Displaying items by tag: Breedon Cement

The rumours were confirmed yesterday when the UK’s Breedon Group announced its acquisition of Ireland’s Lagan Cement. The price was Euro527m, which Breedon will finance with a combination of a new loan, extended credit and an equity placing. The assets it will gain include a cement plant in Kinnegad, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants.

Breedon said that its strategy is to continue buying businesses in the heavyside construction materials market. At a stroke, once the deal completes on 20 April 2018, it becomes an international company. From the cement perspective it gains a new 0.7Mt/yr plant in central Ireland and a terminal in Belfast, UK. The UK Competition and Markets Authority (CMA) wasn’t mentioned in Breedon’s press release on the purchase but it seems unlikely that the competition body would have much to say on the transaction. Lagan Cement does hold ready-mix concrete (RMX) plants, aggregate and asphalt assets in Northern Ireland but these are far away from Breedon’s operations in mainland Britain. That said, the CMA did force Breedon to sell 14 RMX sites when it bought Hope Construction Materials in 2016. Generally speaking, Breedon’s enlargement reduces the diversity of the UK cement industry on the smaller end leaving only Quinn Cement, with operations on both sides of the border, as the country’s sole remaining single site clinker producer.

Aside from geographical expansion, becoming an international building materials company may offer Breedon Group some security from the UK’s exit from the European Union (EU) (so called Brexit). Breedon will join CRH as the only two cement producers with production facilities in both the UK and Ireland. The strategic significance of the position Breedon and CRH are in geographically may arise from whatever deal is reached between the EU and the UK and the significance of the UK’s only land border with the EU. LafargeHolcim is nearly in this club with its plants in England and Northern Ireland and plenty of the other local producers straddle the UK-EU border with terminals or production facilities elsewhere. Yet, in an uncertain Brexit negotiation, having kilns on both sides of the line might come in handy once (or if) the politicians make a decision.

Although, if Liam McCaffrey, the chief executive officer of Quinn Industrial Holding, is to be believed, then Brexit will have little impact at all other than (low) tariffs in a worst case scenario. He said to local press that although damage to the construction industry might arise in the UK from a prolonged recession, the UK’s housing shortage and reliance on imported building materials would probably see it through. That point about a possible financial downturn is important to Breedon Group, given the new debt it will be taking on to pay for acquisition. This is something that will be familiar to Breedon’s competitor Cemex. It is still paying off the debts from its acquisition of Rinker in 2007.

Breedon has decided to delay the release of its interim results from mid-July to September 2018 to allow time for the integration of Lagan into the group. Its sales and earnings may dwarf those from 2017 that it described as ‘one of the most productive years’ in its history. In the meantime congratulations are in order for Breedon Group for ensuring that the UK cement sector is never dull.

UK: Breedon Group has described 2017 as ‘one of the most productive years’ in its history following the full-year contribution from Hope Construction Materials that was acquired in mid-2016. Its sales revenue rose by 43% year-on-year to Euro728m in 2017 from Euro507m in 2016. Its underlying earnings before interest and taxation rose by 35% to Euro90m from Euro66.5m.

“We completed the integration of our largest-ever acquisition, concluded two bolt-on purchases and announced an important transaction with Tarmac that, subject to approval by the competition authorities, will see us streamline our ready-mixed concrete network in exchange for a substantial new reserve of minerals and a strategically valuable asphalt plant. This did not, however, distract us from our operational focus and we once again delivered a solid financial performance,” said executive chairman Peter Tom.

The construction materials group said that construction output continued to grow in 2017, rising by 3% despite a softening of the market during the second and third quarters of 2017. It reported ‘marked’ geographical disparities, with generally stronger demand in England than in Scotland and many regional variances within both countries. Growth was led by increases in residential and infrastructure development.

The group completed a programme of capital investment during the year at its Breedon Cement division. This included buying a fleet of new tractor units and powder tankers, upgrading the pre-heater riser, kiln feed and rail line at the Hope cement plant and a replacement excavator at the limestone quarry.

UK: Claudius Peters has released information about an upgrade project at Breedon Group’s Hope Cement plant in Derbyshire. The work included upgrading and replacing the existing kiln feed equipment built with the plant in the 1970s, and increasing the accuracy and capacity of the system to 200t/hr of raw meal for Kiln 1, Kiln 2, and a standby unit. The contact was signed in October 2014 and completed in May 2017. It is one the largest capital expenditure projects undertaken at the site in recent years.

A key challenge on this project was installing new equipment while the plant remained in operation. Claudius Peters supplied and commissioned: three 300 screw pumps complete with pump inlet hoppers with de-dusting filters and modified pipelines; modifications to existing compressors; and three cyclone filters with collection hoppers transport and material transport to pre-heater inlet via rotary feeders.

UK: Breedon Group will rename Hope Cement as Breedon Cement in August 2017. It said in its half-year report for 2017 that the acquisition of Sherburn’s import terminals had broadened its cement business and that it wanted to bring it all under one group brand.

“I am pleased to report that in the first half of 2017 the former Breedon Aggregates business posted a strong profit improvement and the former Hope Construction Materials business made a robust contribution, even after taking into account the shutdowns of both our cement kilns for planned annual maintenance and upgrade during the first half, which were completed on time and to budget,” said executive chairman Peter Tom. The construction materials group doubled its revenue in the first half of 2017 to Euro368m.

The company also said that it had completed the integration of the former Hope operations and all three divisions now use a common IT platform. It expects to deliver synergies of Euro11m in 2018, ahead of its original schedule.