September 2024
Lead up to the HeidelbergCement purchase of Italcementi 11 November 2015
Both HeidelbergCement and Italcementi released their third quarter financial results for 2015 this week. The results are worth comparing given the impending acquisition of Italcementi by HeidelbergCement.
HeidelbergCement has reported a rise in revenue of 8% to Euro10.1bn for the first nine months of 2015. Its net profit rose by 27% to Euro762m from Euro599m. Its earnings before interest and income taxes (EBIT) rose by 17% to Euro1.4bn. By region, growth in revenue was reported everywhere except for the group's Eastern Europe-Central Asia region. Notably growth in the group's Asian region is slowing, growth is growing in Africa and markets are recovering in North America and the UK. It is also worth noting that the group's cement and clinker sales volumes fell by 1.1% to 60.6Mt in the first nine months of the year.
Italcementi has reported a rise in revenue of 3% to Euro3.2bn for the first nine months of 2015. It reported a loss of Euro8.1m, down from a loss of Euro63.8m in the previous period. Its EBIT fell slightly to Euro166m. By region the group reported that 'positive' trends in North America, India and Morocco, together with reducing operating expenses in Europe, would be insufficient to counteract revenue losses in France and Egypt. Overall cement and clinker sales fell by 1.4% to 32.1Mt.
Compared to its 2014 results, HeidelbergCement seems set to recover some of its revenue and profit growth after fluctuating income since 2008. Meanwhile, Italcementi has been continuing to cut costs, rebuild its business and profitability. So there are no obvious shocks to the apparent value of either company at this stage. It is also worth noting that the good geographical complementarity of each company's assets could make any potential renegotiation less likely. Everybody looks set to gain something should the purchase go through.
The deal in late July 2015 announced that HeidelbergCement would be purchasing 45% of Italcementi's shares at a price of Euro10.60 per Italcementi share for a total price of Euro1.67bn. The only clause mentioned so far has been 'subject to contractual purchase price reductions'. The deal is still expected to be completed in the first half of 2016 following approval from competition authorities. Approval from the Competition Commission of India was announced in September 2015.
The diverging values of Lafarge and Holcim before their merger in mid-2015 had consequences that led to haggling over the deal and the removal of Bruno Lafont as the proposed CEO of LafargeHolcim. The difference here is that HeidelbergCement is buying Italcementi as opposed to merging with it. However, the performances of both companies remain paramount. Now as then the question will be: is the cost worth it?
For more information read Global Cement's article on the HeidelbergCement purchase of Italcementi in our September 2015 issue.
Cementos Progreso to build homes via new scheme 10 November 2015
Guatemala: Cementos Progreso will donate US$0.26 for every bag of cement sold in ConstruRed stores in Guatemala towards a fund that will be used to build 100 homes in the country. Consumers will be asked to put forward the name of someone they know who needs a home as part of this action. They have to be over 18 and have a plot of land ready for their home. The recipient will also have to give proof of a monthly incomes of less than US$650 in order to qualify.
APCMA calls for action on Iranian imports 10 November 2015
Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has said that the growth in the domestic economy has supported overall growth in the cement industry. However it added that the industry has had to approach various decision makers to stop the influx of Iranian cement into Pakistan from Iran via Balochistan. The APCMA said that the industry needs a safeguard mechanism to be put in place to stop the adverse effects of cement smuggling into the country. It stated that the government should impose a 20% Regulatory Duty for import of cement in addition to the current customs duty.
The APCMA spokesperson added that, due to the high cost of doing business in Pakistan, the country's cement industry is losing competitiveness to other countries such as Iran, the UAE and India. The industry has appealed for reduction in energy costs, removal of taxes imposed on gas, a reduction of custom duty on coal to zero and an additional incentive of 5% on export of cement by sea.
Statistics indicate that the cement sector is now almost completely dependent on domestic sales, the share of which has increased to over 80% of total cement sales compared to just 50% in 2008 - 2009, as domestic sales continue to increase, while exports are showing constant decline. Cement dispatches to domestic markets during the month of October 2015 were 2.6Mt compared with 2.1Mt during October 2014, an increase of 24% year-on-year.
Conch delegates visit Eurocement 10 November 2015
Russia/China: A delegation from Conch company, one of China's largest building materials corporations, has visited Russia to see the cement plants of Eurocement. At the meeting, which was held at Eurocement's central office, the group's president Mikhail Skorokhod explained the group's key projects to the Chinese representatives and discussed possible areas of cooperation.
"Conch has the most modern equipment for the production of cement and has considerable experience in operating production lines. It is extremely interesting for Eurocement to study its experience as well as to consider its foreign experience for the development of the national building materials industry in Russia," said Skorokhod. "I am convinced that our Chinese colleagues would also be interested in getting acquainted with the activities of the Russian cement sector leader. This meeting will be the beginning of a fruitful and mutually beneficial cooperation."
The Chinese delegation will visit Mikhailovcement, Ulyanovskecement and Sengleevskiycement during the visit.
