Displaying items by tag: Australia

A couple of news stories from Australia this week give us a reason to look at the country’s cement industry. All the main producers have now released their preliminary reports for the second half of 2016, with the exception of LafargeHolcim, one of the joint owners of Cement Australia. Essentially, the picture is mixed from two of the three main producers - Adelaide Brighton and Boral - with falling sales revenues but growing sales in the east. In mid-2016 the Australian Industry Group Construction Outlook survey predicted that the infrastructure, commercial and residential sectors would start to recover in the second half of 2016 leading to an upturn in 2017, although falling mining and heavy engineering construction was expected to continue to contrast in 2016.

The local market is split in clinker production terms with most of the producers (relatively) concentrated in the south and east of the country. Cement Australia leads in cement production capacity with 2.8Mt/yr or 42% of the country's production base from two integrated plants. Adelaide Brighton then comes next with 2.3Mt/yr or 35% from three plants and Boral follows with 1.5Mt/yr from one plant since the closure of clinker production at its Waum Ponds Plant in Victoria in 2012. The cement grinding plant situation is more varied with Adelaide Brighton's Northern Cement plant in the Northern Territory and BGC Cement plant in Western Australia amongst the country's 12 units, according to Global Cement Directory 2017 data. This total also includes a few slag cement grinding plants such as the Australian Steel Mill Services' plant and the Cement Australia-Ecocem plant that are both in Port Kembla.

Adelaide Brighton reported that its sales volumes of cement were down in 2016 due to major declines in Western Australia and the Northern Territory. Here, volumes had fallen by around 20% year-on-year. Unfortunately, a revival in southern and eastern Australia in the second half of the year wasn’t enough to stem the tide of poor sales. Power supply issues in Southern Australia also caused disruptions at both the company’s own plants and at those of its customers, leading to reduced sales. The cement producer also said that its import volumes had fallen by 2Mt due to lower sales in Western Australia and the Northern Territory and that import costs had increased due to a drop in the value of the Australian Dollar. Adelaide Brighton's reliance on imports is interesting given that this week Semen Padang, a subsidiary of Semen Indonesia, announced that it had started exporting cement to Australia.

Meanwhile, Boral Australia said that its cement revenue had fallen by 3% year-on-year to US$95.3m for its first half to 31 December 2016. However, cement sales volumes grew by 3% driven by higher direct sales. It also noted that competition and energy costs had increased in the period. HeidelbergCement, the other joint owner of Cement Australia, along with LafargeHolcim, said that its operations in Australia had delivered solid development due to strong residential construction demand and strong demand on the East Coast that compensated for a weaker mining sector. LafargeHolcim confirmed this in its half-year report adding that road infrastructure projects had also helped. It also noted that benefits to its adjusted operating earnings before interest, taxation, depreciation and amortisation (EBITDA) had been accrued through energy savings and lower clinker import costs.

LafargeHolcim's financial results for 2016 are due later this week on 2 March 2017. Potentially they have big implications for the Australian cement market given the rumours that were swirling around a year ago about a potential divestment. Although the signs so far suggest that its subsidiary Cement Australia did okay in 2016, pressure elsewhere in the group might prompt a sale of its share. We discussed this issue in December 2015 but since then Adelaide Brighton publicly said it was working on an acquisition plan, including strategy on how to cope with any potential competition issues. All eyes will be on LafargeHolcim later in the week.

Australia: Adelaide Brighton’s financial results have been hit by disruptions to electricity supplies in South Australia. Closure of generation capacity in the region, a temporary closure of an interconnection in July 2016 and bad weather that led to disrupted supplies in September 2016 all caused higher electricity and gas prices, production loses at several plants and reduced sales to customers, whose own facilities were also suspended. The company’s profit after tax fell by 10.4% year-on-year to US$143m in 2016 from US$160m in 2015. Its sales revenue decreased by 1.2% to US$1.07bn from US$1.09bn. It blamed the decline on reduced cement demand in Western Australia and the Northern Territory.

Overall cement and clinker sales volumes fell by 4% in 2016 but this was mitigated by higher sales in New South Wales, Victoria and south-east Queensland. Low sales volumes, higher energy costs and import costs also hit cement margins. The cement producer expects volumes to improve in 2017.

