Taiwan Cement Corp. (TCC) held its 2022 annual general meeting, in which Chairman Nelson Chang delivered a speech and shared business updates

TAIPEI, May 26, 2022 /PRNewswire/ -- Taiwan Cement Corp. (TCC) held its 2022 annual general meeting, in which Chairman Nelson Chang delivered a speech, and TCC shared its 1Q22 results as below:

Chairman Nelson Chang's Speech

In the past half a year or so, it seems foreboding dark clouds are surrounding the world, such as the fast-spreading COVID-19 variants in Asia, and the interruption of worldwide commodity supply chains. These have all led up to uncertainty, pessimism, and anxiety about the future. It is also the most difficult year for Taiwan Cement for the past ten years. Granted all is true, we remain positive that every cloud has a silver lining if we position ourselves in just the right direction. A beam of light always comes out from behind the clouds. However tiny it may be, it gives us hope that we shall remain undaunted so as to embrace a promising future.  

Living in the 21st century, we are unsure of where to go from here and what can be made sure in this world. The risks are no less great than those of the Age of Exploration in the 15th century, notwithstanding the greater knowledge we have gained about the world today.

The totally inexcusable war has caused the ensuing scarcity in both resources and energy. The worldwide break-out of a virus has caused millions of unexpected deaths as well as increased wastes, especially of plastics to an alarming ubiquity. The sudden shortage of energy has also worsened the emissions of carbon-dioxide to make the Earth even warmer. All these issues are posing grave threats to the future existence of Humankind.     

In fact, the reason Humankind has strayed today lies entirely in ourselves. Only when self-examination is in place to allow a fundamental conceptual change in conduct can we afford to claim that we are underway to explore a real answer.

The sense of co-existence in our age should be awakened and evoked on a full scale of the Planet Earth. We must be upfront with the pandemic, weather change and a more idealistic society. Each of us will require a cognitive restructuring in our thinking. It can no longer be "I," but "WE." To familiarize ourselves with the capitalized "WE" is an indispensable step to a sustainable future of mankind. But unfortunately, at the annual meeting of the World Economic Forum in Davos this year, it seems to be going backwards and moving towards a regional economy, an economic model where every country comes first. We cannot continue to contemplate living a life solely for our time and selfishness. Most wars took place for individual rights or self-interests of politicians per se. Only a minimum of warfare was fought genuinely for such lofty causes as freedom and human life.

The Great Leap of the next generation will beyond doubt be motivated by continuous revolutions. It will no longer be technology-driven cognitive change but a restructured mental framework for sustainability.

Dante wrote, "The hottest places in hell are reserved for those who, in a period of moral crisis, maintain their neutrality."

Lastly but not least, may I remind you ladies and gentlemen, "Today is the beginning of eternity."

TCC: Silver Lining

In 1Q22, TCC saw cement revenue in Mainland China decreased by 7.8% year-on-year. Sales volume for the same period also decreased by 24.1% year-on-year. Despite the cement price increase by 18%, it could not catch up with the price hike of coal, especially in 1Q22, when international coal price grew by 195% year-on-year. This price increase in coal caused TCC to see a drop both in gross margin and net profits.

Nevertheless, TCC's 1Q22 consolidated revenue was NT$22.97 billion, representing a 4% increase compared to NT$22.03 billion in 1Q21. This growth was mainly attributed to the new energy businesses. Cement revenues in 1Q22 dropped by 3% year-on-year, but new subsidiaries in the energy segment such as, NHΩA, E-One Moli, and TCC Energy Storage contributed positively to TCC's consolidated revenue.

TCC has transitioned into a circular economy company. As cement markets begin to shrink from their peak, waste treatment has become the focus of business operation. This transition not only helps solve society's waste problem but also increases profits. In the future, TCC's target is to become one of the growth tech stocks. For growth tech stocks around the world, cash dividend payout ratio has not been the main reason for market capitalization growth.

