Displaying items by tag: Germany
First half 2022 update on multinational cement producers
10 August 2022Second quarter results have been released for many of the European-based cement producers, so we’ll take a look at how they are doing so far in 2022. The general trend for the companies sampled here is that revenue is up, cement sales volumes are down and earnings are varied. Added to this, ready-mixed concrete (RMC) and aggregate sales volumes have risen for most of these organisations. Each producer did well in the US, less well in Europe and differently elsewhere. Concurrently, input costs for raw materials, energy and logistics have been rising and this has been passed on to consumers fairly consistently as price rises.
Graph 1: Sales revenue for selected European-based multinational cement producers in the first half of 2022. Source: Company financial reports.
Graph 2: Cement sales volumes for selected European-based multinational cement producers in the first half of 2022. Source: Company financial reports.
Graph 3: Ready-mixed concrete sales volumes for selected European-based multinational cement producers in the first half of 2022. Source: Company financial reports.
Holcim is currently in a state of transition with responses from regulators on big divestments in India and Brazil expected in the second half of 2022 alongside its diversification into light building materials. Both North America and Europe did well for the group in the first half of 2022, particularly the former, where cement sales volumes rose, unlike the other regions. Asia Pacific was more problematic with inflation and pricing issues reported. Cement demand was also said to be ‘softer’ in China and the Philippines compared to the first half of 2021. The region’s recurring earnings before interest and taxation (EBIT) also fell.
HeidelbergCement’s half-year results were less upbeat with cement sales volumes down by 2.6% on a like-for-like basis, RMC sales volumes stable and aggregates sales volumes up by 1.7%. One point to note here is that HeidelbergCement divested its business in the western US in late 2021 and the graphs above do not show like-for-like changes. However, one reason for the dour tone was that higher input costs had led to a 11.4% drop in the group’s result from current operations before depreciation and amortisation (RCOBD) to Euro€1.53bn. It blamed this on its inability to raise prices sufficiently to counter ‘significantly’ higher costs of energy and transport.
Cemex benefitted from its strong presence in the Americas but even this wasn’t enough to shield it from the negative effect upon earnings of higher energy costs and supply chain disruptions. So, net sales increased in Mexico and the US but operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell. In Mexico this was blamed on a higher base for comparison in 2021. In the US a declining EBITDA margin was attributed to higher energy costs and supply chain headwinds from maintenance, imports and logistics. Interestingly though, Cemex managed to raise both sales and earnings in its Europe, Middle East, Africa and Asia despite cement sales volumes slipping. It said it was able to do this due to well executed price rises.
Buzzi Unicem reported growth in sales revenue and earnings despite falling cement sales volumes. It attributed this to a ‘strong’ increase in prices. However, it noted that the mounting energy costs had contributed to a decline in its EBITDA margin. Deliveries for the half-year grew in the US, Central Europe, Poland and the Czech Republic. They fell in Italy and, unsurprisingly, Ukraine. Also, despite the growth in deliveries in Poland and the Czech Republic in the reporting period, Buzzi Unicem said that a slowdown in Europe had become evident in the second quarter of 2022 and was particularly evident in Italy, Poland and the Czech Republic. In Ukraine the group reported that activity had resumed at its Volyn plant in the north-west of the country following the Russian invasion in February 2022. The Nikolayev plant, in the south, though continued to remain idle. Sales volumes halved in the country year-on-year. Given the circumstances it seems amazing that they didn’t fall by more frankly.
Finally, Vicat had a tougher time of it than some of the other companies featured here. Its sales revenue grew significantly, as a result of higher prices, but earnings tumbled. The latter was blamed on a high base for comparison in the first half of 2021 and the energy situation. A few non-recurring capital intensive projects at various plants, including the start-up of the Ragland plant’s new kiln in the US, didn’t help either.
Much of the above leaves an uncertain outlook for the second half of 2022. All of the cement producers here expect to increase their sales revenue and raise their prices. Most of them though are rather more circumspect or downright pessimistic about what the state of their earnings will be. The companies covered here are multinational but with a focus on Europe and the US. We have omitted plenty of regional producers elsewhere around the world in this roundup that have already published their results, such as India-based UltraTech Cement or Nigeria-based Dangote Cement. The other big market that is missing is China, where the producers are mostly yet to publish their half-year results. We will return to cover these topics in future weeks.
