September 2024
Türkiye: The Turkish cement industry needs to invest approximately US$30bn to achieve its net-zero carbon goal by 2053, according to sector representatives. Additionally, around US$2bn is required to adhere to the European Union’s Carbon Border Adjustment Mechanism (CBAM), according to Fatih Yücelik, chair of the Turkish Cement Manufacturers’ Association (TÜRKÇİMENTO).
Yücelik said “The most important issue for us this year is carbon emissions. The amount of investments to be made swiftly in transformation and efficiency work to overcome the barriers created by the CBAM is around US$2bn. However, under the current situation, it is difficult for us to find this financing.”
There are 77 factories producing cement in Türkiye, according to Yücelik. “They all use kilns which heavily consume energy. We are establishing waste heat recovery facilities. The amount of electricity generated by those units can power 618,000 homes,” he said. The industry also faces rising operational costs, with energy comprising about 80% of these expenses.
France: Fives Group has partnered with Holcim to decarbonise its cement production processes. Fives conducted successful hydrogen tests at the La Malle site in France, achieving over 50% hydrogen substitution in cement production. This result also enabled a significant increase in the use of alternative fuels while still maintaining cement quality. The group has also developed a digital model to tailor this process to each cement plant's unique requirements.
India: UltraTech has installed floating solar photovoltaic panels at its Awarpur Cement Works plant on two water reservoirs, spanning 3600m2. The reservoirs contain 7600 panels in total, which will generate 6173MWh/yr of solar energy. This initiative will reduce CO2 emissions by 6000Mt/yr, equivalent to the sequestration benefits of 270,000 trees. The project enables UltraTech to use 100% of the generated power. Additionally, it will reduce water evaporation by up to 70% and has a minimal impact on local ecosystems.
Portugal: Taiwan Cement Corporation has purchased the remaining 60% stake of Cimpor Portugal from the Turkish group OYAK, giving it 100% ownership of the company. This acquisition, valued at €480m, also includes taking over a majority stake in Türkiye, making Taiwan Cement Corporation the ‘third largest player’ in the global cement market, according to the company. The deal strengthens the group’s presence in Portugal, Cape Verde, Ivory Coast, Cameroon and Ghana, aligning with its global expansion and sustainability-focused investments in renewable energy and technology.
Cimpor's chairman Suat Çalbiyik said "This operation represents a very important step in the company's growth and makes it a world reference in cement production."
Iraq/Jordan: Saudi Arabia-based Northern Region Cement has agreed to sell its 50% stake in Jordan-based Cement Experts for Development and Investment to UAE-based AMP Global Trading. In a statement to Tadawul, the producer said that the deal is valued at US$55m. Cement Experts for Development and Investment owns 51% of the joint investment in the Al-Kubaisa cement plant in Iraq.
Breedon Group reveals 2023 financial results 07 March 2024
UK: Breedon Group recorded a 7% year-on-year increase in revenue of €1.73bn in 2023. Earnings before interest and taxation (EBIT) were €171m, down by 2%.
CEO Rob Wood said “The record results we delivered in 2023 are a real accomplishment and something I am extremely proud of. The challenging trading conditions our team faced required agile and bold responses which they took with discipline and determination.”
US: Global Cement understands from material published publicly on Breedon Group’s website that the UK-based company acquired ready-mix concrete, aggregates and building products company BMC Enterprises for US$300m on 6 March 2023. This marks the group’s first entry into the US building materials sector. Breedon Group described the acquisition as a ‘compelling opportunity’ in the ‘fragmented and growing’ market. It described BMC Enterprises as a highly attractive, established business upon which to grow a new group platform in the US, in addition to its existing platforms in the UK and Ireland.
Breedon Group CEO Rob Wood said “The acquisition of BMC represents a compelling opportunity for Breedon to launch our third platform. BMC has an excellent performance track record over a sustained period and is positioned in an attractive market for future growth. As a high-quality aggregates and concrete business that has grown at pace, organically and through acquisitions, with a strong management team and deep local knowledge, BMC’s culture and values are fully aligned with the Breedon business model.” Wood added "The acquisition is expected to be earnings-enhancing for shareholders, while allowing Breedon to maintain a conservative and flexible balance sheet to pay dividends and make further bolt-on acquisitions across each of our platforms as opportunities arise.”
France: Representatives from the global cement and concrete industry will meet in Paris on 7- 8 March 2024 for the Global Buildings and Climate Forum. Industry leaders will seek to set out a framework for sustainable, decarbonised buildings.
Global Cement & Concrete Association CEO Thomas Guillot said “Our industry has been leading the way on decarbonisation through the implementation of our 2050 Net Zero Concrete Roadmap, and as our Roadmap sets out we are committed to fully decarbonising this essential material.”
Bruno Pillon, Chair the French cement association France Ciment, said “France and the whole world will still need to rely on cement and concrete for future infrastructure. But it’s really important that the cement and construction sectors, governments and suppliers all work together to achieve our net zero goal.”