In the past two years, TCC has been redeploying two-thirds of its profits into ESG-related projects, such as building waste treatment facilities in Taiwan and Mainland China, investing in green energy projects, and buying the majority stake in the Italy-based energy storage company NHΩA. These steps are part of a comprehensive strategy to help TCC Group to achieve carbon neutrality. For example, TCC's total renewable energy generated by 2025 is actually sufficient for the Company to achieve RE100 but, TCC's renewable energy are still provided mainly to meet the demand of Taiwan's companies that focus on exporting products.  

As a circular economy company, its waste treatment capacity has been increasing, together with alternative material and fuel usage. Using cement kilns' high temperature to co-process wastes can help the society solve its waste problem. It can also generate alternative material and fuel to help increase cement production once stricter energy and coal controls, such as the situation in Mainland China in 4Q21. Moreover, it can help reduce carbon emissions, generate carbon rights, and reduce cost and reliance on coal. Currently, the cost of alternative fuel is only 1/3 to 1/2 of the cost of coal. By 2030, the total waste treatment volume by TCC may rise up to 10 million tons while alternative fuel usage can exceed 1.3 million tons. This is equivalent to reducing carbon emissions by more than 10 million tons. CIMPOR and OYAK, TCC overseas-invested cement companies, have also been using large amounts of alternative fuel.

As energy business is concerned, TCC foresees a possible supply shortage of industrial green energy in Taiwan. The green energy installations scheduled by the government for 2025 and 2030 are 27Gw and 45GW, respectively. To have green energy used at full capacity and efficiency, TCC believes that there must be at least 20% of energy storage complementary to green energy. This means that at least 5GW and 9GW of energy storage are needed in 2025 and 2030. TCC's total green energy installation is estimated to exceed 500MW by 2025 and is also building, scheduling, and planning many energy storage projects.

TCC's global energy storage installation is expected to exceed 400MWh by the end of 2022. By 2024, the figure is estimated to exceed 2,900MWh. NHΩA, the Italy-based TCC subsidiary, has been rapidly expanding global energy storage presence with projects completed or under planning, spanning across a total of 26 countries. Free2Move eSolutions, an business line of NHΩA, has also built the world's largest vehicle-to-grid (V2G) site with a capacity of 30MW and, when the grid needs electricity, the site can have up to 600 EVs connected to provide electricity back to the grid. NHΩA's other business line, Atlante Co., has been swiftly expanding businesses in Southern Europe with the aim to become the largest virtual independent power producer (IPP).

Energy storage requires batteries and that is why TCC believes the key to the future of energy is batteries. Molie Quantum Energy, a TCC subsidiary, has been building a 1.8GWh super battery factory in Xiaogang, Taiwan since October 25, 2021, and it is scheduled to begin production in 1Q23. Combining the current 1.6GWh battery capacity of E-One Moli, by 2024, TCC's total battery capacity will reach 3.3GWh, around 216 million units per year. The price of batteries is also expected to increase to US$5 per unit in 2024.

In addition to maintaining existing business and expanding to new energy businesses, TCC also has a responsibility to its current and future shareholders. The Company has been taking initiatives to revitalize its land assets, namely the properties in Taiwan and Mainland China. In Taiwan, the Zhudong property is aimed at becoming a lifestyle theme park while the property at Keelung Road, Taipei is aimed to be an "Urban Green Eco-Valley". In Mainland China, an iconic building is under construction in the name of "TCC Gong Liang Building in Hangzhou", which is scheduled to be completed in 2024 and will be TCC's headquarters in Mainland China.

TCC firmly believes that an enterprise should be responsible for its current and future shareholders, but cannot solely focus on current profits. The most important responsibility lies in its positive contribution to the society and the Earth. We have inherited this planet from our ancestors. Therefore, we need to prove to the future generations that the decisions we are making right now is the correct one.

For the next decade, low-carbon cement, resource circulation and green energy are the three pillars for TCC's sustainable growth.