Displaying items by tag: HeidelbergCement
HeidelbergCement lends weight to ‘Northern Lights’ CCS project
06 September 2019Norway: HeidelbergCement has joined a list of leaders from various industries in endorsing Norway’s state-owned energy group Equinor’s carbon dioxide (CO2) capture and storage (CCS) plans. Bernd Scheifele, chairman of the managing board of HeidelbergCement, was among representatives of seven companies who signed memoranda of understanding with Equinor.
HeidelbergCement’s Norwegian subsidiary Norcem has been involved in CCS research at its 1.2Mt/yr integrated cement plant in Brevik since 2011. In early 2018, the government shortlisted the plant for its multiple-industry ‘Northern Lights’ CCS project. Beginning in 2023, Equinor will remove 0.4Mt/yr of CO2, half of the plant’s total CO2 output, from Brevik for storage in empty oil and gas fields beneath the North Sea.
In a statement, HeidelbergCement expressed its intention towork together with Equinor to optimise CO2 transportation and develop Europe-wide disposal solutions
With a good number of the financial results published by the non-Chinese multinational cement producers for the first half of 2019, it is now time for a roundup. Graphs 1 and 2 below lay some of the basics with the general sales revenue and cement production volume trends.
Graph 1: Sales revenues from large multinational cement producers in the first half of 2019 and 2018. Source: Company reports.
Graph 2: Cement sales volumes from large multinational cement producers in first half of 2019 and 2018. Source: Company reports.
This is only part of the picture as the larger companies had various complications. For example, LafargeHolcim’s apparent falling revenue and sales volumes is mainly due to its massive divestments in South-East Asia. On a like-for-like basis its sales and sales volumes of cement rose. Its recurring earnings before interest, taxation, depreciation and amortisation (EBITDA) better illustrated this with a rise of 7.2% year-on-year in real-terms to Euro2.41bn in the first half of 2019 from Euro2.25bn from 2018. The company didn’t have it all its own way though with falling cement sales volumes in Asia despite the divestment and poor growth in its Middle East Africa region.
By contrast HeidelbergCement reported growing sales but its earnings and profits were down. Its profit fell by 33% to Euro291m from Euro435m. This was blamed on the group’s sale of its Ukraine subsidiary in April 2019. The operations were sold to Overin Limited, part of Ukrainian investment company Concorde Capital Group, for Euro13m. HeidelbergCement said that the divestment resulted in a loss of Euro143m. Aside from this, as Bernd Scheifele, the chairman of the managing board of HeidelbergCement, explained, positives in markets in Asia, Western and Southern Europe compensated for weaker business in North America and the Africa-Eastern Mediterranean Basin Group area.
Cemex has a tougher time of it than its larger rivals due its greater reliance on American markets. Slow starts to infrastructure projects were blamed in Mexico, poor weather hit earnings in the US and problems occurred further south too. Luckily Europe was strong for the company with lots of good news areas. It wasn’t enough though as Cemex’s sales fell by 4% to US$6.72bn from US$7bn and its operating EBITDA dropped by 11% to US$1.21bn from US$1.36bn.
As for the other companies covered in the graphs, Buzzi Unicem and Titan Group prospered due to the US market. The former described its US activity as ‘lively.’ However, it admitted that its sales growth there was mainly caused by falling imports in the face of weak domestic demand and ‘considerable production and logistical difficulties’ in June 2019 caused by flooding of the Mississippi river. Titan, meanwhile, caught a well-deserved break after recent years with growth also in Greece and Southeastern Europe. Vicat managed to stave off a decline in sales due to poor markets in Turkey, Switzerland, Indian and West Africa through its acquisition of Brazil’s Ciplan in late 2018. Yet, its earnings and cement sales volumes fell anyway.
