September 2024
India: Two of Holcim's Indian subsidiaries have reported rises in their second quarter 2012 profits. Ambuja Cement has reported a 35% growth in net profit for the quarter ending 30 June 2012 due to increased sales, to US$84.6m from US$62.8m in the same period of 2011. Net sales by the company rose by 17.9% to US$463m during the quarter from US$392m in 2011. Ambuja Cement attributed this to a 7.3% rise in sales volume, to 5.54Mt from 5.16Mt.
During the quarter, absolute Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the company rose by 22.8% to US$133m. However Ambuja Cement declared that higher operational expenses impacted upon this rise. Total expenses for the company, including raw material and power costs, rose by 15.7% to US$354m from US$306m. The company expects that profit margins are likely to remain under pressure due to steep rise in cost driven by higher raw material prices and rise in distribution and freight costs.
Meanwhile, ACC has reported a 26% rise in consolidated net profit for the second quarter of 2012 due to strong revenue growth, to US$74.8m from US$59.2m in the same period in 2011. Total consolidated turnover for ACC in the quarter rose by 15% to US$526m from US$458m in 2011. The company sold 6.05Mt of cement during the quarter compared to 5.93Mt in the same period in 2011.
Like Ambuja Cement, ACC mentioned 'steep' escalations in most of its key input costs including slag, fly ash, gypsum and power. The company also commented that the increase in railway freight rates with effect from March 2012 substantially impacted both inward and outward costs.
Both Ambuja Cement and ACC were fined in June 2012 by the Competition Commission of India for their alleged involvement in a price-fixing cartel. Ambuja Cement was fined US$210m and ACC was fined US$207m. ACC is currently taking steps to appeal against the fine.
Vietnam - Cement overload 25 July 2012
The news this week that Vietnam's state-owned cement producer, Vicem, has made a first half profit 75% larger than that of the first half of 2011 is a surprising statistic from a country with so much spare cement.
The country has spent most of the past decade building cement plant after cement plant. According to research conducted for the April 2012 issue of Global Cement Magazine, Vietnam now has a cement capacity of over 70Mt/yr! Vicem says that it sold 9.7Mt of cement in the first six months of 2012 and reports that this level represents 44% of its intended production for the year. This makes its 2012 cement production target somewhere in the region of 22Mt.
How much of the non-Vicem cement capacity is being utilised in Vietnam is unknown, but it is certainly too much for Vietnam's current needs. When the country's own government owned cement producer announces that it expects to have 6Mt of cement stockpiled by the end of 2012 (enough to supply the UK for the whole of 2013), it is clear that there is a serious cement surplus. Oversupply has not been met by demand, cement prices are depressed and attempts to export, to countries both near and far, are on the up.
To help curb the problem, one cement plant project has been halted in the past week. The Kinh Bac City Development Share Holding Corp (KBC) has received permission from its state to not build its planned 5Mt/yr plant.
Halting new projects is one way for the country to reduce its overcapacity, but in the short term the industry is looking at exports. While its lengthly coastline makes getting cement to ports for export fairly straightforward, Vietnam is badly located to exploit its current situation in this way. It's proximity to China, which itself is starting to face an oversupply scenario despite its efficiency gains, leaves Vietnam at a cost disadvantage.
As well as there being China on Vietnam's doorstep, many other countries in the region, (Indonesia, Malaysia, Japan, South Korea, Philippines, etc), are also self-sufficient in terms of cement and are able to export extra capacity as necessary. Additionally, East Asian countries have often seen Africa as a good export market but the recent rise of Nigeria as a major producer may reduce this opportunity.
Amid all of these numbers the Vietnam News Brief Service commented that the current oversupply in the socialist state was down to the 'unplanned' construction of cement plants over recent years.
Indian staff moves: in brief 25 July 2012
India: Sagar Cements has appointed K Rajendra Prasad as its nominee director on the company's board. Previous to this Prasad was working as the deputy general manager (EPM) at the Andhra Pradesh Industrial Development Corporation in Hyderabad.
Shree Digvijay Cement Company, a subsidiary of Cimpor, has reported that Antonio Carlos Custodio de Morais Varela resigned as a director of the company on 17 July 2012. The move follows Custodio de Morais Varela's assignment to the executive committee of Cimpor following the takeover of the Portuguese producer by Brazil's Camargo Corrêa.
Vietnamese industry sending mixed messages 25 July 2012
Vietnam: The state-run Vietnam Cement Industry Corporation (VICEM) has announced that it made a pre-tax profit of US$15.9m in the first half of 2012, a 73% year-on-year rise compared to the first half of 2011 and 44% of its whole-year target. Howver, its revenues fell by 1.2% year-on-year to US$682m during the same period.
