To coincide with the release of the Global Cement Directory 2013, Global Cement Magazine has taken a closer look at cement companies around the world, comparing capacities to analyse the development of the global cement market. Through this analysis we have determined the Top 20 global cement companies - and those close behind. We comment on their place in the cement industry in different world regions.
The global cement industry is a good indicator of the growth and progress of a country as cement consumption is closely linked to per-capita income. It implicates future changes in the development of a region or country and depends on several factors like demand, raw material reserves, market access and economic conditions.
The cement industry has changed significantly in recent years through trans-national consolidations and co-operations. Much of the potential is in emerging markets, especially China and India. Emerging markets represent approximately 90% of the worldwide market today while western Europe and North America account for most of the remainder. This has opened many markets to competition, consolidation and technical progress.
To determine a ranking for the top global cement companies, listed by their capacities in 2011, Global Cement Magazine considered the plethora of cement companies from around the world. You can see the results in Table 1. The top three companies all reached an annual capacity of over 200Mt in 2011.
Rank | Company/Group | Country | Capacity (Mt/yr) | No. of plants |
1 | Lafarge | France | 225 | 166 |
2 | Holcim | Switzerland | 217 | 149 |
3 | CNBM | China | 200 | 69 |
4 | Anhui Conch | China | 180 | 34 |
5 | HeidelbergCement | Germany | 118 | 71 |
6 | Jidong | China | 100 | 100 |
7 | Cemex | Mexico | 96 | 61 |
8 | China Resources | China | 89 | 16 |
9 | Sinoma | China | 87 | 24 |
10 | Shanshui | China | 84 | 13 |
11 | Italcementi | Italy | 74 | 55 |
12 | Taiwan Cement | Taiwan | 70 | - |
13 | Votorantim* | Brazil | 57 | 37 |
14 | CRH** | Ireland | 56 | 11 |
15 | UltraTech | India | 53 | 12 |
16 | Huaxin | China | 52 | 51 |
17 | Buzzi | Italy | 45 | 39 |
18 | Eurocement | Russia | 40 | 16 |
19 | Tianrui | China | 35 | 11 |
20 | Jaypee*** | India | 34 | 16 |
Above - Table 1: Global cement companies 1-20 ranked by capacity.
Source: Annual reports of respective companies and their websites and the Global Cement Directory 2013.
* Includes 15Mt/yr of capacity from Cimpor shares.
** Cement capacity calculated from clinker capacity assuming clinker factor of 95%.
***As in April 2012.
Rank | Country | Capacity (Mt) |
1 | China | 1452 |
2 | India | 301 |
3 | USA (inc. Puerto Rico) | 114 |
4 | Turkey | 82 |
5 | Russia | 80 |
6 | Vietnam | 73 |
7 | Iran | 71 |
8 | Japan | 70 |
9 | Brazil | 69 |
10 | Pakistan | 65 |
Above - Table 2: Top 10 global cement producing countries by installed capacity.
Source: USGS Mineral Programme Report 2011.
Tackling Chinese producers
Unsurprisingly, given the vastness of the country and the growth of its cement market, six out of the top 10 companies are now Chinese. This includes three with an annual cement production capacity of more than 100Mt/yr, namely China National Building Materials (CNBM) (200Mt/yr), Anhui Conch (180Mt/yr) and Jidong Cement (100Mt/yr).
According to Société Générale de Surveillance, China accounted for 55% of global cement consumption in 2010, a staggering 25 times the consumption of the US. According to official statistics China's consumption in 2010 was 1500kg/capita. The global average without China as just 300kg/capita.
However, this rush has now led to overproduction in China. Although CNBM, third in the global capacity ranks, reported Chinese cement output of 2.09Bnt/yr in 2011 (a figure that cannot be independently verified), a year-on-year increase of 11.7%, cement production has since slowed. For the nine months to 30 September 2012, CNBM and Anhui Conch, which ranks fourth in global capacity terms, reported large decreases in their net profits. CNBM saw its net profit drop by 40% to US$577m while Anhui Conch's net profit went down by 57% to US$632m. According to China National Materials (Sinoma) the country's production volume in the first six months of 2012 amounted to 995Mt, a year-on-year increase of 5.5%.
