September 2024
2016 for the cement multinationals 08 March 2017
The publication of LafargeHolcim’s annual financial results for 2016 this week starts to give us a review of the year as a whole for the multinational cement producers. Of the larger producers, CNBM, Anhui Conch and Votorantim are expected to make their releases in April 2016, so we’ll focus here on the available data from LafargeHolcim, HeidelbergCement, Cemex and BuzziUnicem, with UltraTech Cement included for some regional variety.
Graph 1: Sales revenue from multinational cement producers in 2015 and 2016 (Euro millions). Source: Company financial reports.
As can be seen in Graph 1 currency exchange effects have caused problems for producers’ sales revenues, with LafargeHolcim, HeidelbergCement and Cemex all reporting falling sales on a direct comparison. Subsequently like-for-like adjustments have cropped up repeatedly on balance sheets to try and present a more investor-friendly picture, although even this has still seen LafargeHolcim and HeidelbergCement report small declines. In this sense it’s a little unfair to include India’s UtraTech Cement, given that the bulk of its business is in just one country. Operating in just one country though has its own risks, one of which we’ll discuss below.
Unsurprisingly, given the poor sales, the focus for the multinationals has generally been on earnings measures such as operating earnings before interest, taxation, depreciation and amortisation (EBITDA). Here, LafargeHolcim and Cemex have done far better as they have streamlined their businesses. For example, LafargeHolcim’s operating EBITDA rose by 12.9% year-on-year to Euro4.895bn in 2016.
Graph 2: Cement sales volumes from multinational cement producers in 2015 and 2016 (Mt). Source: Company financial reports.
Graph 2 looks at cement sales volumes. Most of the producers have made small gains or losses in 2016 with the stark exception of LafargeHolcim. Its cement sales fell by 12.9% to 233Mt in 2016. More alarmingly, for the fourth quarter of 2016 LafargeHolcim blamed an increased rate of declining cement sales volumes on demonetisation in India, tough trading conditions in Indonesia and a unusually good year (in 2015) to compare itself against in the US.
On that point about India, UltraTech may not have released any sales volumes figures but other larger Indian producers have experienced problems with the government’s decision to remove certain banknotes from circulation in November 2016. A report by HDFC Securities this week suggests that cement volumes fell by 13% year-on-year in January 2017 following a 9% decline in December 2016. The country may be facing its first decline in cement sales volumes since 2001. This is squarely down to government policy.
On a regional basis probably the most worrying theme has been an apparent slowdown in the US towards the end of the year. As mentioned above LafargeHolcim has blamed it on a good previous year and Cemex concurred. Buzzi Unicem also reported the same trend but didn’t attribute it to anything in paticular. President Donald Trump’s push for US$1tr investment on infrastructure in the US should help to reverse this along with anything that happens with his Mexican border wall plans.
The other area to pay attention to is Indonesia. Both LafargeHolcim and HeidelbergCement reported tough trading here prompted by production overcapacity. Locally, Semen Indonesia said this week that its sales revenue fell by 3% to US$1.95bn in 2016 and it still has new cement plants to be commissioned in 2017.
The overall picture for 2016 from these cement producers appears to be one of companies treading water and making savings as their sales were battered. As mentioned previously (The global cement industry in 2016, Global Cement Magazine, December 2016) the geographic spread of assets the multinationals own doesn’t seem to be protecting them from world events as well as they once did. On the plus side northern Europe seemed to pick up or at least hold steady in 2016 but various political shocks such as the UK departure from the European Union and elections in France and Germany may scupper this. In a similar vein India remains one of the key markets but government policy has potentially dented its growth this year. In the US cement volumes may be slowing but Donald Trump is riding to the rescue! With this continued high level of potentially disruptive events cement producers are probably hoping for a quiet year in 2017.
Rexnord launches ‘smart’ PT Select Bearings 08 March 2017
US: Rexnord has launched so-called ‘smart’ PT Select Mounted Spherical Roller Bearings. These bearings are targeted for conveyor, fan and blower applications in the cement, aggregate, material and package handling industries. They also include product specific QR codes laser-etched on to each product linking to product specific information that links to a dedicated mobile application. The bearings also include engineered bearing seals to increase product life, such as standard triple lip and clearance seals to provide ingress protection against contaminants, to reduce operating temperatures at higher speeds and they feature nitrile material with protective metal shield.
South Korea: Voith has reported on a contract to engineer and install a belt conveyor drive and controller system for SsangYong Cement’s Donghae plant. Changes made by the engineering firm to two belt conveyors from the main limestone quarry to the plant managed to double the production of the quarry.
The engineering company installed new drive trains on the longer 12.8km SB500 belt conveyor, one of the longest single conveyors in the world. The installed power is now 2 x 1.2MW at the head and 1 x 1.2MW at the tail of the conveyor. The existing drives from the longer conveyor were used to double the number of drive trains on the shorter 2km SB200 conveyor. The new configuration of the SB200 drive system consists of 4 x 600kW installed power at the head equipped with new gearboxes. A Voith TurboBelt DriveControl system was also installed to reduce the start-up time of the longer conveyor by half, from originally over 10 minutes. The system includes active-load sharing, belt conveyor control, slip detection and remote service capability. It is also expected to extend the belt lifetime by reducing the mechanical stress as well as the dynamic impacts.
