September 2024
Lafarge nine months sales up by 4% but profit down 09 November 2012
France: Lafarge has reported that its sales have risen by 4% to Euro4.39bn in the first nine months of 2012, compared to Euro4.21bn in the same period of 2011. However, the French multinational cement producer's profits are still suffering due to restructuring charges and an impairment in the second quarter. So far in 2012 Lafarge's net income has fallen by 44% to Euro332m from Euro596m. For the third quarter of 2012 net income fell by 5% to Euro319m from Euro336m.
Lafarge's earnings before interest, taxes, depreciation and amortisation (EBITDA) for its cement business rose by 5% for the first nine months of 2012 to Euro2.22bn from Euro2.08bn in 2011. Cement sales increased by 3% to Euro7.90bn from Euro7.49bn. Cement volumes declined by 2% to 106Mt from 109Mt. For the third quarter of 2012 cement volumes declined by 4% year-on-year to 36.6Mt from 38.2Mt in 2011. Lafarge attributed this to the construction slowdown in Europe, unfavourable third quarter weather conditions in the central United States and the sale of some of its US assets to Eagle Materials in October 2012.
"Our actions to generate sales growth and cash, reduce debt and improve returns led to a fourth consecutive quarter of positive trends even in a lower growth volume environment. These actions will accelerate as we implement Euro550m of innovation and cost savings initiatives in 2013 of our four year, Euro1.75bn additional EBITDA plan," said Bruno Lafont, chairman and chief executive officer of Lafarge.
By region cement volumes declined by 10% in north America to 4.1Mt year-on-year in the third quarter of 2012 from 4.5Mt. Western Europe saw a decline of 12% in the third quarter to Euro4.2Mt from Euro4.9Mt. Lafarge's central and eastern Europe region saw a drop of 8% to 4.5Mt from 4.7Mt. In Poland the group blamed a slowdown on the aftermath of the European Football Championship in June 2012. In Russia a production 'limitation' at a plant near Moscow caused problems. In the 'Middle East and Africa' region volumes fell by 4% to 10.8Mt from 11.4Mt.
In Latin America cement volumes rose by 5% to 2.4Mt from 2.3Mt. Cement sales in the region were led by a 12% boost in Brazil. In Asia volumes rose by 3% to 10.6Mt from 104Mt. Lafarge singled out a 25% increases in domestic cement sales in India, 11% in the Philippines and 14% in Indonesia. Despite increases in volumes in China, Lafarge noted that cement sales were impacted by slower construction growth and increased competition.
In its outlook Lafarge concluded that it expects to see cement demand growing from 1-4% in 2012 driven by emerging markets. The group will hold its target of reducing net debt to below Euro10bn as soon as possible in 2013.
HeidelbergCement reports revenue up by 9.4% so far in 2012 08 November 2012
Germany: HeidelbergCement has reported that its revenue for the first nine months of 2012 rose by 9.4% to Euro10.5bn from Euro9.62bn in 2011. The German construction materials group reported that earnings before interest and income taxes (EBIT) stayed flat at Euro1.07bn in 2012 compared to Euro1.08bn in 2011. Profit before tax fell by 5% to Euro601m from Euro635m.
Results for the third quarter of 2012 showed a different trend, with increasing EBIT and profit. Revenue rose by 9% to Euro3.94bn from Euro3.62bn compared with the same quarter of 2011. EBIT rose by 11% to Euro608m from Euro548m. Profit before tax rose by 6% to Euro427 from Euro403m. At the end of September 2012 the group's net debt stood at Euro7.76bn, a reduction of Euro740m compared to September 2011.
Cement and clinker sales rose by 2.5% for the first nine months of 2012, to 67Mt from 65.4Mt in 2011. By quarter, its sales remained flat, hitting 24.3Mt in the third quarter of 2012. The group attributed the increase for the nine-month period to a continued recovery of residential construction in North America and a persistently strong demand in Asia. The group blamed declining infrastructure expenditure in some European markets for its losses. The largest contribution to sales volumes was made by the 'Asia-Pacific' group area, followed by North America. The sales volumes of the 'Eastern Europe-Central Asia' and 'Africa-Mediterranean Basin' group areas remained at the previous year's level.
Italcementi’s nine month profit crashes by 92% 08 November 2012
Italy: Italcementi's net profit for the first nine months of 2012 has fallen by 92% to Euro17.1m from Euro213m in the same period in 2011. The Italian cement major blamed the on-going crisis in western Europe and new competition in Egypt and Morocco.
Italcementi's revenue for the year to 30 September 2012 fell by 4.4% to Euro3.39bn from Euro3.55bn. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) fell by 11.6% to Euro517m from Euro584m. For the third quarter of 2012, year-on-year decreases in revenue and EBITDA were similar to the year-to-date results. However, the company's net profit fell by 34.7% to Euro16.3m from Euro25m.
Italcementi's 'Central Western Europe' region sold 12.2Mt of cement during the first nine months of 2012, a drop of 16.8% compared to the same period in 2011. The 'Emerging Europe, North Africa and Middle East' region sold 11.1Mt, a drop of 4.9%. North America remained flat with 3.2Mt sold. Asia posted a rise of 7.1% with 7.6Mt sold.
