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

Smartphone work adds 52 percent to sales for China's Eva Precision

September 18, 2014 4:37 pm ET

Growth in supplying the smartphone and automotive industries helped Chinese processor Eva Precision Holdings Ltd. push injection molding sales up 52...    More

Image

China's Polymax Elastomer launches U.S. production in Illinois

September 17, 2014 3:35 pm ET

Chinese materials maker Polymax Elastomer Technology Co. Ltd. has opened a North American production site and headquarters in Waukegan, Ill.    More

Image

Georg Fischer closing SC pipe plant

September 17, 2014 2:58 pm ET

Georg Fischer Central Plastics LLC (GFCP) closed its manufacturing operation for pipe components in Abbeville, S.C., on Sept. 15, putting 17...    More

Image

Toy supplier sues maker in reshoring fight

September 15, 2014 3:18 pm ET

An Arkansas toy supplier is suing a Taiwan-based manufacturer for breach of contract and other civil allegations in a legal dispute that not only...    More

Image

Here's a peek behind our 2014 film & sheet ranking

September 15, 2014 1:22 pm ET

Today Plastics News publishes its annual ranking of North American Film and Sheet Manufacturers. Let's look at some interesting numbers behind the ran...    More

Market Reports

Plastics Caps & Closures Market Report

The annual recap of top trends and future outlook for the plastics caps & closures market features interviews with industry thought leaders and Bill Wood’s economic forecast of trends in growing end markets. You will also gain insight on trends in caps design, materials, machinery, molds & tooling and reviews of mergers & acquisitions.

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

Thermoformed Packaging 2014 Market Review & Outlook – North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Upcoming Plastics News Events

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

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

More Events