In 2011 the Chinese government increased investment in the 'Three Dimensional rural issues' of agriculture, rural areas and peasantry, following its 12th 'Five Year Plan' and cement demand seems set to remain robust. However, the state continued to strictly control new production capacity, so that national asset investment for cement declined by 8.3% in 2011 compared to 2010.
Obviously, China is taking strides to increase infrastructure investment and it does not want the real estate bubble to burst. However, Société Générale de Surveillance is questioning the sustainability of China's rapid development.
"Our analysis indicates that such high cement consumption is unsuitable and all countries where cement consumption has exceeded 1000kg/capita for a number of years have gone through a construction crisis sooner or later."
However, China's major producers still strive to expand their capacities. Typical of this trend is Sinoma, ninth on the list, which expects an annual capacity of 100Mt/yr by the end of 2012 compared to 87Mt/yr at the end of 2011.
Multinationals
The global cement market recovered slightly in 2011, with cement consumption rising by around 3.7%. Despite cost inflation around the world and the global economic crisis, the global economy grew by 3.8% in 2011 following an increase of 5.2% in 2010 according to the IMF.
In China, the largest market, demand rose by 10% and in India, which accounts for 7-8% of global cement consumption, consumption increased by a lower-than-expected 6%. India reached a total capacity of 330Mt/yr in 2011.
One has to differentiate between the major Chinese producers, which are mostly interested in just the local Chinese market and global players that operate in many countries and regions of the world. In order they include Lafarge, Holcim, HeidelbergCement, Cemex, Italcementi, Votoranitm, Buzzi and Vicat. Each of these has a cement production capacity of more than 30Mt/yr. Lafarge is top with 225Mt/yr.
In the various markets around the world these companies compete one against another and also against strongly-established local producers. According to the top two, Lafarge and Holcim, construction activity in 2011 in mature markets remained rather stable at a relatively low level.
In Europe, where many of the multinationals are based, France, Germany and the UK registered volume increases due to favourable fourth quarter weather. Austria remained flat while Greece and Spain experienced significant declines, reflecting the macro-economic trends. Lafarge, top of the capacity rankings, reported a 15% drop in sales in Spain, as lower volumes are needed due to a reduction in civil works. The company's sales in Greece were down by 31%.
In Poland and Ukraine consumption increased by 21% and 12% respectively on the back of the UEFA Euro 2012 Football Championship. This benefitted several of the Europe-based multinationals. In Germany, a relatively strong economic performance led to an increase of 13% in cement consumption.
Eastern Europe experienced a recovery in 2011 after two years of depressed market due to economic crisis. Lafarge reported an increase of 46% in sales on a year-on-year basis in 2011 due to 'well-orientated' prices. Western Europe as a whole consumed close to 155Mt of cement in 2011, according to the Jefferies Report 2011.
HeidelbergCement, which is fifth in the global capacity rankings, is the top multinational in west Africa with four integrated cement plants and four grinding plants. Locally this position is challenged by Nigeria's resident cement giant Dangote, which is just off the bottom of the list.
HeidelbergCement reported an increase in revenue of 9% to Euro1.02bn in 2011 compared to Euro938m in 2010 for Africa and the Mediterranean area, of which cement accounts for 66.2% of its revenue.
In Africa cement consumption rose by over 10% in 2011 in the countries in which the company operates and attractive growth rates of 5 - 9% are forecast.
Meanwhile Lafarge reported an increase of 2% in terms of sales in Africa and the Middle East to US$4.66bn in 2011 compared to US$4.59bn in 2010. 25.5% of the group's revenue in 2011 was from Africa and the Middle East, where the company had 25 cement plants and an annual capacity of 58.4Mt/yr in 2011. This represents more than 25% of Lafarge's total cement capacity.