Dangote Cement once again suffered at home in Nigeria, while its Pan Africa business grew. Trouble at home was pinned on lower volumes, price discounting, higher input and distribution costs and higher fuel and power costs in the first half of 2019. Of more concern, earnings fell in Pan Africa too in the first half due to market conditions in South Africa and Zambia. As ever though Dangote Cement’s diversity in Sub-Saharan Africa should see it through. Finally, Semen Indonesia continued to ride high as its sales increased by 23% to US$1.17bn due to its absorption of LafargeHolcim’s assets. Unsurprisingly, its sales volumes grew at a similar rate, to just below 13Mt in the first five months of 2019. Yet trouble may be store ahead as its local sales fell by 7% in this period.
Other major producers omitted here include Ireland’s CRH and India’s UltraTech Cement. Both are set to release their results later in August 2019 and will make for essential reading as the market conditions so far in 2019 become clearer. The latter in particular will be worth watching if a report by Indian credit agency CARE Ratings out this week is correct. It has forecast production capacity growth of 120Mt by 2030 in India. UltraTech Cement is perfectly poised to benefit from this.
Update on Morocco
31 July 2019The agreement this week by Ciments du Maroc to buy two production projects from Anouar Invest Group marks a consolidation phase in the local market. The subsidiary of Germany’s HeidelbergCement has struck a deal to acquire Atlantic Cement’s 2.2Mt/yr integrated plant project in Settat province and the Les Cimenteries Marocaines du Sud (CIMSUD) 0.5Mt/yr grinding plant at Laâyoune, which was only recently commissioned.
Graph 1: Cement sales and production capacity in Morocco, 2013 - 2018. Source: L’Association Professionnelle des Cimentiers (APC) & Global Cement Directory 2019.
Graph 1 gives an impression of the market conditions the cement producers have faced over the past five years. Cement sales hit of a high of 16.1Mt in 2011 following increasing growth in the 1980s, 1990s and 2000s. Cement sales have since wilted, while production capacity has increased pushing down the capacity utilisation rate. The capacity utilisation dropped below 55% in 2018, using Global Cement Directory 2019 data, although other sources have placed it at around 60%.
Local production is dominated by two multinational producers, LafargeHolcim (LafargeHolcim Maroc) and HeidelbergCement (Ciments du Maroc), and a local company, Ciments de l’Atlas (CIMAT). CIMAT is owned by Addoha Group and it also operates Ciments de l'Afrique (CIMAF) with plants across West Africa. A fourth player, Asment de Témara, run by Votorantim, also operates an integrated plant.
LafargeHolcim Maroc’s turnover fell by 2% year-on-year to US$837m in 2018 along with a drop in consolidated net income of 18% to US$201m. It attributed this to lower sales and growing petcoke costs. Ciments du Maroc’s turnover fell slightly to US$419m but its net profit rose by 3% to US$108m. This followed a generally positive year in 2017 due to a strong second half of the year. It blamed the instability on a poor real estate market. CIMAT managed to raise its sales in 2018 by 6% to US$300m and its income by 1.4% to US$90.7m.
Anouar Invest Group’s decision to sell up may mean that its attempt to break into the cement market has failed. Who can blame it given the market conditions. Although, who knows, HeidelbergCement may have made it a great offer. HeidelbergCement’s gambit is also interesting because, in February 2019, it reduced its stake in Ciments du Maroc by 7.8% to 54.6% signalling less confidence in the country.
Yet, cement sales started to improve in the first quarter of 2019 with consecutive month-on-month improvements. Neither is Anouar Invest Group the last company to try its luck with cement production in Morocco. In June 2019 FLSmdith announced that TEKCIM had ordered a US$45m cement plant from it and Société Générale des Travaux du Maroc. The grinding unit has a production capacity of 1.2Mt/yr. Clearly, despite a market with production overcapacity, companies are sensing opportunities with the cement grinding model.
