September 2024
Pakistan cement industry demands tax cuts 03 March 2014
Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has asked the Federal Board of Revenue (FBR) to exclude cement from the 'Third schedule' of the Sales Tax act or to fix the maximum retail price (MRP) on the basis of two different zones in the upcoming budget of 2014 - 2015.
In a letter to the FMR chairman the APCMA said, that as the dynamics of every province and region are different, collection of sales tax on the basis of a single MRP across the country would force producers to restrict sales to nearby markets. It added that this would restrict sales to further-away markets reducing the potential revenues the FBR could collect.
The APCMA has proposed a zone-based MRP to protect both local consumers from paying excess prices and producers from paying more to sell cement in outlying markets. It also asked the FBR to introduce a uniform tax rate for the corporate sector.
Cement in Pakistan is subject to various taxes including: Corporate Income Tax - 34% of taxable income; Minimum tax – 1% of turnover; Federal excise duty (FED) – US$3.8/t; and Sales Tax 17% of the MRP. The APCMA has also proposed removing the FED and reducing the duty on alternative fuels to zero. Further suggestions included restoring the initial allowance on plants and machinery to 50% (from 25% at present) to encourage production capacity development and reducing import taxes on raw materials and capital goods for industrial development from 5 to 1%.
Titan operating results mark first improvement in seven years 28 February 2014
Greece: Titan has reported that its turnover in 2013 rose by 4% year-on-year to Euro1.18bn, up from Euro1.13bn in 2012. Operating earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 0.1% to Euro196m. This is the first time the construction materials group has reported improved operating results in seven years. Titan's net loss in 2013 increased to Euro36m from Euro24.5m in 2012. Titan attributed the pick-up on the recovery of the housing market in the US, resilient demand in Egypt and a general focus on exports.
By region, Titan noted that domestic cement demand in Greece continued to decline but at a slower pace than previous years, with demand now at 20% of 2006 levels. Its cement plants in Greece are dependent on exports for their viability. In the Group's Greece and Western Europe region, turnover rose by 4% to Euro250m and operating profit fell by 57% to Euro14m.
In North America, Titan's turnover rose by 11% to Euro411m and its operating profit rose to Euro32m. In its Southeastern Europe region, turnover fell by 4% to Euro215m and operating profit fell slightly by 2% to Euro63m. In its Eastern Mediterranean region, turnover rose by 1% to Euro300m and operating profit fell by 7% to Euro87m.
In its outlook for 2014, Titan anticipated cement demand in Greece to increase for the first time since 2006 due to infrastructure spending. Cement consumption in the USA is expected to grow, particularly in the south-east of the country where the majority of Titan's US operations are situated. Political and economic risks make Titan cautious in its outlook for Turkey and Egypt, particularly due to fuel shortages in the latter country.
Cockburn Cement cuts 44 jobs at Munster cement plant 28 February 2014
Australia: Cockburn Cement has cut 44 jobs at its Munster cement plant and intends to cut another 20 jobs over the next 18 months at it restructures its operations. The company said it was restructuring the plant in the face of high-energy costs associated with the production of clinker, according to Western Australia Business News.
Under the restructure, Cockburn Cement will use imported clinker, which it will mill into cement at its Munster and Kwinana facilities. By 2016, all of the 400,000t of clinker previously produced at Munster will be replaced by imported materials. The lime kiln at Munster will remain operational following a US$41m investment, including the installation of dust filters, that increased its production capacity by around 250,000t/yr.
PPC to enter Algeria 28 February 2014
Algeria: PPC announced its advanced plans for entry into the Algerian cement market on 24 February 2014, through a partnership with Algerian private investors that would see it own a 49% stake in the Hodna Cement Company.
The transaction will be funded on a project finance basis, with 80% debt funding from local banks, according to PPC. The stake, which was bought for an undisclosed amount, will see PPC assume management control of Hodna, allowing for the consolidation of the financial results of the project into the PPC group accounts.
According to PPC, Hodna will construct a 2Mt/yr cement plant for US$350m in the Hodna area, which is roughly 300km east of Algiers. PPC is already building cement plants in Ethiopia, Rwanda and the Democratic Republic of the Congo.
"This project sees us entering yet another African country and gives us confidence that by 2017, 40% of PPC revenues will be earned outside of South Africa," said CEO Ketso Gordhan.
"The Algerian cement market is very attractive, as consumption exceeds local production by approximately 3Mt/yr. Moreover, the Algerian government has committed itself to large-scale capital spending programmes, including the US$6bn New City Hassi Messaoud project, which will see the rollout of thousands of housing units," he said, adding that this would "certainly boost the demand of cement in this country."
The company said that once the feasibility study has been concluded, construction of the plant will take up to 30 months, with commissioning anticipated by the fourth quarter of 2016. As with its other expansion projects, PPC said it would engage China's Sinoma International Engineering as the contractor to supply and build the plant, supported by India's Holtec Consulting.
"With a population of close to 40 million people, of which 74% live in urban areas, combined with a relatively high GDP/capita of US$5582, Algeria still requires the construction of 225,000 housing units per year to meet demand. The national housing shortage in Algeria is estimated at 1.2m units," stated PPC.
Holcim's net profit soars by 59.3% in 2013 27 February 2014
Switzerland: Swiss cement maker Holcim has announced a net profit increase of 59.3% to Euro1.3bn for 2013.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 0.2% to Euro3.21bn, boosted by the performance in the US, the UK, Germany, Ecuador and the Philippines, while India, Mexico, Canada and Brazil had a negative impact. The EBITDA margin grew to 19.8% from 18.4%. After adjustments for restructuring costs that were booked in 2012, EBITDA declined by 5.6%.
