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Switzerland: Holcim has launched a targeted cost-cutting programme aimed at increasing operating profit by at least Euro1.25bn by the end of 2014.
The aims of the 'Holcim Leadership Journey' programme include increasing its fixed cost savings, improving energy-efficiency, increasing the use of alternative fuels and raw materials, cutting logistics costs and reducing net working capital. The company said it expected to achieve a positive impact of at least Euro124m in 2012 and anticipated one-off costs of less than Euro167m to complete the programme. Holcim had an operating profit of Euro1.92bn in 2011, excluding one-off items of Euro312m.
Chief executive Bernard Fontana is known as a cost-cutter having launched a similar 'Leadership Journey' cost savings plan in his former role as head of Luxembourg-based stainless steel maker Aperam. Like other energy-hungry cement makers, Holcim has grappled with higher coal, diesel and oil prices, which have added to production and transportation costs.
Holcim said that reducing logistics costs would add an extra Euro208m to operating profit by 2014, while improving energy-efficiency and using alternative fuels should add Euro250m in savings. Improving customer focus, streamlining the procurement process and increasing fixed cost savings should bring in savings of some Euro791m. The company also said that it might make some selective divestments.
Tunisia: A new cement plant has begun production in the region of Rouissat Chbika in the governorate of Kairouan, Tunisia. It is a unit of the Tunisian-Spanish Company SOTACIB, a subsidiary of Spanish group Cementos Molins and has cost the company US$2890m. It has created 350 jobs and will produce 4000t/day once it is fully commissioned.
Ireland: Cement Roadstone Holdings plc (CRH) has released details of its trading in the first quarter of 2012. It reported that operations in the Americas had benefited from favourable early weather conditions and a firmer tone in construction markets in the US. In contrast, trading in its European operations in the first four months was affected by severe weather conditions in February 2012 and by the ongoing impact of volatility in Eurozone financial markets. Overall, cumulative like-for-like group sales to the end of April 2012 were 2% ahead of the same period of 2011, although earnings before interest, tax, depreciation and amortisation lagged behind 2011 due to the tough start in its European operations.
In Europe, poor weather conditions in February 2012, which saw an extended period of extremely low temperatures across continental Europe in contrast to a very mild 2011, impacted trading. This resulted in a like-for-like sales decline of approximately 6% for January and February 2012. The rate of decline moderated in subsequent months as weather improved to leave cumulative like-for-like sales at the end of April 2012 4% behind those of 2011.
Operations in Poland, Switzerland, Benelux, and Turkey were particularly impacted by the harsh conditions. Volumes in Poland have since recovered and were in line with 2011 by the end of April 2012, but volumes elsewhere have remained behind those a year earlier. In Ukraine volumes for the first four months were well ahead of 2011, while January-April 2012 volumes in Finland were somewhat behind 2011. Operations in those countries experiencing austerity measures (Ireland, Portugal and Spain) continued to face challenging market conditions. Overall, cumulative like-for-like sales for the Europe Materials division were slightly ahead of the first four months of 2011.
CRH's Europe Products division, which benefited to a substantial extent from the very mild winter in 2011, was in turn affected by conditions in 2012 with like-for-like sales down by 8% for the first two months. The subsequent recovery in March and April 2012 has been strong in Germany and Denmark but more muted in Benelux, France and Switzerland where weaker government expenditure and consumer confidence has dampened demand. Overall, underlying sales for the first four months of 2012 were 5% behind 2011.
CRH's businesses in the Americas benefited from unusually benign weather conditions in the early months of the year. Helped by this and by a firmer tone in overall economic activity in the US, the group's operations delivered a like-for-like increase of 11% in terms of sales for the first four months of 2012.
In the Americas Materials business division, favourable weather contributed to very strong like-for-like volume increases for the first four months. The Americas Products business operations also benefited from the good early weather with like-for-like sales some 12% ahead of the first four months of 2011. Within its portfolio, those businesses serving the repair, maintenance and improvement (RMI) sectors have shown the most strength to date in 2012.
CRH predicts that given normal seasonal weather in May and June 2012 it expects its overall EBITDA in the (less significant) first half of the year to be close to 2011, when EBITDA was Euro574m. With more positive US economic and construction prospects for 2012 mitigating a more cautious view on the outlook in Europe, CRH reports that, subject to no major financial or energy market dislocations, it expects overall like-for-like sales growth in 2012 and a year of progress for CRH.
Five of the big European producers posted their first quarter results this week and the figures were frosty.
Mirroring the north-south fault-line tearing Europe's economies apart, Germany's HeidelbergCement, Switzerland's Holcim and France's Lafarge showed improvements in overall sales volumes for the first quarter. Italy's Italcementi and Greece's Titan saw total sales volumes fall.
Looking closer, the results revealed that Western Europe was a dead zone for everybody. Despite its restructuring, Lafarge's sales fell by 11% in the region for the quarter. Similarly HeidelbergCement's sales fell by 6%, Holcim's sales fell by 13% and Italcementi's sales fell by 11%. Titan, by contrast, posted a 4% decline in sales in its heartland in Greece and Eastern Europe. Unsurprisingly it attributed the fall to the collapse of the construction sector in the wake of the Greek debt crisis. Even the weather seemed to be against European production, with more than one report blaming an unusually cold February 2012 for the poor results.
As is usual for European cement news in recent years the action in the first quarter of 2012 was all elsewhere, and this is where new profits have been found for these European producers, specifically in Asia and the Americas. It's in these places that Lafarge, Holcim and HeidelbergCement have reported sales increases of 10% and above for the quarter. Unfortunately 'elsewhere' for Italcementi and Titan has included Egypt with all its ongoing political and economic uncertainty, and the US where demand is in a sustained slump.
Bruno Lafont, CEO of Lafarge, summed it up nicely: "Emerging markets continue to be the main driver of demand and Lafarge benefits from its well balanced geographic spread of high quality assets." In a bid to capture some of that spread, it was also announced this week that the Italcementi subsidiary, Ciments Français, is striving to acquire a 6.25% stake in West China Cement. No wonder!
Each of the five producers are continuing to find savings in Western Europe through restructuring efforts but how painful will it become before the market revives? Unfortunately HeidelbergCement's outlook is the most candid. "In the Western and Northern Europe Group area, HeidelbergCement expects further economic growth but a slight overall dip in demand and falling sales volumes in cement and aggregates." Yes, it's going to get worse. Let's hope it's a warm winter in 2013.
Columbia: Columbia's largest cement company, Cementos Argos (Cemargos), has named Jorge Mario Velásquez as its chairman.
A civil engineer with over 30 years' experience in cement, Velásquez replaces José Alberto Vélez, who remains at the head of parent company Grupo Argos. The changes are part of the company's ongoing corporate restructuring process, which includes splitting off non-cement assets to its investment arm, Inversiones Argos.