In its report Italcementi singled out significant cement and clinker sales improvements in India and Thailand. Despite declining volumes in Egypt the company pointed out that as the country's political situation stabilises, the strengthening upturn in consumption could offer opportunities for improvements in group operations on the main market in the North Africa and the Middle East.
In its outlook the company called for greater caution given an intensification of decline in demand in the third quarter of 2012. It also mentioned that, in addition to completing the investments and efficiency measures planned during the year, the company is preparing new measures to 'significantly' reduce operating costs.
Same old story: cement overcapacity in China 07 November 2012
Liu Ming of the National Development and Reform Commission (NDRC) once again stated the obvious this week: China is producing too much cement.
He made the same warning on overcapacity that has been made all year. Officials from the NDRC have recommended stricter controls on new capacity, faster mergers and acquisitions, elimination of out-dated capacity and faster industry upgrades. Unsurprisingly this is exactly the line that China's Ministry of Industry and Information Technology (MIIT) was hawking in its 12th Five-year Plan (2011-2015) for the country's building materials industry that it released back in 2011.
So what's actually happened since last time Liu Ming played Cassandra?
Back in July 2012, at the time of the half-year financial reports, it looked like Chinese cement producers were facing profit gaps of around 50%. Now it looks worse. Major producer China National Building Material Co (CNBM) has reported a drop in net profit of 40% to US$575m for the nine months to 30 September 2012. Anhui Conch has reported a drop in net profit of 57% to US$632m. China National Materials Co Ltd (Sinoma) has reported a 76% drop in net profit to US$48.8m for the same period. Jidong Cement reported a 83% drop in net profit to US$38.6m.
In 2010 Chinese cement production was 1.87Bt. In 2011 it was 2.06Bt, according to Chinese state-released statistics. From January to September 2012, the country produced 1.59Bt of cement, a year-on-year increase of 6.7%. For the full year of 2012 it is estimated that China will produce 2.8Bt/yr. However, according to the NDRC production growth have fallen to 6.7% in 2012 compared to 11.4% in 2011. Capacity is still rising whilst profits are plummeting.
At the start of 2012 the Chinese Vice Minister of Environment Protection, Zhang Lijun, announced that the ministry plans to introduce stricter rules on NOx emissions from cement plants. At the time it was reckoned that the move could wipe out a third of the industry's total net profits. Then in September 2012, industry reports suggested that the government was now going to set nitrogen oxide emissions to 300mg/m3, below the international standard of 400mg/m3. It was estimated that only about a third of producers would be able to afford the necessary upgraded equipment to meet the requirement. Then, also in September 2012, the Guangdong Emissions Trading Scheme (GETS) was launched, which might offer another way of restraining production.
In summary: profits are tumbling, production is probably slowing and new controls are as-yet unbinding. Yet, perhaps Liu Ming repeated his warning for one particular audience who can make a difference. On 8 November 2012 the Chinese Communist Party holds its 18th national congress to decide the new leadership. Producers like West China Cement are certainly hoping this shakes things up. It recently announced that it was waiting for new infrastructure projects to be approved to swallow up its growing surplus.
Vulcan announces leadership appointments 07 November 2012
US: Vulcan Materials Company has announced four personnel changes as part its process to develop its new leadership team for the future. Danny R Shepherd, aged 61, has been appointed to the position of executive vice president and chief operating officer. He was formerly the executive vice president of construction materials.
Robert A Wason IV, aged 61 and senior vice president - general counsel, will retire from Vulcan at the end of October 2013. He will now assume the role of senior advisor to the executive management team until that time.
Michael R Mills, aged 52 currently senior vice president - east region, has been appointed to the position of senior vice president, general counsel. He will report to Donald M James, chairman and chief executive officer. Mills will also serve as the company's corporate compliance officer.
John R. McPherson, aged 44 and currently senior vice president - strategic planning and business development, has been appointed to the position of senior vice president - east region. He replaces Michael Mills and will report to Danny Shepherd in his new role as executive vice president and chief operating officer.
Holcim sees 4.8% rise in net sales in first nine months of 2012 07 November 2012
Switzerland: Holcim Ltd has released its financial results for the first nine months of 2012, which show a 4.8% increase in net sales and over 10% year-on-year improvement in net profit. The group says that its results show the 'advantage of a strong presence in emerging markets, where construction activity remains high.'
Holcim says that its 'unique' geographic diversification has helped support it through a difficult time in its native Europe, allowing it to achieve an increase in consolidated sales of cement, often at better prices. Holcim's group companies in India, the Philippines, Indonesia, Russia, Thailand, Mexico and the USA recorded significantly higher cement sales year-on-year in the period under review. Its consolidated cement sales increased by 3% in the first nine months of 2012 to 111.4Mt.
Despite the difficult market situation in Europe, Holcim's consolidated net sales for the nine months increased by 4.8% to Euro13.4bn and operating earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 5.9% to Euro2.57bn. Its operating profit increased by 7.2% to Euro1.57bn. Holcim said that these results reflected the solid performance in a number of emerging markets, stronger demand for building materials in North America, improvements in efficiency and the first successes of the Holcim Leadership Journey. Holcim increased its net income by 10.3% year-on-year to Euro910m.