Australia: Semen Padang, a subsidiary of Semen Indonesia, has started exporting cement to Australia. It delivered 22t of cement to Sydney on 21 February 2017 on the Meratus Minahasa V.1705S, according to the Jakarta Post. Commercial director Pudjo Suseno said that the shipment was made in response to demand from potential Australian buyers revealed at the end of 2016. The cement producer has previously sold exports to countries including Bangladesh, the Philippines and Sri Lanka. It exported 396,000t of cement and 90,000t of clinker in 2016.

Australia: Boral’s revenue from its cement business fell by 4% year-on-year to US$118m in the first half of its financial year, which ended on 31 December 2016. Total cement sales volumes rose by 3%. The building materials producer blamed the fall in sales revenue on low wholesale clinker volumes due to higher direct sales volumes of cement. Its sales prices for cement grew by 1% for bulk cement and 3% for packaged products. It added that, although competition pressure and energy costs are rising, its cost improvement plans are helping.

Overall, Boral’s sales revenue fell by 5% to US$1.6bn from US$1.68bn. However, its profit after tax rose by 9% to US$114m from US$105m. It attributed this to a ‘solid’ performance in Australia combined with good earnings from Boral USA and USG Boral.

Australia: Good Environmental Choice Australia (GECA) has released a new standard for cement, concrete and concrete products, and is now welcoming applications for certification. The new Cement, Concrete & Concrete Products Standard covers three distinct sub categories - cement and supplementary cementitious materials (such as blended cements and alternative non-Portland cements), concrete (including ready-mix and concrete manufactured in temporary batching plants on site) and concrete products (such as masonry, precast concrete, pipes, roof tiles, and autoclaved cellular concrete). It seeks to support and reward manufacturers who make efforts to minimise the environmental, health and social impacts of cement and concrete production.

The GECA standard is intended to enable manufacturers to provide assurance to procurers and specifiers seeking products with a lower environmental impact that their product meets strict sustainability criteria. The standard is currently under review for recognition under the Green Building Council of Australia’s (GBCA) Green Star ratings tools and is recognised by the Infrastructure Sustainability Council of Australia’s (ISCA) ratings system. GECA is a non-profit organisation and part of the ecolabelling initiative that helps consumers identify environmental aspects of products.

Australia: Adelaide Brighton has raised concerns about a South Australia state plan to build housing and tourism facilities near to its Birkenhead cement plant in Adelaide. At a public meeting held by the Development Assessment Commission, a local planning body, the cement producer expressed its concerns that building more housing would create more complaints about the plant’s activities, according to the Portside Messenger newspaper. It added that the government should consider building buffers to reduce noise and dust pollution from the site. The local government wants to build a tourism development near Cruickshank’s Beach and the cement plant.

Australia: Adelaide Brighton Cement has signed a sales agreement with Beach Energy to supply processed gas for one year from its Mooba processing plant. Supply of the gas is expected to start on 1 January 2017 and it will replace the previous deal that the companies had for raw gas.

Australia: Wagners is attempting to sell its cement terminal in Queensland for up to US$150m. The unit has been on the market previously, according to the Australian newspaper. The Australian firm started with divisions in concrete, quarrying and transport and has since diversified into cement, fly-ash, lime and other products.

Australia: Sunstate Cement is set to start using new packaging equipment from Haver & Boecker at its Port of Brisbane cement grinding plant in November 2016. It has installed a Roto-Packer Adams 4 for its packaging machine, Ibau storage technology for its drymix mixer, a Newtec palletising system and a stretch hood machine made by Lachenmeier. The decision to install the new packaging line follows a switch to polyethylene (PE) bags.

“With the uptrend of the Do-It-Yourself market in Australia, the attractive and clean design of PE packaging will provide a competitive advantage to drymix manufacturers,” said Alan Arbotante, Area Sales Manager for Packaging Technology at Haver & Boecker Australia.

Australia: Adelaide Brighton has said its annual net profit is likely to fall in 2016 compared to 2015, mainly on the back of lower income from property deals. However, its management has offered an otherwise bullish outlook, with price rises looming for several key products.

Adelaide Brighton said it expects net profit for 2016 to be US$143-150m. The top end of the range would represent a 3.8% decline year-on-year. It reported that annual sales volumes of cement and clinker were likely to be below 2015 levels, but volumes of premixed concrete, aggregates and concrete products would be significantly higher than a year earlier.

For the first half of 2016, Adelaide Brighton reported a net profit of US$57.8m, a 6.7% decrease compared to the same period of 2015. After stripping out the impact of property transactions, the company's earnings were 7.8% higher year-on-year.