Displaying items by tag: Australia

Australia: Adelaide Brighton’s Birkenhead cement plant has been criticised by a local environmental group for its dust emissions ahead of a review of its licence. The Port Adelaide Residents’ Environmental Protection Group has asked the plant to pay towards cleaning up dust emissions near to the plant as well as stricter controls of dust and noise, according to the Westside Weekly newspaper. The local Environmental Protection Authority (EPA) is reviewing the cement producer’s current licence, which expires at the end of October 2017. The EPA has released a draft licence including conditions requiring the cement company to produce management plans to address dust and noise levels.

Australia: Boral Australia’s external revenue for its cement business remained flat at US$240m in the company’s financial year, which ended on 30 June 2017. The company said that its external revenues were steady, underpinned by a 2% price increase and lower wholesale volumes to support higher volumes of cement sold internally. Total sales volumes of cement rose by 2%. Its cement businesses earnings grew supported by price and volume gains as well as productivity and material input cost benefits, partially offset by higher energy costs. Overall, the division’s total revenue rose by 1% year-on-year to US$2.61bn from US$2.60bn.

Australia: Adelaide Brighton has announced a 10.9% year-on-year fall in net profit for the six months to June to US$54.4m, while revenues rose by 4.7% to US$569.2m. For the full year it expects underlying net profit to be in the range of US$148 - 157m. The company added that a surging property market and a healthy pipeline of infrastructure projects means that it is on the lookout for acquisitions in a bid to keep pace with demand and grow its market share. The company has already spent US$67.7m on bolt-on acquisitions so far in 2017.

“From a demand point of view on the east coast, it’s hard to be pessimistic,” said chief executive Martin Brydon to The Australian newspaper. Brydon said the company was pragmatic about the residential property market eventually cooling off, but any slowdown would not immediately affect the business. “Even if there was a significant drop in approvals or applications for housing, the pipeline is still there for the next 18 months,” he added.

The company also said it was likely to raise cement prices for a second time later in 2017 amid the robust conditions on the east coast, but declined to confirm the likely amount of the price rise. The price rise has been partly precipitated by strong demand but also by rising electricity prices, which remain a major preoccupation for the company. It is expected to spend an extra US$6.3m on electricity within 2017 than it budgeted for, due to unexpectedly high prices.

Australia: James Hardie has announced its financial results for the quarter ended 30 June 2017. The group’s adjusted net operating profit was US$61.7m, a decrease of 7% compared to the same period of 2016. Group adjusted earnings before interest and tax (EBIT) came to US$88.3m, a fall of 10% year-on-year, although net sales rose by 6% year-on-year to US$507.7m. James Hardie’s North American fibre cement segment saw its sales volume increase by 2% year-on-year, with nets sales up by 6% to US393.1m.

Group CEO Louis Gries said, "Our North America fibre cement segment results reflect top line growth of 6%, including volume growth below our market index. Additionally, manufacturing inefficiencies and production costs led to a decrease in EBIT margin of 5.2 percentage points compared to the prior corresponding period. Within our international fibre cement business, net sales increased 8% due to volume increases in our Asia Pacific market, and EBIT increased by 10%, driven by the strong performance of our Australian and New Zealand businesses."

Australia: Boral Cement has ¬applied to the Environment Protection Authority (EPA) to run a 1.3Mt/yr cement grinding plant at Geelong in Melbourne, Victoria for 24 hours per day. The proposed facility would enable the company to unload from ships to be delivered to the production site via covered belt conveyors.

“The new site is directly adjacent to the wharf complex, which would allow efficient unloading of clinker from ships,” a Boral spokesman said when the company first raised the concept in late 2016. “Importantly, the site is also surrounded by other large industrial premises, meaning it is well separated and largely hidden from residential areas.” Boral has also proposed constructing new equipment, including an enclosed ball mill and covered store, outdoor product stockpiles and clinker unloading and delivery infrastructure.

EPA development assessments manager Tim Faragher said that Boral Cement required a works approval before starting any construction works on the clinker grinding mill. “Work approvals are ¬required for industrial and waste management activities that have the potential for ¬significant environmental impact,” said Faragher. The EPA now has four months to make a decision on Boral’s application.

US: Boral has completed its acquisition of Headwaters, a leading building products manufacturer and fly ash marketer in North America. Boral USA and Headwaters will form a new division to be named Boral North America, which will be headquartered in Atlanta, Georgia, the location of Boral’s current US headquarters.

