September 2024
CRH reports steady improvement in third quarter 21 November 2017
Ireland: CRH’s like-for-like group sales for the third quarter of 2017 rose by 3%, boosted by continued underlying growth in the Americas, although some operations were hit by adverse weather. CRH, which is in the final stages of buying US-based Ash Grove Cement for Euro2.98bn, added that it continues to expect another year of progress in 2017, with earnings before interest, taxes, depreciation and amortisation (EBITDA) of more than Euro3.2bn. This is 2.2% higher than the Euro3.13bn EBITDA it saw during 2016.
Group sales for the nine months as a whole were Euro20.7bn, an increase of 2% compared to the same period if 2016. EBITDA for the nine months was also 2% higher at Euro2.43bn.
Global coal prices pile pressure on Pakistan’s cement producers 21 November 2017
Pakistan: Rising coal prices are presenting a risk to the profit margins of cement manufactures in Pakistan. It is expected that this sustained rise in coal prices will increase the cost of cement production in the short-term.
Major contributory factors to the higher coal prices include China’s imposition to cut production to 276 days to reduce the supply glut since October 2016, while extra safety checks are resulting in tightened domestic coal supplies in the country. Moreover, tropical storms in the Atlantic basin and floods in Australia and Indonesia are giving rise to logistical issues with coal supply. Nuclear outages in France are driving extra competition for coal.
To add to the already worsened supply situation, South Africa`s National Union of Mine workers (NUM), which represents 70% of employees in the coal mining sector, started a strike on 19 November 2017 over unresolved wage disputes.
India: The State Pollution Control Board (SPCB) has recommended that Jammu & Kashmir Cements’ plant at Khrew, Pampore for causing ‘major pollution.’ However, the state government has given the state-owned cement producer time to stay open while it installs dust control upgrades, according to the Kashmir Monitor newspaper. The company employs around 1000 workers and the government is concerned about the disruption that shutting the plant would cause.
GCP Applied Technologies launches new cement additives 17 November 2017
US: GCP Applied Technologies has launched two new cement additives: Opteva HE quality improvers and Tavero VM grinding aids. Opteva HE is intended to enhance early strength and is targeted at ‘challenging’ cements. Tavero VM is a grinding aid additive intended to help stabilise vertical roller mills during production by reducing water injection requirements and cement pre-hydration. It also improves cement performance by delivering higher strengths and shorter setting time. The company intends to expand its range of additives for cement production under the Opteva and Tavero brands.
JSW Cement starts work on cement grinding plant in Odisha 16 November 2017
India: Shri Naveen Patnaik, the Chief Minister of Odisha, has laid the foundation stone for a 1.2Mt/yr cement grinding plant that JSW Cement is building at Kalinganagar in Jajpur. The plant is scheduled to start operations in 2018, according to the Orissa Diary. Once the unit is commissioned the cement producer has plans to double its production capacity to 2.4Mt/yr.
Sempertrans and Shaw Almex to end cooperation agreement in North American conveyor belt market 16 November 2017
US/Austria: Sempertrans USA, part of Semperit Group, and Shaw Almex Industries have agreed to end a cooperation agreement for the North American conveyor belt market. The agreement was originally set up in 2016. Sempertrans USA has set up a sales and distribution organisation for conveyor belts in North America and it will use this to serve its customers. Tim Shaw, the chief executive officer (CEO) of Shaw Almex, said that both companies had agreed that it would be better if they acted independently so that they could be more ‘flexible’ in handling their respective customers.
Update on Argentina 15 November 2017
Forget the news stories about poor markets in Colombia and Brazil. Argentina is riding a construction boom right now. Local producer Loma Negra recently ran an initial public offering and it picked a good time to do it. It aimed to generate up to US$800m from the flotation and in the end it raised over US$1bn. Good news for its Brazilian owner InterCement no doubt, which was last reported as aiming to sell a 32% stake in the company in order to cover its debts. More cheer must have followed from Loma Negra’s third quarter results this week. Its cement sales volumes rose by 9% in the latest quarter to 1.72Mt due to expanding local construction activity.
Graph 1: Cement production and consumption in Argentina Q1 – 3, 2008 – 2017. Source: Asociación de Fabricantes de Cemento Portland (AFCP).
As Graph 1 shows its experience mirrors the wider industry. Cement production rose by almost the same rate for the industry as whole, by 10% year-on-year to 3.19Mt for the quarter, according to Asociación de Fabricantes de Cemento Portland (AFCP) data. For the nine months as a whole production has also risen by 9% to 8.7Mt. This figure is the third highest in the last decade since 2008. Production peaked in 2015 before dropping a major 10Mt following a subdued construction industry in the wake of devaluation of the Argentinean Peso in late 2015 and early 2016. At the time LafargeHolcim, the operator of Holcim Argentina, also blamed the negative influence of neighbouring Brazil’s own financial woes. The economy has bounced back giving the country’s its highest nine month cement consumption figure, 8.8Mt, in the last decade.
