September 2024
India: UltraTech Cement has commissioned 0.3Mt/yr slag cement grinding mill at its grinding plant at Patliputra in Bihar. The new capacity is intended to meet demand for slag cement in eastern India. With the expansion of the plant the cement producer has a production capacity of 70.6Mt/yr.
Saudi Arabian first quarter results round-up 11 May 2017
Saudi Arabia: Tabuk Cement made a net profit of US$2.3m in the first quarter of 2017 from revenues of US$15.3m. For the same period, Umm Al Qura Cement made a net profit of US$4.5m from revenues of US$13.8m. Saudi Cement made a net profit of US$44m and Yanbu Cement made US$33m in profit from revenues of US$81.9m. Eastern Province Cement made US$13.3m from total sales of US$53.9m.
Raysut Cement reports 62% slump in profit for Q1 11 May 2017
Oman: Raysut Cement has reported a 62% fall year-on-year in its net profit for the three months to 31 March 2017, due to lower sales volume and increased taxes this year. The group net profit fell to US$8.0m against a group net profit of US$21.0m during the corresponding period of 2016.
The cement producer said that its profit dropped because of significant increase in cost of electricity, lower sales volumes and an increase in the tax rate from 12% to 15%.
The group as a whole sold 0.76Mt of cement during the period from 1.02Mt of cement sold previously, a year-on-year decline of nearly 25%. While sales at the parent company fell by 19%, Raysut Cement's UAE subsidiary Pioneer Cement recorded a 35.4% decline in sales volumes. Revenue earned by Pioneer Cement dropped by 34.3% to US$13.3m compared to US$20.3m.
Greece: Titan Group’s finances recorded an improvement in the first quarter of 2017, primarily due to the continued recovery of the US market. All geographic regions where the group operates recorded higher sales volumes with the exception of Greece, where demand remains stagnant at low levels.
Consolidated turnover was Euro361.8m, a 7.1% increase year-or-year compared to the first quarter of 2016. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 18% to Euro51.1m. The net result after minority interests and the provision for taxes was a loss of Euro3.9m versus a loss of Euro18.6m.
The US market continues to constitute the main regional growth driver for Titan. Turnover in the country rose by 26.9% year-on-year to Euro221.2m. EBITDA almost doubled to Euro34.1m from Euro17.9m in the same period of 2016.
In Greece, residential building activity remained at very low levels, affected by the domestic economic crisis and increased uncertainty. Certain major public road projects were concluded early in 2017 leading to lower cement consumption. Export volumes were lower than the previous year due to competitive global conditions. The subdued market coupled with increased energy costs led to a decline in profitability. In total, group turnover for Greece and Western Europe for the first quarter of 2017 declined by 7.7% to Euro57.6m, while EBITDA, suffering from higher energy costs, fell to Euro4.4m from Euro8.3m.
Turnover in the markets of Southeastern Europe increased in the quarter but continuing competitive pressures and higher energy costs, both negatively impacted profitability. Total turnover increased by 5.8% to Euro37.9m, while EBITDA declined to Euro3.8m from Euro6.3m.
In Egypt, the group’s plants have been in full operation utilising locally-ground solid fuels, which allowed for an increase in production and sales volumes in the first quarter of 2017. The group said that the economy has not yet adjusted to the large devaluation of the Egyptian Pound in 2016 and a climate of uncertainty and volatility is affecting building activity and market prices. Turnover in Egypt during the first quarter was Euro45.2m, a significant increase in local currency but a 30.8% decline in Euro-terms, while EBITDA reached Euro8.9m, a 17.4% decline in Euro terms.
In Turkey demand was affected by a heavy winter and negative foreign exchange differences further impacted Adocim’s results. The net result attributable to Titan was a Euro0.5m loss versus a profit of Euro0.4m.
In Brazil, despite the improvement in key macroeconomic indicators, the market remained in decline compared to the same period in 2016. The signs of improvement in the construction confidence index have yet to be translated into an increase in demand for building materials.