According to HeidelbergCement, the main drivers for a continuing rise in construction activity and cement demand in sub-Saharan Africa are solid economic growth, population increase, urbanisation and infrastructural measures.
The company plans to continue its strategy of targeted capacity by further expansion of production capacities (118.4Mt/yr in 2011) and new plants in markets where they already operate, while Holcim exits from South Africa. Holcim, the second-largest cement company worldwide reduced its shares in AfriSam from 85% to 15%. Its net sales in this region were US$1.03bn, just 4.5% of the group's turnover.
In 2012
The net sales of the top 10 companies confirm a slight recovery of the global markets in the first three quarters of 2012. Both Lafarge and Holcim reported an increase for the nine months to 30 September 2012 of about 5%. Lafarge has seen its takings increase to US$15.6bn, a rise of 5%. Holcim has increased its revenue to US$17.5bn, an improvement of +4.8%.
However, Lafarge's income has fallen by 44% to US$431.2m and its profits are suffering from its restructuring programme. Meanwhile, Holcim's sales volumes in western Europe were down by 46% on a like-for-like basis to 20.1Mt and sales were down by 6% to US$4.78bn.
Sales volumes at HeidelbergCement increased by 3% from 65.4Mt to 67Mt on a year-on-year basis in the first nine months of 2012, with a rise of 12% to 8.9Mt in North America and a rise of 7% to 22.1Mt in Asia-Pacific. However, it saw a decrease of 4% from 16.7Mt to 16.1Mt in western and northern Europe. Sales in western Europe, Central Asia and the Africa/Mediterranean Basin region remained at 2011 levels.
The company's cement earnings before interest, tax, depreciation and amortisation (EBITDA) margin grew from 23.5% in March 2012 to 24.4% in September 2012 and the positive trend is expected to continue.
In the first nine months of the year the company's turnover decreased by 2.1% to US$11.27bn. However, Cemex, seventh in the list, saw its EBITDA increase by 9% to US$2.0bn (on a like-to-like basis by 13%) and operating income in the third quarter increased by 35% to US$410m. Cemex performed solidly in South America but Cemex saw its net sales in the Mediterranean region (mainly Spain) fall by 19% to US$342m in the third quarter on the back of very poor economic conditions in that country.
In the future
The development of the global cement industry is expected to continue. In India, for example, the 'Indian Cement Industry Forecast' by RNCOS sees the country's cement production grow at a compound annual growth rate (CAGR) of around 12% over the period to 2014, reaching 303Mt/yr.
Sufficient raw material availability and various incentives provided by the state governments make this region lucrative for investments. Numerous domestic and international cement companies are striving to establish their production base in this region, although numerous local producers currently hold sway in the market.
Lafarge expects the global cement market demand to grow by 4.6% CAGR through 2015, while assuming a total GDP world growth of 3.4% CAGR as per IMF predictions and no further major economic shocks in the global economy. Lafarge interestingly excluded eastern Europe in this general forecast. It sees cement demand in Europe to fall by 0.6%/yr CAGR for 2011 to 2015. The group says that its priorities to 2015 are extracting more value from the existing plants and driving a higher output from the existing plants for an additional 13-15Mt/yr, especially expanding in the emerging markets.
HeidelbergCement is also expanding, mainly in the emerging countries. 10Mt of additional capacity will come online in 2012 and 2013. Its largest project for 2014 will be in Indonesia, where it is building a 4Mt/yr integrated cement plant.
According to a forecast by China Cement Industry Report for the 2010–2015 period, domestic output of cement in China will register 2.48Bnt and its capacity will reach 2.75Bnt in 2015. All of the top-ranked Chinese producers plan to expand their capacities, despite the existing over-capacity in the country. Could this lead to even more exports from China or will the domestic market be able to defy Société Générale de Surveillance's prediction?
Today, the biggest challenge for the top-ranking global cement companies is to keep up with rapid growth in demand in developing markets, while taking steps to forge a more sustainable global cement industry for the future. The higher the rank of the company, the more responsibility it has with regards to this second target.