Displaying items by tag: HeidelbergCement
HeidelbergCement sells up in western US
26 May 2021HeidelbergCement confirmed the rumours this week with the announcement that it was selling assets in the western US to Martin Marietta for US$2.3bn. The deal covers subsidiary Lehigh Hanson’s US West region cement, aggregates, ready-mixed concrete and asphalt businesses in California, Arizona, Oregon and Nevada. This includes two of its cement plants, with the exception of the 1.5Mt/yr Permanente cement plant in California, related distribution terminals, 17 active aggregates sites and several downstream operations. The companies expect to conclude the deal by 2022 but naturally it is subject to approval by competition bodies.
Well, this is a big one considering that one of the catalysts for the group’s divestment plan was the reduction of the value of its total assets by Euro3.4bn in July 2020 following a review. Depending on the exchange rate, the value of the divestment to Martin Marietta covers half to two thirds of that amount. Group chairman Dominik von Achten later told the media in February 2021 that the company was planning to sell the first of the five assets in early-to-mid 2021. However, cement isn’t the full story here since Lehigh Hanson operates three integrated plants in California and seven terminals. So, by elimination, the Tehachapi and Redding plants are the ones that are being sold along with some combinations of the terminals. Both of those plant have production capacities of around 0.8Mt/yr. Unless the terminals being sold have been valued highly, then the majority of the deal appears to encompass some or all of the 25-odd aggregate sites, 15 asphalt sites and 30 ready-mix concrete sites the company operates in the four states.
On the cement side it doesn’t seem unreasonable at face value for the authorities to allow Martin Marietta to take over most of Lehigh Hanson’s business in the region since it should broaden competition from a production angle. Instead of five companies in California with integrated plants, there will be six. For Martin Marietta, the deal also carries the feel of unfinished business in the region since it briefly held a cement business there for around a year in the mid-2010s. It acquired Texas Industries (TXI) in July 2014 and then sold the cement business in California to CalPortland in September 2015.
Both companies are pursuing different strategies. HeidelbergCement says it is hunkering down on its other four North American regions – the US Midwest, Northeast and South, plus Canada - through selected ‘bolt-on’ acquisitions and plant upgrades. Martin Marietta says it wants to take advantage of long term demand trends such as increased state infrastructure investment in California and Arizona and private-sector growth. It also reassured shareholders with its version of the acquisition/divestment story by saying it was going to generate value the same way it did previously with TXI. It’s a small thing but the acquisition also sees the US’ largest domestic cement producer increase its production base. The top five North American cement producers will remain controlled by companies headquartered in Europe but it is a step towards regionalism.
As for who’s right, in the short term, the west coast region looks good. The area included some of the best performing states in 2020 in terms of growth in cement consumption year-on-year in 2020 with the exception of Oregon. In its winter forecast the Portland Cement Association (PCA) attributed growth in the Mountain region of the US (including Nevada) to underlying economic fundamentals and favourable demographic trends, although it expected this to slow down in 2021. In the Pacific region it forecast consumption to grow modestly in 2021 due to residential construction. As if to underline the current situation, Cemex decided to recommission a kiln in Mexico in February 2021 to cope with cement shortages and project delays in California, Arizona and Nevada.
In the face of these figures HeidelbergCement’s decision to sell suggests either it dangled a juicy proposition with good short term prospects in front of the buyers or its long term projections are pointing elsewhere. Selling up, yet holding onto its largest cement plant in the region, also smacks of hedging its bets. No doubt it will be holding on to a few terminals too. On the other hand, it would be very interesting indeed to know what part, if any, HeidelbergCement’s internal carbon price played in its decision to divest in the western US. California has the country’s biggest carbon emissions trading scheme (ETS). If say, legislators suddenly decided to follow the price trend of the European Union’s ETS then things might look different.
UK: Hanson, part of Germany-based HeidelbergCement, has reduced its bagged cement allocations to customers. The Construction Index has reported that the decision is due to a national shortage of cement in the UK. The building materials producer introduced a packed cement allocation in May 2021. It calculated these by the proportion of orders that it believed could fulfil. Packed products director Andrew Simpson said, “Regrettably, we have been unable to maintain those levels.” He added that the company had had to perform unforeseen work on its cement operations following its 2021 shutdown.
Supply issues for packaging materials have also been reported. Bag suppliers informed Hanson to expect longer-term packaging shortages due to global demand for polymer and kraft paper, according to Simpson. He added that low pallet availability was also a concern.
US: HeidelbergCement subsidiary Lehigh Hanson has agreed to sell its assets in its US West region to Martin Marietta for US$2.3bn. The transaction includes the sale of its business activities in cement, aggregates, ready-mixed concrete and asphalt in California, Arizona, Oregon and Nevada, with the exception of the Permanente cement plant and quarry. The sale includes two cement plants with related distribution terminals, 17 active aggregates sites and several downstream operations. The companies expect to conclude the deal by 2022 subject to regulatory approval.