Vicem reports that it sold 9.71Mt of cement and clinker in the first half of 2012, a 1.4% drop compared to the same period of 2011. Of the total 0.65Mt was exported, a 1.5% increase. Vicem produced 7.45Mt/yr of cement and 7.08Mt/yr of clinker between January and June 2012.
Meanwhile, a city authority has called a halt to the construction of a new cement plant amid continued overcapacity in Vietnam. Kinh Bac City Development Share Holding Corp (KBC) has received approval from authorities from the central province of Nghe An to withdraw from a cement plant project worth of hundreds of millions of US Dollars.
Construction of the Saigon-Tan Ky plant, which was planned to have a designed capacity of 5Mt/yr, was started on 19 May 2010 and it was expected to be developed in two phases. The production capacity for the first phase was projected to be 2500t/day (0.95Mt/yr). Investment for the first phase was proposed at US$71.8m. Local media has reported that the support structures for the three kiln plant have not yet been completed.
Vietnam had around 2.8Mt of cement in inventories by the end of June 2012 but the figure is expected to rise to as much as 6Mt by the end of the year. Local media reports that the overcapacity has been brought about through the 'unplanned construction of cement plants' in recent years.
Nigeria: The government of Lagos State has unveiled a new deal with Dangote Cement and Lafarge Cement WAPCO. The collaboration will help to ensure undisrupted supplies of cement products to construction firms that have been contracted to handle various infrastructure projects that are to be carried out by the state in the coming years.
Commissioner for Works and Infrastructure, Dr Obafemi Hamzat, revealed the details and explained that Governor Babatunde Fashola had engaged both Dangote and Lafarge Cement WAPCO to guarantee stable supplies. "We are looking into the use of concrete now that we have a lot of cement in the country. We have met with Dangote and Lafarge to see how they can assist us with our contractors."
Hamzat lamented the high cost of cement imports as one of the reasons responsible for the high cost of road construction and urged the Federal Government to restore railways so that they can be used as an alternative route.
India: Encouraged by the general response to its US1.1bn penalty imposed on 11 Indian cement companies for a price-fixing cartel, India's competition watchdog, the Competition Commission of India (CCI), has said that it will show leniency to those companies and individuals that provide information on cartels and anti-competitive agreements.
"It is the right time to reach out to people and encourage them to come out with information on more cartels," said CCI Chairman Ashok Chawla. Chawla said that the Competition Act provides for 'leniency programmes' for those who help the CCI tackle the 'pernicious practise of cartelisation,' and pointed out that the facility had not yet been used.
More disappointing half year results for China 25 July 2012
China: Henan Tongli Cement Co Ltd, a Shenzhen-listed cement producer, said that its first half 2012 net profit rose by 8.6% year-on-year to US$15.2m. Its operating revenue dipped by 2.8% year-on-year to US$308m.
Meanwhile China Tianrui Group Cement Co Ltd, a Henan Province-based clinker and cement producer, said that it booked US$42.7m in net profit in the first five months of 2012, a plunge of 43% year-on-year. Its revenue dipped by nearly 6% year-on-year to US$485m.
King to visit Ohorongo plant 25 July 2012
Namibia: The recently-opened Ohorongo cement plant will be visited by Swaziland's King Mswati III next week as part of a visit to Namibia. The King, Africa's last absolute monarch, will spend five days touring the country with one of 14 his wives and two government officials.
Iran plant closed for 10 days over strike 24 July 2012
Iran: The Khazar Cement Plant, one of the largest in Iran was forced to stop production for 10 days due to a dispute with truck drivers. The drivers had refused to transport cement at the rate that they had been paid by the Gilan Province Government. As the plant cannot store the cement it has produced, it had to be shut down temporarily. The drivers have now returned to work after accepting a 15% pay-rise.
The Khazar plant exports cement to Russia, the Republic of Azerbaijan, Iraq and Turkmenistan.
Mixed results for Cementos Lima 23 July 2012
Peru: Cementos Lima, Peru's largest cement producer, has posted a second-quarter net income of US$20.3m, down from US$22.2m a year earlier. The company blamed an increase in its costs.
Lima's second-quarter revenue however, was up year-on-year to US$111.7m compared with US$98.0m a year earlier. The company said that its cement production in the quarter was 0.87Mt, an increase of 12.4% compared to that seen in the same quarter of 2011.