Germany: HeidelbergCement’s sales revenue rose by 11% year-on-year to Euro9.95bn in the first half of 2022 from Euro8.94bn in the same period in 2021. Its cement and clinker sales volumes dropped by 4.8% to 58.8Mt from 61.8Mt, while its profit for the period attributable to shareholders dropped by 28% to Euro542m from Euro755m. During the reporting period, the producer reduced its net debt by 8.9% to Euro6.79bn from Euro7.45bn.
Chair Dominik von Achten said "The first half of 2022 was characterised by the strong increase in energy and raw material prices. In this persistently difficult market environment we were again able to significantly increase our revenue.” He continued, “In view of the unprecedented increase in energy prices in recent weeks, the second half of the year remains challenging. For the full year, we continue to expect a significant increase in revenue, while for the result from current operations we now anticipate a slight decline on a comparable basis compared to the strong previous year.”
Building CO2 infrastructure in Europe
20 July 2022It’s been a good week for carbon capture projects in Europe with the announcement of who the European Union (EU) has selected for a grant from its Innovation Fund. 17 large-scale projects have been pre-selected for the Euro1.8bn being doled out in the second round of awards. On the cement and lime sector side there are four projects. These include projects at Holcim’s Lägerdorf cement plant in Germany, HeidelbergCement’s Devnya Cement plant in Bulgaria, Holcim’s Kujawy plant in Poland and Lhoist’s Chaux et Dolomites du Boulonnais lime plant in France. Large-scale in this instance means projects with capital costs over Euro7.5m. To give readers some sense of the scale of the projects that the EU has agreed to pay for, if the funding was shared out equally between the current bunch, it would be a little over Euro100m per project. This is serious money.
Devnya Cement’s ANRAV carbon capture, utilisation and storage (CCUS) project in Bulgaria has received little public attention so far so we’ll look a little more closely at this one first. No obvious information is available on what capture technology might be in consideration at the plant. HeidelbergCement’s leading experience in carbon capture technology at cement plants gives it a variety of methods it could use from a solvent scrubbing route to something less common. What the company has said is that, subject to regulatory approval and permitting, the project could start to capture 0.8Mt/yr of CO2 from 2028.
What has also been revealed is that the project is linking up via pipelines to a depleted part of the Galata gas field site in the Black Sea. Oil and gas company Petroceltic Bulgaria is a partner and the aim of the project is to start a CCUS cluster in Eastern Europe. with the potential for other capture sites in Romania and Egypt to join in. This is noteworthy because much of the focus for the burgeoning cement sector CCUS in Europe so far has been on usage on local industrial clusters or storage in the North Sea.
The other new one is the Go4ECOPlanet project at Holcim’s Kujawy plant in Poland. Lafarge Cement is working with Air Liquide on the project. The latter will be providing its Cryocap FG adsorption and cryogenics technology for direct capture of flue gas at the plant. The transportation of the CO2 is also interesting here as it will be by train not pipeline. Liquid CO2 will be despatched to a terminal in Gdańsk, then transferred to ships before being pumped down into a storage field under the North Sea.
Turning to the other two grant recipients, the Carbon2Business project plans to capture over 1Mt/yr of CO2 using a second generation oxyfuel process at Holcim Deutschland’s Lägerdorf cement plant. This project is part of a larger regional hydrogen usage cluster so the captured CO2 will be used to manufacture methanol in combination with the hydrogen. Finally, Lhoist’s project at a lime plant in France is another team-up with Air Liquide, again using the latter’s Cryocap technology. The capture CO2 will be transported by shared pipeline to a hub near Dunkirk and then stored beneath the North Sea as part of the D'Artagnan initiative. Around 0.61Mt/yr of CO2 is expected to be sequestered.
