up for China Ceramics in 2016 First Quarter
China Ceramics Co., Ltd. recently announced financial results for the first quarter ended March 31, 2016.
China Ceramics Co., Ltd. recently announced financial results for the first quarter ended March 31, 2016. Revenue for the first quarter was RMB 134.2 million (approximately $20.8 million), a decrease of 36% from 2015. The year-over-year decrease in revenue was primarily due to the 41.4% decrease in sales volume to 4.1 million m2 of ceramic tile from 7.0 million m2 last year. This was somewhat offset by the 10.1% increase in average selling price.
“As anticipated, our first quarter 2016 revenue was substantially down from the same period last year, reflecting the currently challenging market conditions in our sector in China,” said Jiadong Huang, CEO. “However, despite a 41% contraction in sales volume compared to the first quarter of 2015, we were able to report a reasonable level of cash flow in the first quarter. In addition, a decrease in our cost of sales including lower depreciation expenses enabled us to achieve improved profitability as compared to the year-ago quarter.
“In the first quarter, we maintained a reduced utilization of existing plant capacity based on the market environment in order to keep our operating costs low. We will bring additional capacity online as the business environment improves. Although sales volume in the first quarter was lower than in past periods, we saw sound demand for our higher margin ceramic tile, which sustained the average selling price of our products. We believe that while China’s urbanization and demographic trends are sustainable, occasional volatility will occur due to imbalances in housing supply and demand. We continue to believe that the operating environment for the rest of the year will be challenging due to abundant real estate still in inventory and unsold. However, once the current inventory of real estate properties is worked through the sales channels, we expect that a rebound in the construction and building materials sectors will materialize.”
Gross profit for the first quarter was RMB 18.0 million (~ $2.8 million), an increase of 30.4% from the first quarter of 2015. The gross profit margin was 13.4% vs. 6.6% for the first quarter of 2015. Profit from operations before taxation was RMB 8.5 million (~ $ 1.3 million), up 97.7% from RMB 4.3 million (need U.S. currency) for the first quarter of 2015. Net profit was RMB 6 million (~ $ 0.9 million), compared to net profit of RMB 2.8 million (need U.S. currency) for the first quarter of 2015.
The company expects the currently challenging market conditions to continue for the rest of 2016, as housing construction reportedly recently recorded its first-ever declines and the number of homes that remain unsold rose 7.4% compared to last year. However, the company believes that in the long-term the economic fundamentals for growth are still in place, as the real estate and construction sectors continue to be essential to China’s economy. Government support for both affordable and senior housing is also expected to generate opportunities for real estate companies.
For more information, visit www.cceramics.com.