Pipe maker Lesso benefits from urbanization in China

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: March 18, 2014 3:54 pm ET
Updated: March 18, 2014 3:56 pm ET

Related to this story

Topics China, Construction, Extrusion, Pipe/Profile/Tubing

China’s largest plastic pipe maker, Lesso Group Holdings Ltd., said the quickening pace of urbanization in the country kept demand for its building materials solid and pushed sales up 20 percent last year, to 13.07 billion Chinese yuan ($2.15 billion).

Lesso, based in Foshan, Guangdong province, said in a March 17 announcement that net profit was up 17 percent to 1.43 billion yuan ($236.2 million). Those results contrast somewhat with government data this month that pointed to decelerating growth in China’s country’s broader industrial sector, but Lesso said it was benefiting from the government’s focus on infrastructure spending.

Its earnings announcement came one day after China’s State Council, the country’s top administrative body, unveiled a new target for urbanization, calling for 60 percent of the country’s 1.3 billion people to live in cities by 2020, up from 54 percent now.

That would add about 80 million people to the country’s urban areas, equal to the population of Germany, between now and 2020.

“The Chinese government’s accelerating urbanization, increased investment in infrastructure, irrigation engineering works and construction of social security housing provided a fresh impetus to China Lesso’s business,” the company said in a March 17 report to the Hong Kong Stock Exchange.

It acknowledged challenges in China’s economy and uncertainty in Europe, the United States and emerging economies, but Chairman Wong Luen Hei said he expected the company’s markets to “continue their momentum” in 2014.

“China’s gross national product growth decelerated slightly in 2013, casting uncertainty and risks over the macro-economy,” the company said. “Nevertheless, the group believes that urbanization, agricultural reform and the increase in properties completed in China will continue at a steady pace.”

Lesso said it planned to open two new factories this year, in Hainan and Yunnan provinces, and would start construction on a previously announced pipe factory in Shandong province. It’s been trying to add production outside its base in southern China, which provides about 60 percent of its sales.

More than 90 percent of Lesso’s sales came from plastic pipe and fittings, but the company said sales from a new business units selling home decoration products such as doors and windows and services like integrated kitchen designs nearly doubled its sales, to about 800 million yuan ($132.1 million), compared to 2012.

Lesso has been trying to diversify outside its traditional pipe market into other building industry segments to take advantage of what it said is a trend in China toward more houses and apartments being sold “pre-decorated.”

Still, it said it sold 1.003 billion metric tons of PVC pipe and fittings in 2013, compared with 845.7 million tonnes the previous year. Likewise, it said non-PVC pipes and fittings sales volume rose from 230 million tonnes in 2012 to just over 269 million tons last year.


Comments

Pipe maker Lesso benefits from urbanization in China

By Steve Toloken
Staff Reporter / Asia Bureau Chief

Published: March 18, 2014 3:54 pm ET
Updated: March 18, 2014 3:56 pm ET

Post Your Comments


Back to story


More stories

Image

Vinyl siding's lead slips, but industry pushing back

July 29, 2014 2:04 pm ET

Vinyl siding continues to be the top cladding choice for home builders and remodelers but fiber cement is gaining ground — at an alarming rate...    More

Image

Universal Polymer beefing up capabilities through acquisition

July 29, 2014 12:04 pm ET

Universal Polymer & Rubber Ltd. is growing again and adding to its capabilities, this time via another acquisition and a plant expansion.    More

A third generation is adding to the growth at American Vinyl Co.

July 28, 2014 4:32 pm ET

American Vinyl Co., a compounding and extrusion company that increased its workforce 20 percent this year, is looking to double its space for storing ...    More

Image

Who are the fastest growing pipe, profile and tubing extruders?

July 28, 2014 3:09 pm ET

Question: What's the word on this week's Plastics News annual ranking of the top Pipe, Profile and Tubing extruders in North America? Answer: Up....    More

Image

Australian trade group battles non-compliant PVC pipe fittings

July 28, 2014 2:19 pm ET

An Australian plastics industry association is battling against imported, non-conforming PVC pipe fittings, but is stymied by a convoluted web of regu...    More

Market Reports

Plastics Recyclers Data Report & Directory

This exclusive MS Excel database contains all the companies from Plastics News' ranking of top North American Recyclers and Brokers by reprocessed volume and also includes a directory with materials processes, services offered and company contact information. Data is based on primary research by PN editorial staff.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events