Earlier in the year LafargeHolcim said it was importing 0.25Mt of cement into Argentina between May 2017 and April 2018 because it couldn’t meet local demand from its own plants. Given the over-abundance of clinker in the world one might be forgiven for being sceptical about this claim. Bolivia’s Itacamba announced it was also exporting cement to Argentina this week. However, the other point to note from the graph is that consumption has been about 90,500t higher than production so far in 2017. This is an envious position for local producers to be in. One more striking feature that sticks out from the graph above is the undulating curve than both production and consumption has. The Argentinean economy has been through the ringer in recent years and this shows in the ups and downs of the figures.
From the perspective of the three major domestic producers, Loma Negra’s sales revenue rose by 53.9% year-on-year to US$620m in the first nine months of 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by a whopping 73% to US$157m. Cementos Avellaneda, owned by Spain Cementos Mollins and Brazil’s Votorantim, reported similar good news with its overall results boosted by the Argentine market. Its sales revenue in the country rose by 28.3% to Euro130m and its EBITDA rose by 59.5% to Euro32.4m. Although Mollins did make the point that inflation had been particular problem in Argentina, although its impact had been ‘greatly’ outweighed by price rises. LafargeHolcim has had its problems globally so far in 2017 but Argentina hasn’t been one of them. Its operations in the country have been propping up the group’s Latin American results each quarter so far in 2017. Despite being one of its smaller regions by sales revenues, its sales and earnings delivered some of the group’s highest growth in the third quarter of 2017.
In this kind of environment new production capacity can’t be far away. Sure enough Cementos Avellaneda plans to increases the capacity of its San Luís cement grinding plant by 0.7Mt to 1Mt/yr by the second quarter of 2019. US$200m has been earmarked for the project.
So, great news for Argentina and proof that poor markets can turn around. The Brazilian cement association SNIC reckoned in October 2017 that the rate decline of cement sales was slowing, suggesting that the bottom of the downturn was in sight. On the evidence of the current situation in Argentina once the market does revive, South America will be the place to watch.
US: Refractory manufacturer HarbisonWalker International (HWI) has announced two new members of its senior leadership team. Ross Wilkin has joined as chief financial officer (CFO) and corporate treasurer, and Michael Werner has joined as senior vice president, Commercial and corporate officer.
Wilkin joins HWI from Universal Stainless & Alloy Products, where he served as CFO. Before his role at Universal Stainless, he was CFO at Dynamics. Much of Wilkin’s career has been spent with HJ Heinz Company where he eventually became the became the vice president and CFO for the company’s Australia and New Zealand organisation. He began his finance career at KPMG, serving both in Toronto, Canada and in Cleveland, Ohio. A graduate of Carlton University with a Bachelor of Commerce degree in Accounting and Finance, Wilkin is a certified public accountant in both Canada and the US.
Werner previously led global commercial operations for Loparex. Prior to this he spent 20 years at GE Plastics and Sabic in numerous domestic and global roles, where he progressed to become Product General Manager. He began his career at Monsanto as an engineer in Technical Development and as a manager of Business Development in the thermoplastic elastomer business. Werner holds a Bachelor of Science degree in Polymer Science from the Pennsylvania State University.
France/Belgium: French police have searched the Paris offices of LafargeHolcim as part of an on-going investigation into the company’s conduct in Syria. At the same time the offices of Belgium’s Groupe Bruxelles Lambert (GBL) were also searched, according to the Agence France Presse (AFP). Both companies said they were cooperating with the investigations.
A source quoted by AFP said that the investigators are trying to find out if GBL had been aware of Lafarge Syria’s activities in Syria. GBL is a shareholder of LafargeHolcim that held a 9.4% stake at the end of 2016. The investigation as a whole is attempting to determine whether LafargeHolcim’s predecessor company Lafarge Syria paid terrorist groups in Syria and how much managers knew about the situation.
Brazil: Votorantim Cimentos’ sales revenue has remained stable at US$968m in the third quarter of 2017, boosted by its performance in North America. At home in Brazil the cement producer benefitted from improved market conditions, including higher prices and higher revenues from mortars and agricultural lime. Despite this though its local revenue fell by 4.9% year-on-year in line with the national market. The cement producers adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 27% to US$157m but the company blamed this on a non-recurring tax adjustment.