Prosperity Minerals Holdings, which operates a cement manufacturing business in the People's Republic of China and an iron ore trading business serving the same market, today issued the following trading update.
The Company traded profitably for the six months ended 30th September 2008 with its profits from operations from Yingde Dragon Mountain and iron ore trading slightly lower, but the share of profits from associates was substantially lower than the corresponding period a year ago.
The demand for cement and iron ore is expected to weaken in the second half of the fiscal year due to a marked slowdown in the growth of the Chinese economy.
The export oriented economy of Guangdong Province, the Company's main market for cement, is being adversely affected by the global economic crisis.
Residential and commercial real estate sectors are experiencing widespread deferment and cancellations of projects; on the other hand, infrastructure is holding up well.
Second half cement prices are not expected to benefit from the same seasonal uplift as last year.
A number of the major steel mills in China have recently announced reductions in their production by up to 20% due to the sharp reduction in the demand for steel.
The rate of growth of iron ore import levels are expected to reduce substantially in the coming months and iron ore spot prices have declined significantly.
As a result, it is anticipated that the Company's full year results will be substantially below current market expectations.
Profits from operations at YDM for the six months ended 30th September 2008 was slightly lower than in the prior year, but volumes sold remained broadly the same. Trading conditions deteriorated during the summer due to unusually poor weather conditions and the effects of reduced activity around the Beijing Olympics. The start of the current construction season in September has not been as strong as the previous year and, in addition, margins have continued to come under pressure due to high coal prices.
Similar factors have affected associated companies including a plant upgrade, which required the need for temporary shut downs in April and May. Profits for the first half will therefore be materially below expectations.
The company expects the challenging trading conditions to continue into the second half of the year.
For the six months to 30th September 2008, trading was broadly in line with the prior year. Iron ore shipments amounted to 1.9 million tonnes in the period compared to 1.8 million tonnes in the prior year. The margin achieved was slightly below the same period in the prior year due to the mix of supply being weighted towards South Africa. The Company expects to ship less iron ore in the second half of the fiscal year.
Chairman & CEO David Wong said, 'It is never an easy task to report bad news, but we are all currently living through truly extraordinary economic times. Once the global economy has returned to normal, I am confident about the medium and long term prospects in the PRC both for cement manufacture and iron ore trading. Our cement assets are highly efficient and, even in the current market, continue to operate at or near full capacity. Similarly, Prosperity has an excellent iron ore trading model in which we do not take inventory risk positions. I look forward to being the bearer of better news.'
Prosperity will announce its Interim Results in early December.
The Company traded profitably for the six months ended 30th September 2008 with its profits from operations from Yingde Dragon Mountain and iron ore trading slightly lower, but the share of profits from associates was substantially lower than the corresponding period a year ago.
The demand for cement and iron ore is expected to weaken in the second half of the fiscal year due to a marked slowdown in the growth of the Chinese economy.
The export oriented economy of Guangdong Province, the Company's main market for cement, is being adversely affected by the global economic crisis.
Residential and commercial real estate sectors are experiencing widespread deferment and cancellations of projects; on the other hand, infrastructure is holding up well.
Second half cement prices are not expected to benefit from the same seasonal uplift as last year.
A number of the major steel mills in China have recently announced reductions in their production by up to 20% due to the sharp reduction in the demand for steel.
The rate of growth of iron ore import levels are expected to reduce substantially in the coming months and iron ore spot prices have declined significantly.
As a result, it is anticipated that the Company's full year results will be substantially below current market expectations.
Profits from operations at YDM for the six months ended 30th September 2008 was slightly lower than in the prior year, but volumes sold remained broadly the same. Trading conditions deteriorated during the summer due to unusually poor weather conditions and the effects of reduced activity around the Beijing Olympics. The start of the current construction season in September has not been as strong as the previous year and, in addition, margins have continued to come under pressure due to high coal prices.
Similar factors have affected associated companies including a plant upgrade, which required the need for temporary shut downs in April and May. Profits for the first half will therefore be materially below expectations.
The company expects the challenging trading conditions to continue into the second half of the year.
For the six months to 30th September 2008, trading was broadly in line with the prior year. Iron ore shipments amounted to 1.9 million tonnes in the period compared to 1.8 million tonnes in the prior year. The margin achieved was slightly below the same period in the prior year due to the mix of supply being weighted towards South Africa. The Company expects to ship less iron ore in the second half of the fiscal year.
Chairman & CEO David Wong said, 'It is never an easy task to report bad news, but we are all currently living through truly extraordinary economic times. Once the global economy has returned to normal, I am confident about the medium and long term prospects in the PRC both for cement manufacture and iron ore trading. Our cement assets are highly efficient and, even in the current market, continue to operate at or near full capacity. Similarly, Prosperity has an excellent iron ore trading model in which we do not take inventory risk positions. I look forward to being the bearer of better news.'
Prosperity will announce its Interim Results in early December.