Egyptians Against Coal want to eradicate its use by 2017 10 November 2015
Egypt: An independent local coalition called Egyptians Against Coal (EAC) aims to advocate excluding coal use from Egypt's energy and cement industry by 2017 due to its 'hazardous environmental threats,' according to a statement from the group released on 10 November 2015.
In mid-September 2015, the Ministry of Environment approved studies made by seven cement factories to use coal in their production process instead of natural gas. The factories include those of LafargeHolcim, Suez Cement (Italcementi) and Arabian Cement, among others.
Suez Cement has announced that it plans to convert two more of its plants to use alternative energy sources, at a total cost of US$37 - 50m each. The company is aiming to convert the Tora and Helwan plants to use coal and a heavy fuel oil known as mazut, following in the footsteps of the Kattameya and Suez plants in the last few months.
During a meeting, the EAC discussed potential ways to raise awareness and advocacy on both the level of individuals and decision makers. The initiative brings together researchers, economists, lawyers, as well as journalists who are interested in environmental issues.
"We are about to issue a booklet that illustrates everything related to coal use and another booklet about alternative energy resources to produce clean energy," said Amena Sharaf, a researcher at the Egyptian Centre for Economic and Social Rights (ECESR).
According to the EAC, coal use in some factories caused severe harm for its labour force and their families living nearby. It claims that workers 'do not know about friendlier energy alternatives that could be used.'
The use of coal in Egypt raised many concerns on both the local and official levels when the idea was first suggested, including among then-minister of environment Laila Iskandar. The amendments stated that coal will be used on a 'large scale' without stating a definitive number on the industries in which it will be used.
Ciments de l'Afrique Cameroon launches new cement plant in Cameroon 09 November 2015
Cameroon: The launch of Ciments de l'Afrique Cameroun's (CIMAF) new 500,000t/yr cement plant brings Cameroon's cement plant number to three. The Moroccan-based company has been supplying cement to Cameroon for several months and intends to increase production to about 1Mt/yr in the near future.
The other two cement plants in the country are Les Cimenteries du Cameroun, the oldest company in the country that produces 1.6Mt/yr, as well as Dangote Cement Cameroon, which was commissioned several few weeks ago and produces 1.5Mt/yr of cement. Estimated domestic cement demand stands at 2.8Mt/yr. Turkey's MEDCEM is also constructing a 600,000t/yr cement plant in Douala.
Mordovcement plans to rebuild local railway infrastructure 09 November 2015
Russia: Mordovcement, part of Eurocement, has launched an investment programme to rebuild local railway infrastructure.
The investment offers funding for the full replacement of 9.1km of track and 42 switches. The proposed repairs will guarantee the continued safe use of the railway infrastructure for the supply of raw materials. The US$3.14m project will raise the turnover of wagons for the loading of cement and will help to establish the stable delivery of cars of raw materials from the quarry to the production area. The development will boost the reliability of the railway track as a whole and extend its lifecycle, reducing the complexity and cost of maintenance and obtaining economic benefits during its operation.
Votorantim Cimentos opens new mortar plant near Salvador 09 November 2015
Brazil: Votorantim Cimentos has inaugurated a 206,000t/yr mortar plant at the Camacari industrial hub, in Salvador, north-eastern Brazil. This is Votorantim's sixth unit in operation in north-east Brazil and it received US$6.48m in investment. The plant will generate 80 direct and indirect jobs.
Western Diamond Cement opens in Takoradi, Ghana 09 November 2015
Ghana: Western Diamond Cement Limited (WDCL) has launched its product in Takoradi under the brand name 'Diamond Cement.' The company, which has the first vertical cement mill in Ghana, will produce 42.5 rapid and 32.5 rapid cements. It has 6500t of clinker storage.
Buddarajo Roju, Manager of Quality Control at Western Diamond Cement Limited, said that Ghana is a vibrant economy and that there is rapid growth in the whole of West Africa, especially infrastructural development. He said that the company is committed to implementing the Environmental Impact Statement to the Environmental Protection Agency and mitigation measures on dust generation, noise impact, as well as liquid and solid waste.
Tarai turmoil forces Udayapur Cement Industries to down its shutters 09 November 2015
Nepal: Udayapur Cement Industries (UCI) has had to pull its shutters down due to the disruption in vehicle movement caused by ongoing strikes.
UCI's General Manager Surendra Poudel said that the plant incurred a US$3.01m loss after it was unable to operate due to lack of raw materials. Cement production came to a halt after raw materials could not be supplied due to the protracted strikes in the plains for the last three months. Poudel said UCI was only able to produce 70% of its installed cement capacity in the last two months. Reportedly, it needs 100t/day of coal and 2000L/day of diesel. However, the required raw materials could not be supplied from India due to the blockade at the border points and general strike.
"It had become impossible to even manage the daily administrative expenses," said Poudel. The plant's total expenditure is around US$4.52m/month, including US$301,339 for salaries and US$90,428 for electricity and other expenses. Poudel said they would not be able to pay the salaries and electricity bills if the crisis persisted for one more month.