Baoshan Iron & Steel Co., Ltd.
Information Release
（27th, March 2015, Shanghai, China）Baoshan Iron & Steel Co., Ltd. (hereinafter referred to as Baosteel or the Company, SSE: 600019) released the 2014 annual results: sales of 21.82 million tons of finished products, total revenue of RMB 187.8 billion and the total profit of RMB 8.28 billion. The Company's EPS is RMB 0.35 per share, ROE is 5.16% and BVPS is RMB 6.94 per share.
In 2014, China's economic growth further slowed down, domestic steel demand and price remained weak, industrial credit was still tight and the low profit situation still continued. 88 domestic large-medium sized steel mills accumulatively achieved the total profit of RMB 30.44 billion with the sales profit margin of 0.85% and the scale of losses of 14.8%. Under the background of weak fundamentals of steel industry, Baosteel continued to carry out upgrade of product mix, improvement of manufacturing capability and cost optimization, maintained best performance among domestic steel industry and achieved annual total profit of RMB 8.28 billion, up 3.1% YoY. With 3% of crude steel output of large-medium sized steel mills, the Company created 27% of the total profit .
Performance highlights in Annual Report
I. High-end products strategy characterized by technical leading
In 2014, Baosteel launched the world debut of 5 new products, including new generation of advanced ultra-high strength steel- QP steel (QP1180CR) and debut products supply doubled. The company continued to maintain the advantage of technical leading in the fields of auto sheet, home appliances sheet, oriented silicon steel, oil-gas pipes etc. The Company achieved the sales of newly developed products of 1.32 million tons, with the invention patents proportion of 63.4%, creating a new record in the history. In 2014, Baosteel successfully developed and promoted 81 new grade products to the market.
Baosteel has several scientific research achievements that won the government prizes. "Innovative Development and Application of 600℃ Ultra-supercritical Thermal Power Generating Unit" won the national first prize for progress in science and technology, which is the third time for Baosteel to win this prize after the auto sheet and oriented silicon steel products. "R&D of Core Process and Set Equipment of Cold Rolling Hot-dip Aluminum-zinc Plating Unit" won the first prize for progress in metallurgy science and technology in 2014.
II. Focus on customer value and differential marketing
Baosteel has established over 100 marketing branches in China, with the business covering 25 provinces, municipalities and autonomous regions. The Company owns nearly 60 service centers. In 2014, both the sales of strategic and advantageous products exceeded 12 million tons. The proportion of export maintained 10%.
Baosteel has consecutively titled as "Excellent Supplier" by GM, Dongfeng Honda, Guangqi Honda, Dongfeng Nissan and GAC Fiat. The market shares of auto sheet maintained 50%, while the sales of oriented silicon steel increased by 3%. Baosteel actively explored the overseas market, and has successfully signed the contract of 270,000 tons natural gas pipeline in Turkey .
Meanwhile, the Company continued to deepen the EVI technical services for auto sheet, and constantly improved the system supporting capability, and promoted the brand influence of auto sheet. Based on summarizing the practices of auto sheet EVI achievements, the Company explored the non-auto industry EVI mode, implemented 22 non-auto EVI projects, and preliminarily formed the EVI technical marketing mode of home appliances products such as Haier, Haojue Motor and Media etc.
III. Fast development of diversified business
E-Commerce business
In march, 2014, the first chattel mortgage information platform in China- Shanghai Banking Chattel Mortgage Information Platform was officially put into operation. At present, the Platform has reached framework cooperative agreements with 14 banks, and will gradually cover various chattel mortgage businesses with the steel mortgage as the starting point to explore new industrial opportunities for the E-commerce industrialization.
In 2014, the revenue of the Company's E-commerce business was RMB 15.11 billion, up 330.9% YoY. Shanghai Steel Trading Center focused on improving the customer experiences, upgrading resource grading, online financing, online logistics and other new online trade service modes, stably and healthily explored steel mills and clients to form certain industrial influence and E-commerce radiating capacity, improved the warehousing, logistics and other E-commerce supporting capacity and boosted E-commerce sales volume. The Platform achieved the annual sales of 4.51 million tons.
Vertical development of E-commerce financing service: in terms of online payment business, the third-party payment function of Eastern Pay is connected with the "universal joint" settlement system of Baosteel's financial company, therefore Eastern Pay achieved the annual settlement flow of RMB 30 billion, up 450% YoY.
