China's largest plastic pipe maker, China Lesso Group Holdings Ltd., is expanding in traditional and new ways, to capture, for example, what it calls “huge potential” in the offshore fish farming market.
Foshan-based Lesso launched a new business line to provide products and services for offshore caged fish farming. Lesso reports that its test cages received good marks for resistance to strong wind and waves. The company anticipates extensive government support for offshore fish farming.
“The new business has huge potential for development and is expected to stimulate the group's sales growth in the future,” CEO Zuo Manlun said in the company's interim report.
Also in the first half, Lesso launched an e-commerce platform — Lesso Mall — that has already realized 215 million yuan ($33.6 million) in sales.
Lesso posted 7.04 billion yuan ($1.09 billion) in sales in the first six months of this year, a 7 percent increase from the year-earlier period, citing continued high demand for infrastructure development. Gross profit climbed 16.1 percent to 1.91 billion yuan ($298 million).
The Hong Kong-listed firm is optimistic that Beijing's policies supporting sustainable growth will buoy future prospects. Beijing's focus on water conservation, ensuring safe water supplies and reducing pollution all offer growth opportunities, Lesso said.
Production capacity increased slightly to 2.05 million metric tons, up from 2 million in the first six months of 2014, as the company spent 629 million yuan ($98 million) on factory expansion and automation.
Lesso plans to spend 1 billion yuan ($156 million) this year, including building a new factory in Shandong in north China.
Traditionally strong in south China, Lesso plans to aggressively pursue opportunities throughout the country. In the six months, Lesso realized 59.9 percent of its sales in southern China, a slight increase from the year prior.
Declining raw material costs pushed down the production cost per ton of plastics pipe and fittings by 7.5 percent. Prices to customers declined 3.4 percent.
Pipe and pipe fittings generated 90.3 percent of Lesso's sales for the period. Sales were especially strong for water supply and gas transmission pipes in urban projects.
PVC pipes generated stronger momentum than non-PVC pipes for Lesso, which shipped 560,000 metric tons of PVC pipes, up 10 percent from the previous year, while non-PVC pipe shipments edged down 1.7 percent to 132,000 metric tons.
Lesso has also been making and selling building materials and interior decoration products, including doors, windows, tiles and kitchen cabinetry, since 2012. Sales of these products for the first half of 2015 totaled 344 million yuan, or about 4.9 percent of the total.