Today HeidelbergCement publishes its financial results for the first quarter of 2017, giving us an idea of how the year is shaping out for the major cement producers outside of China. Looking at graphs 1 and 2 below of cement production volumes and sales revenue gives the initial impression of a reversal of fortunes for the two leading multinational companies. LafargeHolcim’s production and sales are declining as HeidelbergCement races to catch up, boosted by its acquisition of Italcementi in 2016.
This interpretation would be misleading, however, given that LafargeHolcim has been steadily whittling down its assets to become more profitable and because HeidelbergCement has just taken on a raft of production units. The real figures to look at might be the like-for-like changes with adjustments made for currency, consolidation effects and suchlike. Under these conditions each of the three leading cement producers, with the addition of Cemex, have reported stagnant cement sales in the period. Yet the surprise comes from an analogous look at sales. LafargeHocim and Cemex both reported sales revenue increases of 5 – 6% on a like-for-like basis, whilst HeidelbergCement reported no change. This is further backed up by operating earnings before interest, taxation, depreciation and amortisation (EBITDA) figures that rose significantly on a like-for-like basis for LafargeHolcim at 8.8%, more modestly at 2% for Cemex but fell by 3% for HeidelbergCement.
Graph 1: Cement sales volumes at selected multinational producers in Q1 2016 and Q1 2017. Sources: company reports.
Graph 2: Sales revenue at selected multinational producers in Q1 2016 and Q1 2017. Sources: company reports.
The tragedy of the picture above appears to be that Eric Olsen, the chief executive officer of LafargeHolcim, has started to turn the company around following the merger between Lafarge and Holcim in 2015, just as he is leaving the company. This week Olsen denied that his departure was related to the Syria scandal but that it was related to ‘tensions’ at the group. The lesson that HeidlebergCement can take from this is that enlarging a building materials company in a supressed global market requires decisive action to maintain profitability. Certainly, if it doesn’t go HeidelbergCement’s way in future months and years then the stability of its management and major shareholders may become apparent. Although it doesn’t mention internal matters, HeidelbergCement does flag up higher geopolitical and macroeconomic risks in its outlook for 2017 as well as a ‘shift of political measures towards protectionism.’ That last one is potentially bad news for a multinational cement producer looking to move excess clinker around as it downsizes towards profitability.
Of the rest of the producers included in the graphs above Dangote Cement is worth some attention. The production and sales figures show a company evolving from a national player into an international one. Challenged by economic problems and a market contraction at home in Nigeria the company is exploding internationally in sub-Saharan Africa. Roughly, it sold a third of its cement outside of Nigeria in the period but only made a quarter of its revenue outside of its home turf. This has interesting implications for the international future of the company. However, it will be a big moment for the firm once it finally builds a plant in Nepal outside of Africa.
Italy’s Buzzi Unicem and the Brazilian operators Votorantim and InterCement are due to release their first quarter results in the coming weeks which will flesh out the international picture. Already there are lots of fascinating regional trends emerging that require discussion, such as the Philippines that we looked at last week and a ‘back to business’ feeling in China. Next week in the run up the IEEE/PCA Cement Industry Technical Conference in Calgary, Canada we’ll look at the US.
UK: A proposed strike by Cemex UK heavy good vehicles (HGV) drivers threatens the supply of construction materials for major construction projects, says the Unite union. The 82 HGV drivers who are members of Unite returned an 87% vote in favour of strike action and action short of strike in response to wage negotiations. Continuous work to rule industrial action, where employees follow the minimum requirements of their contract will start on 22 May 2017, followed by an initial 24 hours strike on 26 May 2017. The union says that projects set to be affected by the dispute include work at Heathrow airport and the Mersey Gateway.
