Bosnia-Herzegovina: The Bosnian-Herzegovinian cement producer Tvornica Cementa Kakanj (TCK), part of Germany's HeidelbergCement, has announced that it expects its net profit to increase by 20 - 25% to Euro5.6 - 6.1m in 2013, while it expects cement sales to be broadly flat at around 425,000t. The effects from ongoing investment and process-optimisation measures are expected to kick in in 2013, generating savings that should lead to the projected rise in net profit, according to company director Branimir Muidza. Speaking to regional news agency SeeNews, he described the targets as ambitious and optimistic but not unrealistic.
TCK is making its claims in the midst of a Bosnian market that is estimated to require only 1.05Mt of cement in 2013, a decrease from the 1.10Mt/yr consumed in 2012. In 2008 - 2009 cement consumption was as high as 1.85Mt. Muidza expects that the lack of new investments in the industrial sector and new infrastructure, rising unemployment, illiquidity in the construction sector and a crisis in the real estate market would lead to a continued slump.
Muidza said that the expected impact on TCK's business from the recent EU accession of Croatia, which is the company's largest export market, would not cause problems for TCK, as its cement is already made to EU standards. He added that if Croatia benefits from EU accession further down the road, so will TCK.
Going forward, TCK's investment pipeline for the 2013 - 2014 period features a project for the automation of cement milling and packing operations, modernisation of its sampling laboratory, upgrade of its weighing system, construction of an administrative building and procurement of new IT equipment. No production capacity upgrades have been planned over the medium term as the existing capacity is sufficient to meet the current market demand.
When it comes to long-term investments, which covers the period until 2018, the company plans the construction of a cement silo which should further expand the range of its products and therefore put it in a better competitive position. The cost of the investment is currently thought to be US$10.3m.