US: The Federal Trade Commission (FTC) has approved Boral’s proposed acquisition of Headwaters. Boral expects that the transaction will be completed within two business days. The transaction is worth US$2.6bn. Following the purchase Boral USA and Headwaters will form a new division to be named Boral North America.

“We have been eagerly awaiting the approval from US regulators to allow us to complete the acquisition and to deliver on our strategy. In the meantime, we have continued to develop our integration plans and we are confident in our ability to deliver on the synergy targets we established when the transaction was announced,” said Boral’s chief executive officer and managing director Mike Kane. He added that Boral North America will focus on building products and fly ash.

Australia: The Construction, Forestry, Mining and Energy Union (CFMEU) has expressed concern over contaminated cement produced at Adelaide Brighton’s Birkenhead plant. Several large construction projects around Adelaide have used the contaminated cement the union has told the Australian Broadcasting Corporation (ABC) News. Adelaide Brighton says it is investigating an issue with its bulk cement that took place at the plant between 7 April and 10 April 2017.

Several companies including Boral distributed the cement. Adelaide Brighton says it has reviewed the situation and taken action subsequently to minimise the effect. This has included disposing of a large volume of cement.

Unsurprisingly the European Commission blocked Duna-Dráva Cement’s (DDC) attempted purchase of Cemex Croatia this week. Merging the country’s biggest cement producer with its largest importer was going to be a challenge for the commission. Whereas in previous transactions the various parties offered business disposals to ease the commission’s concerns, here all they were got was access to a cement terminal in Metković in southern Croatia. And this facility on the Neretva river is currently being leased by Cemex! Clearly this didn’t give the impression of being a long term solution.

Compare this with the merger between Lafarge and Holcim in 2015 where multiple sales were proposed to make sure the deal went through. Or look at the acquisition of Italcementi by HeidelbergCement in 2016 where the parties sold Italcementi’s Belgian subsidiary Compagnie des Ciments Belges to Cementir to make the deal happen. In comparison to these deals the attempt by HeidelbergCement and Schwenk, through their subsidiary DDC, comes across as a calculated gamble designed to test the resolve of the commission. If the commission had somehow passed the proposed acquisition then the companies would have cornered the market. If it turned it down, as it has, then nothing would be lost other than putting together the bid. HeidelbergCement had its mind on bigger things as it bought and then integrated Italcementi.

Commissioner Margrethe Vestager summed up the mood of the commission: “For mergers between direct competitors, we generally have a preference for a clean, structural solution, such as selling a production plant. HeidelbergCement and Schwenk decided not to offer that. Instead they proposed to give a competitor access to a cement terminal in southern Croatia. Essentially, this amounted to giving a competitor access to a storage facility – without existing customers or established access to cement, without brands and without sales or managerial staff.”

Elsewhere, the other big story in the industry news this week was Votorantim’s decision to focus on the lime business in Brazil by adding lime units to some of its existing cement plants. Given the dire state of the local cement and construction industry, initiatives to break the deadlock have been expected. The alternative is plant closures and divestures, such as the ongoing talks by Camargo Corrêa to sell the other big local producer, InterCement. Votorantim plans to build lime units attached to the cement plants at Nobres in Mato Grosso, Xambioa in Tocantins, Primavera in Pará and Idealiza in Goiás. Unfortunately the agricultural areas of the country and ones with cement plants don’t overlay neatly. Cement production is mainly focused in the south-eastern states and Votorantim are targeting the Cerrado, in the centre of the country, for the lime business.

The scale of the project, at US$50m, the scale of the lime business generally and the addition of lime units at cement plants suggest that the pivot to lime can only be a sideline to cement and construction. Given the similarity of the cement and lime production processes the announcement would be much more significant were Votorantim set to convert clinker kilns into lime ones. A notable example of this was at Cement Australia’s Gladstone plant in Queensland, Australia. Here a mothballed FCB-Ciment clinker kiln was converted into a lime kiln in the early 2000s. At the time the cost of the conversion project was valued at just under US$20m. If Votorantim was seriously thinking of doing this at a few of their underperforming cement plants then one would expect the bill to be higher than US$50m. However, it’s early days yet.

Australia: Adelaide Brighton has appointed Zlatko Todorcevski as a non-executive director. He has a Bachelor of Commerce (Accounting) and holds an MBA. He has worked for more than 30 years in the oil and gas, logistics and manufacturing sectors in Australia and overseas and has a background in finance, strategy and planning. He has previously held the position of Chief Financial Officer with BHP Billiton’s Energy business, Oil Search Limited and most recently at Brambles.