Revenue dropped by 6.8% to Euro16.2bn due to exchange rate effects and low prices in some markets. Holcim's cement sales fell by 2.4% mainly due to a decline in the Asia/Pacific business. The high demand in Russia and Azerbaijan boosted sales in Europe.
For 2014 the company expects cement demand to grow in all regions and operating profit to improve in organic terms.
Two subsidiaries to merge with India Cements 27 February 2014
India: Trinetra Cement and Trishul Concrete Products Ltd, both of which are subsidiaries of India Cements Ltd (ICL), will be merged with ICL. The board of ICL met on 26 February 2014 and approved the amalgamation of the two subsidiaries with itself. The amalgamation is subject to regulatory and other approvals.
ICL holds a 61.22% stake in Trinetra, which has a paid-up capital of US$721,000 through its fully-owned subsidiary, ICL Financial Services Ltd. ICL has an 88.4% stake in Trishul Concrete, which has a paid-up capital of US$352,000 through its wholly-owned subsidiaries.
Under the scheme of amalgamation, the appointed date for the merger is 1 January 2014.
There has been an interesting knock-on effect from further economic integration of the Association of Southeast Asian Nations (ASEAN) this week. Holcim Philippines may delay the construction of a 2.5Mt/yr cement plant in Bulacan province due to a drop in import tariffs in 2015. Vietnam or Indonesia were named as possible sources of clinker due to their excess capacity.
The ASEAN group comprises 10 countries including Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam, Laos, Myanmar and Cambodia. Their respective cement production capacities range from 0.3Mt/yr at a clinker grinding plant in Singapore to Indonesia's integrated cement production capacity of 45Mt/yr. In total the ASEAN countries have a production capacity of around 220Mt/yr for a population of about 600m with national gross domestic products (GDP) per capita ranging from US$900 (Laos) to US$52,000 (Singapore).
One scenario for cement producers in the ASEAN countries is that they might be swamped by exports from places like Vietnam. That country had a production capacity of 73Mt/yr in 2013 with cement sales predicted to rise to 63Mt in 2014. Assuming the government released figures are correct, that leaves at least a 10Mt of cement production-sales gap that could torpedo a neighbouring country's cement industry in the free trade area.
Indonesia, the other potential source of clinker that Holcim Philippines mentioned, has seen construction growth slow and production capacity grow. Holcim reported in its nine-month report in November 2013 that, while national cement sales had risen by 5.3% to 41.6Mt, supply capacity had risen by 9% to 59Mt/yr. Assuming equal sales distribution throughout this suggests a capacity gap of 4Mt.
Some politicians in the region have complained that impending free trade area will create winners and losers. At a recent ASEAN meeting in Yangon, Myanmar a Myanmar planning minister raised the issue of a development gap within the ASEAN region calling for renegotiation for countries like Myanmar, Cambodia and Laos.
Meanwhile both the cement industries in Vietnam and Indonesia have clearly anticipated the implications of the ASEAN Economic Community. The Vietnam National Cement Association expects to remain competitive within the ASEAN region and against Chinese imports after 2015. In Indonesia State Enterprises Minister Dahlan Iskan stated this week that the cement industry was ready for the ASEAN Economic Community thanks to the government's strategy to consolidate its major cement producers within one company, Semen Indonesia. Consistent cement industry growth in South East Asia may be about to change.
CRH announces non-executive board appointment 25 February 2014
Ireland: The Board of Cement Roadstone Holdings (CRH) has announced that Henk Rottinghuis has been appointed as a non-executive director of the company.
Rottinghuis, aged 58, is a Dutch citizen with a background in distribution, wholesale and logistics. He was until 2010 Chief Executive Officer at Pon Holdings BV, a large, privately held international company that is focused on the supply and distribution of passenger cars, trucks and equipment for the construction and marine sectors.
Rottinghuis is currently the Chairman of the Supervisory Board of Stork Technical Services which provides asset management services to the oil and gas, power and chemical industries. He is also a member of the supervisory boards of the Royal Bank of Scotland NV and the retail groups Blokker Holding BV and Detailresult Groep.
Saudi Arabian Cement to boost Rabigh plant production capacity 25 February 2014
Saudi Arabia: Arabian Cement Company (ACC) has announced that its management board has approved a project to boost the production capacity of the company's plant in Rabigh. The new production line will add a capacity of 10,000t/day and is expected to start operations in mid-2017. No financial details were available.
Adelaide Brighton revenue rises 3.8% to US$1.1bn in 2013 25 February 2014
Australia: Adelaide Brighton's revenue for 2013 has risen by 3.8% year-on-year to US$1.1bn. Its net profit fell by 1.2% to US$136m but excluding a one-off gain in 2012 its net profit rose by 3.9%. Adelaide Brighton said that it was starting to see returns from its capital expenditure (capex) programme in cement and lime and, given subdued volume growth in 2012, the company was yet to realise the full extent of the investment.
"Modest growth in underlying net profit on healthy sales is encouraging given that we are yet to see the full benefit to revenue and margins of our major capex programme and the recovery of residential demand has only just begun," said managing director Mark Chellew. "Adelaide Brighton's cement and lime exposure to resources and infrastructure again supported shareholder returns despite commercial and residential building activity being weak for much of the year."
The Australia-based construction materials company expects demand for cement and lime in 2014 to be similar to 2013. It also expects to consolidate returns from its cement mill upgrade at Birkenhead in South Australia to be consolidated in 2013. Chellew added that if the Australian carbon tax is removed by 1 July 2014 it could save the company an after tax benefit of US$1.8m compared to 2013.