Pipe maker Lesso benefits from urbanization in China

By Steve Toloken
News Editor / International

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
News Editor / International

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

Plastic products win Best of IBS awards

January 30, 2015 1:36 pm ET

LAS VEGAS — A year ago, inventor Jeremy Smith of Utah took his idea for an electrical outlet cover plate with LED lights on the bottom edge to...    More

Image

LG Hausys pulls out of Russian PVC profile market

January 30, 2015 11:17 am ET

LG Hausys Ltd., the building and decorative materials offshoot of South Korean giant LG Chemical Ltd., is pulling out of PVC window profile...    More

Image

US loses top investment destination spot to China

January 30, 2015 11:14 am ET

China has overtaken the United States as the leading global destination for foreign direct investment, according to a new report.    More

Image

China to lead the way on robots

January 30, 2015 11:12 am ET

More industrial robots will be operating in China’s production plants than in the European Union or North America by 2017.    More

Image

DuPont-Chenguang JV to produce fluoroelastomers in China

January 29, 2015 12:30 pm ET

DuPont Fluoropolymer Solutions and Zhonghao Chenguang Chemical Research Institute Co. Ltd. are proceeding with a 50-50 joint venture to serve the fast...    More

Market Reports

Plastics in Automotive: Innovation & Emerging Trends

This special report newly released by PN and sponsored by The Conair Group examines current trends in the use of plastics in automotive, materials innovations and the changing landscape. It includes a review of legislative/regulatory activity impacting vehicle development and lightweighting, market opportunities & challenges for mold and toolmakers, innovative design strategies being implemented by major OEMs and suppliers, as well as a review of key indicators in Canada, Mexico, Brazil and China.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Injection Molding Market Analysis & Processor Rankings

Plastics News BUNDLED package contains our in-depth Market Analysis of the Injection Molding segment. You will gain keen insight on current trends and our economic outlook.

As a BONUS this includes PN's updated 2014 database of North American Injection Molders RANKED by sales volume. Sort, merge, mail & prospect by end market, materials processed, region, # of plants and more.

Learn more

Upcoming Plastics News Events

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

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

More Events