2023 roundup for the cement multinationals 06 March 2024
Cement producers appear to have doubled down on the lessons they learned in 2022 by seeking profits wherever they could in 2023, despite stagnant markets in certain key places. Even with sales volumes of cement going down for most of the multinational cement companies covered here, revenues and earnings rose through price rises or business realignment.
Heidelberg Materials can often be relied upon to sprinkle a bit less sugar on its financial commentary compared to some of its competitors. Thus it is always worth reflecting on what it says. In its view, “In 2023, high inflation rates across the globe, increased financing costs, and persistently high energy and raw material prices significantly impaired construction activity and thus demand for our building materials. The decline in demand in private residential construction, which was massive in some cases, could not be offset by a solid development in industrial commercial construction and infrastructure projects.” Other opinions are available.
Graph 1: Sales revenue from selected cement producers in 2022 and 2023. Source: Company reports. Note: Figures calculated for UltraTech Cement.
Heidelberg Materials is notably missing in Graph 2 (below), though as the company is likely to be holding back its cement sales volume numbers until it releases its full annual report for 2023 towards the end of March 2024. However, Holcim and Heidelberg Materials reached similar sales volumes of cement in 2022 and this looks likely to have continued in 2023, or even gone further. Holcim divested its India-based and Brazil-based operations in 2022 and Africa-based ones in South Africa, Tanzania and Uganda in 2023. Heidelberg Materials has also slimmed down, albeit at a slower pace, with the sale of its businesses in Southern Spain in 2022 and The Gambia in 2023. Note that CRH and Holcim have swapped places in terms of sales revenue from 2022 to 2023. 65% of CRH’s sales came from its Americas divisions.
The outlier here is UltraTech Cement. It increased its sales volumes as the India-based market continues to push forward. Dangote Cement, meanwhile, delivered a surprise with a fall in volumes, due to poor trading at home in Nigeria. Sales outside of Nigeria grew significantly though. A real key moment for the evolution of Dangote Cement as a multinational player will be when its sales, volumes and earnings outside of Nigeria surpass those from back home. It’s not there yet but it looks likely to happen in the next few years.
Graph 2: Cement sales volumes from selected cement producers in 2022 and 2023. Source: Company reports. Note: Figures calculated for CRH and UltraTech Cement.
The progress of the construction market in the US compared to elsewhere has wielded an outsized effect on balance sheets for companies. Signs of this have been apparent for several years but it really picked up in 2023 with CRH switching its primary listing to the US in September 2023 and then Holcim announcing that it is planning to spin-off its North American business (for more on this see GCW 645). Heidelberg Materials was asked during its analysts’ conference call for its 2023 financial results what its plans were for the US. Chair Dominik von Achten said he was against splitting the business off from the rest of the group but that all other options were on the table. Various media outlets have interpreted this to mean that an initial public offering in the US is a likely possibility.
What Cemex does with this situation, if anything, might be worth watching. The company is already North America-focused. Its key markets are in Mexico, the US and Europe, and it is already listed in Mexico and the US. Subsequently in 2023 the market in Mexico bounced back and operating earnings rose sharply in both Mexico and the US. Finally on this theme, Buzzi, the fifth largest cement producer in the US by capacity, may also face a similar dilemma to its peers about what to do with its largest earning business area.
The increasing dominance of the US market for western-based multinational cement producers may be accelerating a trend towards large regional companies everywhere. China-based cement players already dominate the top 10 list of the world’s largest cement producers by capacity. Companies from India and elsewhere are on the way to do likewise as they grow and concentrate on one geographic area. The situation in the US meanwhile is persuading the multinationals to do the same thing in reverse as they reconfigure themselves based on market demand. In financial terms, this may mean chasing growth in the US, learning to cope with high carbon prices in Europe or diversifying away from heavy building materials. Elsewhere, despite the proliferation of regional giants, such as the China-based cement companies, few seem keen to become truly multinational in a hurry, although opportunities, such as the ongoing sale of InterCement in Brazil or CRH’s acquisition of AdBri in Australia, are still present.
Global Cement Weekly will return to look at the large China-based cement companies when they release their financial results later in March 2024
Al Jabor Cement appoints Rizwan Khan as General Manager 06 March 2024
Qatar: Al Jabor Cement has appointed Rizwan Khan as its General Manager.
He previously worked as the chief financial officer for Al Jabor Cement. Prior to this he held financial and analytical roles for LafargeHolcim in the UAE and Saudi Arabia from 2009. Earlier in his career he worked for Emirates Flight Catering from the late 1990s. Khan holds a master in business administration qualification with a focus on finance from the University of Bradford in the UK.
Al Jabor Cement has been an affiliate company to Holcim since 2003 when it formed a strategic partnership. It also uses the name Holcim Cement Qatar.