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.