“The sale of our US West region activities is a major step in our portfolio optimisation as part of our ‘Beyond 2020’ strategy,” said Dominik von Achten, chairman of the managing board of HeidelbergCement. “We are simplifying our portfolio in North America and prioritising on the strongest market positions.” Chris Ward, president and chief executive officer of Lehigh Hanson added, “We will accelerate the build-out of our positions in the four key regions Canada, Midwest, Northeast and South through selected bolt-on acquisitions and capacity expansion projects in the future.”
HeidelbergCement’s Lengfurt cement plant receives Platinum Concrete Sustainability Council certification
21 May 2021Germany: HeidelbergCement has completed a comprehensive Concrete Sustainability Council (CSC) certification campaign at its 10 cement plants, 12 concrete plants and five aggregates sites underwent the certification process. One cement plant– the Lengfurt, Bavaria, plant - and two concrete plants achieved Platinum certification. The Lengfurt cement plant is the first German cement plant to do so.
Senior manager sustainable construction and public affairs Christian Artelt said “CSC certification allows production sites to gain a holistic understanding of their sustainability performance.” He added “Our successful engagement in CSC certification highlights our commitment to sustainability.”
Górażdże Group to vaccinate 700 employees
19 May 2021Poland: HeildelbergCement subsidiary Górażdże Group plans to vaccinate 700 of its employees against Covid-19. A first dose will be administered in mid-May 2021 followed by a second in June 2021. The Pfizer-BioNTech vaccine will be used and administered on company sites. The corporate health campaign will be conducted as part of the country’s National Immunisation Program.
Germany: HeidelbergCement has launched the Quarry Life Award, a competition for proposed biodiversity-supporting quarry restoration projects. The company says that it is looking for projects which consider quarries’ impacts throughout their entire lifecycle. It is offering a Euro30,000 prize for the winning proposal.
Chief executive officer Dominik von Achten said, “The time for action is now - The World Economic Forum 2021 Global Risk Report has put biodiversity loss among the five most concerning global risks, both in terms of likelihood and impact. With the competition, HeidelbergCement wants to contribute to the global restoration agenda and work towards a net positive in biodiversity. Our sites can provide valuable habitats for a variety of animal and plant species during and after extraction.”
Germany: HeidelbergCement’s consolidated net sales rose by 1% year-on-year to Euro3.96bn in the first quarter of 2021. Its result from current operations before depreciation and amortisation (RCOBD) rose by 33% to Euro538m from Euro405m in the same period in 2020. Group cement and clinker sales volumes rose by 2% to 28.4Mt from 27.7Mt. Cement volumes rose by 11% in Western and Southern Europe to 6.8Mt from 6.1Mt, by 5% in Asia-Pacific to 8.8Mt from 8.4Mt and by 1% in Africa-Eastern Mediterranean Basin to 5.2Mt. Volumes fell by 5% in North America and by 4% in Northern and Eastern Europe-Central Asia to 3.1Mt and 4.4Mt respectively.
Dominik von Achten said, “HeidelbergCement has made an excellent start to 2021. In all group areas, we have once again been able to significantly increase our results and margins compared with an already strong first quarter in 2020. This is a seamless continuation of our very good development in recent quarters.”
Greece: HeidelbergCement subsidiary Halyps Building Materials has agreed to sell its aggregates business and two ready-mix concrete plants to Heracles Group, part of Switzerland-based LafargeHolcim. Heracles Group said that the acquisition would enable it to better serve the growing Athens metropolitan area and key infrastructure projects regionally. The value of the deal is undisclosed.
LafargeHolcim’s Europe, Middle East and Africa regional head Miljan Gutovic said, “I am excited about the opportunities and growth prospects of this acquisition in the Attica region of central Greece. It will provide additional support towards our net zero ambition with our leading range of sustainable building solutions such as EcoPact green concrete.” Heracles Group launched EcoPact on the Greek market in April 2021. In the first four months of 2021, LafargeHolcim completed four other bolt-on acquisitions.
HeidelbergCement remains active in the market through its subsidiary Halyps Cement. The company operates the 0.7Mt/yr Apropyrgos cement plant in Athens. Chief executive officer Dominik von Achten said, "We are pleased that the transaction has been successfully signed.” He added that the realignment is the next step in the group’s portfolio optimisation as part of its Beyond 2020 strategy. In January 2021, its subsidiary Suez Cement departed from the Kuwait cement market with the sale of its majority stake in Hilal Cement.
FLSmidth to prepare Norcem’s Brevik cement plant for carbon capture and storage installation
22 April 2021Norway: Norcem, part of Germany-based HeidelbergCement, has awarded a contract to Denmark-based FLSmidth to provide modifications to allow for downstream CO2 removal at its integrated Brevik cement plant. The supplier will begin work in the unit’s winter 2022 shutdown. Its upcoming carbon capture and storage (CCS) installation is scheduled for commissioning in September 2024.
Norcem project manager Tor Gautestad said, “We are very excited to have FLSmidth on board and to finally begin the construction of the full-size installation.” He added, “FLSmidth’s extensive process knowledge, and air pollution control in particular, will be critical to the success of the project.”
Germany: HeidelbergCement’s consolidated net sales grew by 1% year-year to Euro3.96bn in the first quarter of 2021 from Euro3.93bn in the first quarter of 2020. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 23% to Euro538m from Euro436m. The group said that the preliminary results are ‘significantly’ above market expectations.