September 2024
Portugal: Cimpor says a takeover offer from Brazil's Camargo Corrêa is too low and lacks detail on its plans for Cimpor's future. The leading Portuguese cement-maker would not recommend to shareholders whether they should sell or keep their stakes.
Camargo, Brazil's second-largest construction group, launched a Euro5.5/share takeover bid for the 67.1% of Cimpor it does not own at the end of March 2012. Analysts had expected the bid to succeed after two key shareholders said they were prepared to sell. Yet the board's opinion, given in a statement issued late on 13 April 2012, could complicate the process or require sweetening of the bid. Camargo is already the largest single Cimpor shareholder and the outstanding shares it does not own in Cimpor are valued at around Euro2.4bn.
Cimpor's statement said the offer does not include a premium for taking control of the company and lacks detail on what would happen to Cimpor's asset portfolio, debt profile and dividend policy. "For the above reasons, the board is not in a position to recommend to shareholders to tender their shares, as the price is low and significantly undervalues Cimpor, and, in the absence of adequate information on the future of Cimpor post-offer, neither may the board recommend to shareholders to maintain their investment," it said.
Portuguese conglomerate Semapa earlier proposed that some Cimpor shareholders should form a joint holding company to try to keep the company in Portuguese hands. Its offer does not represent a counter-bid, but Semapa said it implies a price of Euro5.75/share.
Camargo has said the price it offered is fair, expecting most Cimpor shareholders to use this 'good opportunity', but would not say if it would consider sweetening the offer. It also said in the statement that the price implied in Semapa's complex proposal could not be compared to Camargo's direct bid. It said that Semapa's arrangement, if it were to go ahead, would have to trigger a compulsory competing bid by those who join the Semapa-proposed holding company.
Vietnam reports 9.57Mt sales in Q1 13 April 2012
Vietnam: Vietnam's cement sales came to 9.57Mt in the first quarter of 2012, according to the Ministry of Construction. This fulfilled 17.4% of the whole-year plan due to the implementation of several projects in March 2012. Production was 9.98Mt, meeting 18.1% of the full-year target. Production in March 2012 was 4.85Mt, representing nearly half of the quarter's total.
Vietnam spent US$90.5m on imports in the first quarter of 2012, making up 20.7% of the whole-year plan, including US$30.9m in March 2012. The country's exports were US$43.3m, fulfilling 19.2% of the full-year target, including US$10.4m in March 2012.
National consumption is forecast to reach between 55Mt and 56.5Mt in 2012, rising by 11% and 12% from 2011 respectively. Yet the country's cement output is forecast to rise to 73Mt in 2012 due to the additional operation of eight new cement plants with combined production capacity of 6.9Mt. In 2011 Vietnam produced and sold 49.3Mt. The country also imported 1.15Mt and exported 5.5Mt of cement and clinker during the period, the ministry noted.
New producer says directive 'makes no sense' 12 April 2012
South Africa: An order by South African competition authorities to delay cement industry statistics by three months will negatively affect perceptions of economic activity in the country, according to industry newcomer Sephaku Cement.
The CEO of Sephaku Pieter Fourie said that the directive by the South African Competition Commission to the Cement and Concrete Institute that it delay the publication of its quarterly national cement sales figures by three months made 'no sense'. The institute represents the four major cement producers in South Africa: Pretoria Portland Cement, AfriSam, Lafarge and NPC-Cimpor.
Sephaku, a Nigerian-backed newcomer, is building an integrated cement production facility in the Limpopo province, where it intends to produce cement from the fourth quarter of 2013. It says that cement sales form a large component of construction activity in South Africa and are a leading economic indicator. Sephaku believe that the change in reporting will affect related economic predictions.
Stephan Olivier, CEO of AfriSam, commented that the change in industry reporting was a bid to make it difficult to use the data for anti-competitive behaviour. Simon Roberts, chief economist and manager of the commission's policy and research division, said that companies had previously used the data provided by the institute to 'monitor' their cartel agreement.
Projects by Nigerian-backed Sephaku and a new Chinese-backed empowerment entity, Conticem, will boost South Africa's capacity by nearly 5Mt/yr. Both Sephaku and AfriSam anticipate a better industry outlook in 2012 but uncertainty remains over the government's ability to accelerate its infrastructure plans.
Brazilian twist 11 April 2012
Camargo Corrêa's ongoing bid for Cimpor must be creating nightmares for Brazil's anti-cartel authorities.
If the takeover goes through, Camargo Corrêa's Brazilian market share will rise from 24% to 37% according to data from the Global Cement Directory 2012. Together with industrial conglomerate Grupo Votorantim, who already own 21% of Cimpor, this share would amount to 72% of the country's total cement capacity.
As covered in this week's Global Cement Weekly #44 Jose Barros Franco, chief executive of Intercement a subsidiary of Camargo Corrêa, has explicitly denied that Camargo had a pre-agreement with Votorantim to split up Cimpor assets. However, he did not rule out a deal in the future to jointly manage the company. This implies that companies representing nearly three-quarters of the Brazilian cement market might be working together to at least some degree!
In October 2011 Camargo Corrêa denied that it was in talks to buyout Cimpor. According to one source at that time, Camargo Corrêa planned to take over Cimpor's operations in Brazil while Votorantim was considering taking assets outside of Brazil. Currently analysts expect the same thing to happen now if the takeover goes through, especially given any possible anti-competitive attention in Brazil.
With operations in four continents Portugal's Cimpor holds 77% of its global capacity outside of Brazil. If the takeover does actually happen, then the key question is this: how much of Cimpor's international operation does Votorantim want in return for helping its competitor Camargo Corrêa to grow back at home in Brazil?