Holcim expects demand for building materials to rise in emerging markets in the whole of 2012 in Asia and Latin America, as well as in Russia and Azerbaijan. In North America, it expects that its cement volumes will also increase. In Europe however, sales volumes are expected to decrease in all business segments.
Holcim reiterated its stance that cost management, including the Holcim Leadership Journey programme, will be paid very close attention. It said that it will continue to pass on inflation-induced cost increases. Its approach to new investments will remain cautious. Holcim expects to achieve organic growth in 2012 on the level of operating EBITDA and to reap the first positive effects of the Holcim Leadership Journey in 2012.
Heroin found in Pakistan cement exports 07 November 2012
Pakistan: The Pakistan Railways, Custom authorities and All Pakistan Cement Manufactures Association (APCMA) have decided to tighten security arrangements at the border with India following reports that heroin has been smuggled into India disguised as cement exports from Pakistan. The decision was made during a meeting between the three organisations.
Indian custom authorities have caught heroin from Pakistan cement four times within the last few months, according to APCMA sources. Proposed measures to improve security have included deploying more custom officials at the loading stations, further checks by officials and special locks for railway bogies.
According to the APCMA, despite increased demand for cement in India, exports from Pakistan have declined by 15.7% so far in 2011. Pakistan Railways have commented that the decision to tighten security arrangements at the border have been taken to save the country from 'defamation'.
CNBM sees 40% decline in profit for first nine months of 2012 07 November 2012
China: China National Building Material Co (CNBM), a major State-owned cement producer in China, has reported a net profit of US$575m for the first nine months 2012, a year-on-year decrease of 40%. Operating revenue during the period rose by 7% to US$9.58bn. Net profit for the third quarter fell by 29% to US$271m, while operating revenue rose by 2% to US$3.46bn.
VICAT reports flat sales for first nine months of 2012 07 November 2012
France: Vicat has reported that its sales for the nine months ending 30 September 2012 remained flat year-on-year at Euro1.73bn. The French construction company reported sales of Euro879m for its cement business for the period, compared to Euro873m for the first nine months in 2011.
Consolidated sales for the third quarter of 2012 were Euro602m, a rise of 3.5% year-on-year. The breakdown of nine-month sales by business shows that the contribution of the cement business remained stable at 52.6% of total operational sales, as opposed to 52.5% in the first nine months of 2011.
"Vicat's performance in the first nine months of 2012 confirms the wisdom of the group's cautious development strategy. Investment under the 2010 performance plan and acquisitions in India and Kazakhstan enabled Vicat to achieve growth in business volumes in the third quarter, despite a macroeconomic environment that remains mixed," said Vicat's management board in a statement.
Vicat's cement business sales dropped in France, Egypt and West Africa. In France sales fell by 11.8% due to poor weather in early 2012, the end of some large projects and the weaker economic and industry environment. In Egypt consolidated sales fell by 30.3%. Operational performance in Egypt continued to be affected by problems with security and fuel supplies. Vicat's gas supply was cut off due to maintenance work on a pipeline, while the whole of Egypt experienced a serious shortage of fuel oil. Maintenance work completed in early October 2012. In West Africa consolidated sales fell by 6.7% and cement volume remained flat.
In the US the company's cement business posted an increase in its consolidated sales which were up by 21.1%. This increase was driven by strong growth in sales volumes in California and the Southeast region. In Turkey, India and Kazakhstan consolidated sales grew by 11.1%. This was the result of a sharp upturn in the market, which began in the second quarter and continued in the third.
In India, sales were Euro118m in the first nine months of 2012, a rise of 34.6%. Vicat maintained its strong performance in India, with the ongoing build-up of production at Bharathi Cement's modern plant. In the first nine months of 2011 cement volumes were almost 1.9Mt. In Kazakhstan, the build-up of operational and commercial activity at the Jambyl Cement plant continued. Revenue in the first nine months was Euro51m compared to Euro20m in 2011. This performance was driven by very strong volume growth, with more than 0.77Mt sold in the first nine months of 2012 as a result of major infrastructure and housing projects.
CSN plans 3Mt/yr expansion in Minas Gerais 07 November 2012
Brazil: Steel manufacturer CSN has announced plans to set up four cement assets in Minas Gerais state. The company wants to grow its current cement production capacity of 2.4Mt/yr to 5.4Mt/yr with an investment of US$491m.
CSN has proposed setting up three cement plants and a second clinker unit, adding to one at Arcos that began operations on May 2011. Currently the clinker unit at Arcos supplies 2500t/day the company's plant at Volta Redonda in Rio de Janeiro. The second clinker unit would expand this to 6500t/day, making it the largest clinker production site in Latin America.
Other cement companies investing in Minas Gerais state include Cimentos Liz's US$147m expansion to its capacity at plants in Vespasiano and Lagoa Santa. Holcim is growing the capacity of its plant in Barroso from 1.3Mt/yr to 3.5Mt.yr. Both Holcim and Cimentos Liz are receiving funding from the state development bank BDMG.