“Due to this retrofit project, we were able to reduce the working hours of plant workers, achieved cost savings, and a flexible operation is now possible. Thanks to Voith’s technical support and efforts, the plant will enjoy sustainable operations providing value to its community, its owner, and the employees,” said Dukgi Lee, General Manager of the plant.
South Korea: SsangYong Cement has awarded a contract to Claudius Peters Projects for the supply of a grate cooler modification. The existing cooler at the Donghae cement plant will be upgraded by with an ETA 5th generation clinker cooler system. It consists of a fixed inlet, the High Efficiency module (HEM) and a moving floor ETA technology. It is designed for a stable production at 7600t/day.
SsangYong cement was established in 1962 and operates the world’s largest cement plant in Donghae with a capacity of 11.5Mt/yr of clinker. It employs around 400 workers.
US: Orcem Americas, a subsidiary of Ireland’s Ecocem, has been refused planning permission to build a slag cement plant in Vallejo, California. The cement producer was hoping to build a US$50m grinding plant but it faced opposition from local residents on environmental grounds, according to the Irish Times. The issues for the planners was an anticipated increase in the number of trucks on local roads and pollution from the plant. Orcem Americas can now appeal the decision to Vallejo’s City Council if it chooses.
UK: Breedon Group’s sales revenue and profits have been expanded by its acquisition of Hope Construction Materials in 2016. Its revenue rose by 43% year-on-year to Euro523m in 2016 from Euro367m in 2015. Its profit before tax rose by 50% to Euro53.9m from Euro36m. The group also attributed its success to its aggregate business.
“2016 was arguably the most eventful year in the group’s history. We completed our largest acquisition to date, invested a record amount in our business, began supplying our biggest ever contract and delivered an excellent financial performance – all against the background of an uncertain economic environment and challenging trading conditions in many of our markets,” said executive chairman Peter Tom.
The building materials company added cement production to its portfolio when it purchased Hope in mid-2016. It added a cement plant, five new quarries, a network of concrete plants and eight rail-linked distribution depots. In November 2016 it bought Sherburn Minerals, including two terminals in northeast England and eastern Scotland, that are used to import cement and ground granulated blast-furnace slag (GGBS).
Aalborg Portland orders two calciners from A Tec 08 March 2017
Denmark: Aalborg Portland has awarded A Tec a contract to upgrade its Cement Kiln 87 in Aalborg. It has ordered two calciners for its 4500t/day semi-dry kiln system that was commissioned in 1988. The calciners will be designed and delivered during the kiln’s annual stop in February and March 2017. Commissioning is planned for the spring of 2017. The upgrades are intended to increase production of Ordinary Portland Cement on the line.
A Tec intends to adapt the flow pattern of the calciner system in a way to improve the operational behaviour of the system. The design will be configured for the usage of 100% solid alternative fuels with low emissions. Additionally, the number of kiln stops due fall through cyclone blockages should be reduced. A Tec will conduct the engineering, supply the equipment and will be responsible for errection and documentation.
The new calciner system will be equipped with the A Tec Post Combustion Chamber (PCC) for the optimised mixture of fuels and combustion air in the end section of the calciner. The PCC was specially developed for the achievement of complete combustion of alternative fuels at high substitution rates.
Siam Cement Group buys Vietnam Construction Materials 08 March 2017
Vietnam: Thailand’s Siam Cement Group (SCG) has purchased a 100% stake in Vietnam Construction Materials for US$155m. The enterprise value of the transaction is valued at US$440m, including net debt and additional efficiency improvement investment to the acquired assets, according to the Bangkok Post. Vietnam Construction Materials has a cement production capacity of 3.1Mt/yr including one integrated plant at Tuyen Hoa in Quang Bing Province. The acquisition raises SCG’s cement production capacity in the Association of Southeast Asian Nations (ASEAN) region outside of Thailand to 10.5Mt/yr. It follows other purchases by SCG of Vietnamese building materials companies including the white cement producer Buu Long.
Mehmet Göçmen appointed new head of Sabancı Holding 08 March 2017
Turkey: Mehmet Göçmen has been appointed as the new chief executive officer of Sabancı Holding, the owner of several Turkish cement companies including Çimsa and Akçansa. He replaces Zafer Kurtul, who will vacate his position from 30 March 2017. Göçmen currently serves as Sabancı Holding Energy Group Head.
Göçmen graduated from the Department of Industrial Engineering at the Middle East Technical University in 1981. He also holds an MS degree from the Department of Industrial Engineering at Syracuse University in the US. He worked in executive positions between 1983 and 1995 at Steel Wire & Rope Industry, at Lafarge between 1996 and 2003 and he was appointed as General Manager of Akçansa in 2003. He has served as Human Resources Group Head, Cement Group Head and Energy Group Head at Sabancı Holding since 2008.
US: E Instruments plans to release its E8500 Cooled NOx portable emissions analyser in the spring of 2017. The product is intended to increase its accuracy of its NO gas sensor at higher temperatures than normal, particularly above 40°C. The E8500 Cooled NOx keeps the NO sensor cooled with an internal cooling system. The analyser measures, displays and records the NO sensor temperature to make it easier to comply with US Environment Protection Agency (EPA) conditional test methods such as CTM-030. The E8500 Cooled NOx also comes with a Sample Conditioning Unit that cools and dries the stack gas at the probe handle to minimise the time that the gas has in contact with the condensate.