The key point to consider from all of the above is that all of these projects are clear about what is happening to the CO2 after capture. The days of ‘carbon capture and something’ have thankfully been left behind. CO2 transportation infrastructure is either being used or built and these cement plants will be feeding into it. This will inevitably lead to questions about whether all these new CO2 networks can support themselves with or without EU funding but that is an argument for another day.
Finally, in other news, four residents from the Indonesian island of Pulau Pari started legal proceedings against Holcim last week for alleged damages caused by climate change. Industrial CO2 emissions are unquestionably a cause of this along with other sources but what a court might think about this remains to be seen. Yet, it is intriguing that the plantiffs have decided to go after the 47th largest corporate emitter rather than, say, one of the top 10. Regardless of how far the islanders get this is likely not to be last such similar attempt. If the case does make it to court though it seems likely that Holcim will mention its work on CCUS such as the two projects above. Only another 200-odd cement plants in Europe to go.
Germany: Cemex Deutschland’s carbon capture partner Carbon Clean has hired US-based engineering company KBR to carry out installation of the planned 100t/day CycloneCC carbon capture system at the producer’s Rüdersdorf cement plant in Brandenburg. KBR will provide front-end engineering design (FEED) services for the project.
KBR global technology solutions president Jay Ibrahim said "Reaching net zero targets requires expertise from different industries to work together, and we make a powerful team. Hopefully, it will be the first of many such projects."
Germany: Christian Pfeiffer has launched its new FlexCore hardened rolled steel plates for ball mill diaphragms. With a hardness of 60HRC, the plates are wear and breakage resistant, enabling maintenance to be planned to the day, according to the supplier.
Holcim Deutschland’s Lägerdorf cement plant to receive oxyfuel kiln and carbon capture system
18 July 2022Germany: Holcim Deutschland announced a planned upgrade to its Lägerdorf cement plant’s kiln on 14 July 2022. The producer will install a second generation oxyfuel kiln, which uses an air separation unit to supply oxygen directly, emitting CO2-rich flue gas. A new carbon capture system will supply captured CO2 to a synthetic hydrocarbons plant, which will produce methanol for other industrial applications. The upgrade will result in the capture of 1.2Mt/yr
of CO2 emissions and make Lägerdorf one of the world’s first carbon neutral cement plants, according to Holcim Deutschland.
The project, called Carbon2Business, was among four cement plant projects and 13 other EU-wide projects to win a share of a US$1.81bn EU Innovation Fund funding pot. CEO Thorsten Hahn acknowledged that the awarding of funds was ‘good news for Holcim and all partners working with us to decarbonise cement.’ He said “Climate change means cement change.”
Cemex Deutschland acquires 53% stake in ProStein
12 July 2022Germany: Cemex Deutschland has acquired a 53% majority stake in Saxony-based stone mining company ProStein. ProStein’s six quarries yielded 3Mt of raw materials in 2021. Cemex Deutschland says that the acquisition doubles its own raw materials capacity.
ProStein is the leading stone producer in Eastern Germany, where Cemex Deutschland operates its Rüdersdorf, Brandenburg, cement plant.
Holcim to acquire Cantillana
06 July 2022Belgium: Switzerland-based Holcim has agreed to acquire façade and external insulation systems producer Cantillana. Cantillana employs 200 people across nine plants in Belgium, France, Germany and the Netherlands. Its forecast full-year sales are Euro80m in 2022. Holcim says that the move is in line with its Strategy 2025 - Accelerating Green Growth target of expanding its solutions and products unit to 30% of group sales.
Germany: Zement- und Kalkwerke Otterbein plans to invest Euro10m in upgrades to its Otterbein cement plant to increase the sustainability of cement production there. The new equipment will include a hot gas filter SCR catalytic converter system. The producer says that this will install the facility as one of the lowest-CO2 cement plants in the world. Local press has reported that, after commissioning the new system, the company plans to increase its approved substitution of biomass as fuel to 100% from 60%.
INFORM secures ISO 27001 certification
01 July 2022Germany: Certification body TÜV Rheinland Group has awarded INFORM with ISO 27001 accreditation. The certificate signifies that the company operates with secure data handling, transparent internal processes and systematic risk management. INFORM thanked its employees, whose support made the achievement possible.