Oman: Raysut Cement has confirmed its plans to build a new cement plant via a joint venture with Oman Cement. The cement producer announced its plans in its first quarter financial report for 2017. The new company will be called Alwasta Cement Company. As announced previously the new project will be dependent on a feasibility report. It also announced that its project with Barwaaqo Cement Company to build a terminal in Somaliland, an autonomous region of Somalia, is progressing and that work on a new packing plant in underway.
PCA names leaders in safety and sustainability 10 May 2017
US: The Portland Cement Association (PCA) has announced the winners of its Chairman’s Safety Performance, Safety Innovation and Energy and Environment Awards. The awards recognise outstanding safety performance in the manufacturing of Portland cement, creative safety-enhancing projects in the cement industry and outstanding environmental and community relations respectively.
“The facilities recognised today are to be congratulated for their safety achievements,” said Allen Hamblen, PCA chairman and president and chief executive officer of CalPortland, in relation to the Safety Performance Awards.
Winners of the 2017 PCA Chairman’s Safety Performance Awards:
Category: Less than 226,000 hours
Buzzi Unicem USA – Chattanooga, Tennessee
LafargeHolcim US – Morgan, Utah
Lehigh Hanson, Inc. – Tehachapi, California
Category: 226,001 - 289,000 hours
Ash Grove Cement – Foreman, Arkansas
GCC Permian – Odessa, Texas
Lehigh Hanson, Inc. – Leeds, Alabama
Category: 289,001 - 563,000 hours
Cemex USA – Brooksville, Florida
Cemex USA – New Braunfels, Texas
Martin Marietta Materials – New Braunfels, Texas
Winners of the 2017 Safety Innovation Awards:
Milling/Grinding
Ash Grove Cement, Montana City, Montana
Pyroprocessing
Cemex USA, Balcones, Texas
Distribution
CalPortland Cement Terminal, Portland, Oregon
LafargeHolcim US, Corporate Program, Chicago
Winners of the 2017 Energy and Environment Awards:
Energy Efficiency
Cemex USA Construction Materials, Pacific, LLC, Victorville, California
Environmental Performance
Cemex USA Construction Materials, Pacific, LLC, Victorville, California
Land Stewardship
Continental Cement Company/Green America Recycling, Hannibal, Missouri
Outreach Winner
Mitsubishi Cement Corporation, Lucerne Valley, California
Germany: HeidelbergCement has suffered from poor sales in Asian and African markets as it continues to integrate assets from Italcementi into the group. Its pro forma sales revenue remained stagnant on a like-for-like basis at Euro3.78bn in the first quarter of 2017. Its cement sales volumes also remained static on a like-for-like basis at 27.8Mt. Although the group described its fortunes as ‘mixed’ in its emerging markets it reported sales declines in Thailand, Bangladesh and Egypt.
“We were able to almost offset the effect of higher energy costs, bad weather conditions and increased competition in some emerging countries in the most seasonally weak quarter of the year,” said Bernd Scheifele, chairman of the managing board. He added that the overall outlook for the global economy is positive despite ‘major’ macroeconomic and geopolitical risks. The group derives about 60% of its revenue from the US, Canada, the UK, Germany, countries in Northern Europe and Australia. As such it relies on the ‘good and stable economic development’ of these territories.
Overall the group’s cement sales volumes grew by 58% to 27.8Mt from 17.6Mt due to the acquisition of Italcementi in mid-2016. Its sales revenue from its cement business grew by 49% to Euro1.9bn from Euro1.3bn.
By region, sales in Europe and North America rose in the reporting period despite a strong comparison quarter in 2016 and poor weather. Falling prices in Indonesia and Ghana were described as the main cause for falling revenue in Asia and Africa. Results in Western and Southern Europe were also damaged by higher maintenance costs year-on-year.
France: Julien Soum has been appointed as the European business development manager at Anderman Ceramics. Soum has worked as a commercial engineer in Europe for the last five years with knowledge of the refractory markets for cement and steel working for Refractaria and Hepha. He was educated at the University of Montpellier and the Kedge Business School in Marseille.