Ukraine: The supervisory board of Eurocement Ukraine has appointed Vitalii Horholiuk to the post of acting director-general. The board dismissed the application of the deputy director-general and director of engineering Ihor Nikolaenko. Nikolaenko has occupied these positions since June 2010. Former Eurocement Ukraine director-general Demis Galchev was relieved from the position on 31 January 2012. Since that time the post has been vacant.
Germany: With effect from April 2012 Roger Meier has been appointed sales director of FLSmidth Sample Processing Technology, Wuppertal, Germany (formerly Pfaff AQS). Roger Meier will also be responsible for coordinating the common sales effort for FLSmidth Brno (formerly Autec) and FLSmidth Wuppertal.
FLSmidth Sample Processing Technology designs and manufactures a wide range of products for every stage of the sample processing chain in cement, steel and other minerals sectors. Previously Roger Meier has held a position as Building Materials Segment Manager and Industrial XRD Applications Manager at PANalytical BV, in the Netherlands.
Saudi firms see strong start to 2012 11 April 2012
Saudi Arabia: Yanbu Cement has announced that its first-quarter net profit for 2012 rose by 43% year-on-year to US$38.6m. Earnings per share for the first three months of the year rose to US$0.37 from US$0.26 in the year earlier period. It added that its first-quarter operating profit surged by 44% to US$39.9m.
Meanwhile Yamama Saudi Cement has said that its first quarter profit surged by 54% compared to the first quarter of 2011 to US$74.1m due to higher sales and better operational efficiency. Its first-quarter earnings per share came in at US$0.37 compared to US$0.35 in 2011, according to a statement. Its operating profit for the three-month period rose to US$76.5m, compared to US$49.1m in the same period of 2011, a year-on-year rise of 55%.
Russian production struggling to top 2007-2008 levels 11 April 2012
Russia: The Russian cement market remains unable to match its performance in 2007-2008. Although output grew by 15% year-on-year in the first quarter of 2012, Russian companies produced 'just' 9.61Mt of cement. Meanwhile cement prices continue to increase in the country but they are not expected to reach the pre-crisis levels before 2019.
In the first quarter of 2012 production climbed by 15% year-on-year to 9.61Mt according to an estimate made by CMPro Ltd, a Moscow-based company. By comparison in the first quarters of 2007and 2008, production exceeded 11Mt.
According to the President of Lafarge Cement, production in 2012 will rise by 10% against the 2011 level of 56.2Mt, as the market restores due to new construction and infrastructure projects. 2011 was a record year since 2007 as 63.2 million m2 of housing was commissioned. In line with this view Siberian Cement expects cement prices to increase by 12-15% in the summer of 2012 and the CEO of Sukholozhsktsementa Maksim Sotnikov believes that the annual price growth will reach 10%.
Less optimistically, the general director of Basecement Vyacheslav Shmatov said that cement imports are curbing the growth of prices on the domestic market. According to CMPro Ltd, in the first quarter of 2012 imports doubled year-on-year to 340,000t.
March results raise jitters in Indian business 11 April 2012
India: Growth in the Indian cement industry for March 2012 was 12%, the lowest figure since November 2011, causing some analysts to fear that there may be a slowdown ahead.
Despatches for the four main Indian companies, namely ACC, Ambuja, UltraTech and JP Associates, peaked at 21% in November 2011. Subsequent growth has averaged out at 13% for the December 2011 to February 2012 period. The high growth since November 2011 has been attributed to an increase in demand during the Uttar Pradesh legislative assembly elections and an addition of new capacity. Subsequently, industry growth estimates for 2013 were increased from 7-8% to 10%. However, with March 2012 witnessing the lowest growth in five months, a few analysts are cautious about this. The industry growth is now expected to be around 6.5%.
Pinakin Parekh and Neha Manpuria, JP Morgan analysts, commented, "The big four companies have seen a year-on-year growth come to an average 12%, among the lowest over the last five months." They added that growth slowdown in March 2012 could be due to decline in despatches by JP Associates.
An analyst from a domestic brokerage said, "A good amount of capacity was added by these players in 2011. The rise in demand growth rates in November 2011 and its slowing down in March 2012 could be due to this. Some of these months are being compared with months a year ago when these capacities were still being commissioned." The analyst expects demand growth for the rest of 2012 to average 6-7% with a high possibility of an upside.
However, a few have turned bullish on the sector. Anand Agarwal and Rahul Kumar, analysts with international brokerage Jefferies, said, "Strong despatches by major cement companies in March confirm our belief of a revival of cement demand and we expect overall industry despatches to clock a double-digit growth for a fifth consecutive month in March 2012. We expect the strong demand momentum to sustain throughout 2012." Mihir Jhaveri, Prateek Kumar and Suhas Harinarayan from Religare Research see a 9-10% despatch growth for the 2013 fiscal year.
Attacks on cement dealers reported in Kerala 11 April 2012
India: Keralan cement dealers have condemned attacks on cement shops and cement vehicles allegedly carried out by workers attached to the railway goods sheds in the towns of West Hill and Kallai. They have warned they will retaliate if the attacks continue. The Kerala Vyapari Vyavasayi Ekopana Samithi (KVVES) has declared support to the dealers, organised under the banner of the Kerala Cement Dealers Association.
T Naziruddin, KVVES president, inaugurating the general body meeting of the Kerala Cement Dealers Association's Kozhikode unit, demanded the intervention of the authorities to settle the issue. District president of the association MV Sakeer Hussain, who presided over the meeting, called for an immediate end to the attacks, which he said were being carried out to press for higher unloading charges for cement at railway goods sheds.
The association has alleged that the workers were insisting that cement should be brought to the city only by trains and that vehicles bringing cement by road were being attacked to create an artificial scarcity of cement. He said that this in turn would cause hardships to those who depended on the construction sector for livelihood.