China’s Xingfa Aluminium expects aluminium profiles sales to increase in H2 amid a robust recovery in the domestic market. The company sales volumes fell by 6.8pc in the first half of 2020 (H1) to 258,830mt from the prior year period as domestic orders dropped in the Q1 amid the COVID-19 pandemic.

 

Outlook

In H2, economic recovery in China is robust and the company’s order book is in good shape. The domestic demand for aluminium profiles is expected to rise in H2. The COVID-19 pandemic and geopolitical unrest could hurt Xingfa’s operation in H2, and the company will continue to focus on controlling operation risks, internal reforms and technological upgrades.

 

Xingfa will continue to consolidate its aluminum construction profiles business in H2 and expand the industrial profiles segment. The company aims to increase revenues from the industrial profiles and deep-processing products over the next 3-5 years. Xingfa’s 

precision manufacturing plant located in Sanshui Industrial Park of Guangdong Province is expected to commence trial production by the end of 2020. The plant will become Xinfa’s base for manufacturing industrial profiles.

 

In the export market, the pandemic has accelerated Xingfa’s markets expansion as the company sought to exports to mitigate a drop in domestic orders. The company will continue to increase exports and explore viable overseas investments to expand its market share.

 

H1 results

Xingfa Group’s total sales volumes dipped by 6.8pc to 258,830mt in H1 from 277,654 in H1 2019. Sales volume of construction aluminium profiles fell by 6.1pc to 195,321mt, while sales volume of industrial profiles dropped by 8pc to 61,931mt from the prior year period. The company’s production was cut in February and shipments were significantly reduced, however, on resumption the company focused on export orders as the domestic market was still recovering from the pandemic. In Q2 domestic demand improved lifting Xingfa’s sales volumes. 

 

In H1, the volume of aluminium consumed China’s real estate dropped by 2.4pc to 6.5mn mt from the prior year period according to Sublime China Information, quoted by the company. According to Xingfa this indicates a steady recovery in China’s real estate market and that overall demand for aluminium was only slightly affected in H1.

 

The company’s revenue fell by 8.6pc to approximately CNY4,526.6mn ($656.02mn) in H1 from the prior year period. Sales of aluminium construction profiles and industrial profiles contributed 76.4pc and 21.4pc to revenue, respectively. In H1, revenues of construction aluminium profiles fell by 8.6pc to CNY3,457.2mn, while revenue of industrial aluminium profiles declined by 9.5pc to CNY968.5mn. 

 

Xingfa’s gross profit in H1 fell by 8.3pc to CNY576.3mn from the prior year, with gross profit margin at 12.7pc. In H1, the company’s net profit attributable to shareholders was CNY252.8mn, up by 6.8pc from H1 2019, primarily due to a significant rise in other income and a reduction in finance costs. 

 

In H1, Xingfa exported aluminium profiles to Australia, New Zealand, Vietnam, Malaysia and Singapore. The company also recorded its first shipments to the United Kingdom. However, the acute pandemic situation has dampened the purchasing motives of overseas downstream companies and our overseas expansion pace was affected to a certain extent.

 

($1=CNY6.9)

 

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