IT business
Baosight Software and China Mobile signed the Data Center Service Contract and Further Deepening Strategic Cooperation Agreement, which convoyed the construction of "four centers" in Shanghai. The cloud services and solution of Baosight Software was the first one to pass the national standard qualification certification. The construction of IDC Phase III Project has been launched, and the it will become the largest data center in China. It will provide high-quality network services for the internet enterprises, cloud suppliers and other end-users.
IV. Pioneer of domestic environmentally friendly enterprises
The Company implements the concept of environmental management in the whole management process, and has advantages in the technical research and application of low-carbon economy and green product manufacturing. In 2014, the total energy consumption decreased 45.4 tons of standard coal YoY. The Company released the new round development planning of green manufacturing and the environmental protection commitment, and achieved the photovoltaic power generation of 39.02 million kwh, and the key environmental protection facilities with the functions and states in industrial leading positions.
The Company constructed green industrial chain, cooperated with the Suppliers and Customers to reinforce the control of harmful substances, clarified the control list of over 300 purchased materials containing harmful substances, analyzed the environmental protection demands of over 50 customers in the fields of automobile, home appliances, power energy etc., formed the Company's first list of customers' green demands as the guidance document for internal management and control. The Company won the recommendation of international certification authority - British Standards Institution for the certification of management system of harmful substances in home appliances (QC080000), and became the first domestic steel enterprise that passed the certification of this system.
Profit distribution plan
According to the proposal of General Shareholders' Meeting in 2012, based on the principle that the cash dividends distributed every year is no lower than 50% of the parent company's net profit of consolidated statements, the total cash dividends in 2014 shall be no lower than RMB 2.896 billion. The Company always emphasizes the returns to the stockholders, and insists on the policy of long-term cash dividends, the Company proposes to release the cash dividends RMB 0.18 per share (tax inclusive) to all stockholders registered on the date of record confirmed in the dividend announcement. The cash dividends are predicted to occupy 51.2% of the parent company's net profit of the consolidated statements (this plan is pending for approval of the Company's 2014 General Shareholders' Meeting before implementation).
In 2015, the Company's operating policy is: "one-body(steel business), two-wings(E-commerce and IT business), three-bases coordination(Shanghai headquarters, Meishan Steel and Zhanjiang Steel), seeking development with innovation and reform; differential competition, cost improvement and lean operation, maintain superior performance".
I. Promote E-commerce business to a new level
The establishment of Ouye Clouding Co., Ltd. and its subsidiaries symbolizes that the Company's steel E-commerce business will achieve greater investment and development. In 2015, the Company will speed up the industrialized development of E-commerce business, established the warehousing information cloud platform that covers the whole country; further attract social resources to speed up the distribution of E-commerce logistics networks; explore to expand the bank finance and financing business of the platform; construct the credit database based on the E-commerce platform, improve the modes of mortgage financial business and risk control and reinforce the management and control of financing risks.
II. Ensure "Sep. 2015" successful ignition of Zhanjiang Steel
It is close to launch the ignition of No. 1 blast furnace in Zhanjiang Steel. Focusing on the ignition issue, the Company will elaborately plan various production preparation work to ensue the timely and safe commissioning, profoundly practice the management and control mode of "factories and departments in Zhanjiang Steel are managed and supported by Shanghai headquarters", to provide complete management support and ensure the authentically simple and high-efficiency production operation of Zhanjiang Steel.
III. Implement environmental management and construct clean factories
The Company will reinforce the management and control of environmental protection risks, and includes the management and control of environmental risks into business process in combination with the environmental management requirements in Shanghai, Nanjing, Zhanjiang and other different plots, to upgrade the Company's emergency treatment ability of sudden events; promote environmental protection planning projects, implements 20 greening transformation projects, newly increase 200,000 m2 greening space to upgrade the factory appearance and boundary environment.
IV. Explore and promote intelligent manufacturing
The Company will gradually achieve the transformation of the decision analysis from database to big data center, transformation of supply chain from local coordination to overall optimization, transmission of equipment from automation to intelligence by deep integration of new technologies such as internet, cloud computing and big data with full supply chain, to explore the intelligent manufacturing development of steel industry.
In 2015, the Company's overall operation objective is: "achieve the total operating revenue of RMB 190 billion, ensure "Sep. 2015" successful ignition of No.1 blast furnace of Zhanjiang Steel, complete the sales of unique and leading products at least 12 million tons, comprehensive energy consumption at least 85000 tons of standard coal and the total profit per ton ranking the top three in the world."
For any relevant material, please visit the Company's Website: http://bg.baosteel.com/
Please contact:
Baoshan Iron & Steel Co., Ltd.
BOD Office
Tel: 86-21-26647000
Fax: 86-21-26646999
E-mail: ir@baosteel.com
