On August 27, Conch Cement released its semi-annual report for 2026. In addition to the highly concerned revenue and profit, a set of financial data is also eye-catching: according to the semi-annual report, the group's financial expenses increased by 146.66% year-on-year, from -497 million yuan in the same period last year to 232 million yuan, from negative to positive.
Conch attributed the increase in net exchange losses to the appreciation of the RMB and exchange rate fluctuations. Data show that the net exchange loss of Conch Cement in the first half of the year amounted to 606 million yuan, compared with 165 million yuan in the same period last year. At the same time, in order to stabilize the capital income, part of the monetary capital of Conch Cement was allocated to financial management, and the interest income under financial expenses decreased year on year.
Conch's semi-annual report clearly indicates that due to the foreign exchange control of some investment countries, the depreciation of local currencies and the fluctuation of exchange rates of major currencies such as RMB and US dollar, the foreign currency assets, liabilities and cross-border capital receipts and payments of overseas companies may result in exchange gains and losses. The Group is exposed to certain exchange rate fluctuations.
For the half-year profit of a cement enterprise, such a huge exchange loss is not a negligible financial miscellaneous, but a solid profit loss. For the whole cement industry, the money in Southeast Asia and Africa is not as good as expected.
Conch's overseas business is distributed in Indonesia, Myanmar, Laos, Cambodia, Uzbekistan and other countries and regions, and the operating income and expenditure of overseas companies are generally settled in local currencies and US dollars. In the first half of the year, overseas sales revenue increased by 20.98% year-on-year and gross interest rate by 47.44%, which means that the balance sheet of enterprises is naturally exposed to multiple exchange rate fluctuations.
At present, domestic cement enterprises have entered overseas markets on a large scale, and some developing countries such as Africa and Southeast Asia are the main battlefields of the industry, but these countries usually face greater currency exchange rate risks, such as foreign exchange control, devaluation of local currencies, and two-way fluctuations of the US dollar and RMB, which may be detonated at any time. Another characteristic of
overseas projects is that the capital investment in the initial stage of construction is relatively large, which mainly comes from registered capital and internal and external financing. The heavier the investment and the higher the liabilities, the greater the exchange rate exposure.
Conch's "exchange rate lesson" gives three inspirations
to the industry. In the face of risks, Conch's countermeasures are worth referring to: 1. Overall arrangement of financing and foreign exchange revenue and expenditure, steadily reducing the scale of overseas liabilities, and optimizing the structure of assets and liabilities; 2. Play the role of cash pool management, strengthen the centralized and unified management, unified allocation and efficient use of foreign exchange funds, and reduce the cost of settlement and sale of foreign exchange; 3. In view of the risk of exchange losses on RMB liabilities of overseas projects caused by the expected appreciation of RMB, replace the stock of RMB liabilities with local currency loans of the host country to balance the currency mismatch. There is only one thing at the heart of
this one-two punch: Don't treat the exchange rate as luck, manage it as a variable.
For cement enterprises that are going to sea on a large scale, these three Enlightenments are particularly critical-going to sea can not only calculate capacity account, price account, but also exchange rate account and capital account. Investment in building factories is a sunk cost, but exchange rate fluctuations are a persistent source of profit and loss, which can not control exchange rate exposure, and even higher overseas gross profit may be eroded in the settlement and sale of foreign exchange. Conch has made up a solid "exchange rate lesson" for the whole industry with solid exchange losses.
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