Former Italcementi chairman Giampiero Pesenti dies
25 July 2019Italy: Giampiero Pesenti, the former chairman of Italcementi, has died at the age of 88. The grandson of one the brothers who created the company in 1906, he took a degree in mechanical engineering from the Polytechnic University of Milan and then started working for Italcementi in 1958. He became chief operating officer and chief executive officer (CEO) before becoming its chairman, according to Reuters. He was known informally at Italcementi as ‘Engineer Giampiero.’ Notably, the Italian cement producer purchased Ciments Francais in 1992, under his leadership, greatly increasing its size. Italcementi was purchased by Germany’s HeidelbergCement in 2016.
Poland: Przemysław Malinowski has been appointed as the managing director of Górażdże Beton from the start of August 2019. He succeeds Wojciech Hałat, who will take the role of general director of HeidelbergCement Kazakhstan. Malinowski will report to Andrzej Reclik, the General Director of Górażdże Cement.
Malinowski is a graduate of the University of Economics in Katowice and MBA Studies at the University of Economics in Wroclaw. Before joining the Górażdże Group in 2017, he worked for EDF Group.
Germany: HeidelbergCement’s profit fell in the first half of 2019 due to non-recurring effects related to the divestment of its assets in Ukraine. Its profit fell by 33% year-on-year to Euro291m in the first half of 2019 from Euro435m from in the same period in 2018. Its revenue rose by 9% to Euro9.21bn from Euro8.43bn. Its sales volumes of cement fell slightly to 61Mt and ready-mixed concrete sales volumes grew by 6% to 24.4Mm3. Its profit fell by 33% to Euro435m from Euro291m.
“In general, the market dynamics weakened slightly in the second quarter in comparison with the first quarter. Nevertheless, we were able to improve our result in the second quarter because of our strong global positioning. Good margins in Asia, as well as Western and Southern Europe, more than compensated for the weaker business due to adverse weather conditions in North America and the Africa-Eastern Mediterranean Basin Group area,” said Bernd Scheifele, the chairman of the managing board of HeidelbergCement.
Ciments du Maroc buys Atlantic Cement and Cimsud
30 July 2019Morocco: Ciments du Maroc has signed a deal to buy Atlantic Cement and Cimsud from Anouar Invest Group. Atlantic Cement is building an integrated plant in Settat province and Cimsud has recently commissioned a 0.5Mt/yr grinding plant at Laâyoune. Ciments du Maroc said that the agreement would strengthen its market presence in the central region. The acquisition is planning to complete in the second half of 2019 subject to regulatory approval. No value for the purchase has been disclosed.
Ciments du Maroc, subsidiary of HeidelbergCement, operates three integrated cement plants and two grinding plants. It also runs 30 ready-mixed conrete plants and four quarries.
Alpacem buys terminal in Trieste
30 July 2019Italy: Austria’s Alpacem purchased a terminal and bagging plant at Trieste in Italy from Italcementi in April 2019 for an undisclosed sum. The unit will be run by the company’s Slovenian Salonit Anhovo subsidiary with support from its Italian subsidiary W&P Cementi. Cement processed at the terminal will be delivered from the Salonit Anhovo integrated plant in Slovenia for sale in Slovenia, Italy and Croatia.
Spain: FYM-HeidelbergCement has launches a new clinker conveyor at the Port of Malaga. The new Euro2.5m project started by loading 4800t of clinker onto a ship bound for Ireland. The conveyor will continue to be tested in August 2019 with 30,000DWT and 40,000DWT vessels. The enclosed conveyor has a load capacity of 650t/hr. the project also included setting up two storage areas in the Pescadería area of the city.
Lehigh Cement signs order with KHD
29 July 2019US: Humboldt Wedag, a subsidiary of Germany’s KHD, has signed a contract with Lehigh Cement to supply a cement plant for a cost of more than Euro100m. The contract includes engineering, supply of equipment and structural steel as well as advisory services related to erection and commissioning of the unit. Lehigh Cement, a subsidiary of HeidelbergCement, has separately announced that it is currently preparing for a US$600m upgrade to its integrated Mitchell plant in Indiana. Construction work on the project is scheduled to start in 2020.