Displaying items by tag: Cemex

UK: The Competition and Markets Authority (CMA) has announced that it will consider the undertakings offered by Breedon Group to which its deal with Cemex UK for acquisition of several of the latter’s ready-mix and aggregates operations would be subject. The regulator explained its ruling by saying, “There are reasonable grounds for believing that the undertakings might be accepted by the CMA under the Enterprise Act 2002.” This may lead to the completion of the acquisitions, which were agreed on 21 January 2020.

Mexico: Cemex has launched Operation Resilience, its 2020 medium-term strategy. The plan consists of strategic divestments, US$280m in cost reduction and optimisation of the company’s portfolio towards European and US markets.

Chief executive officer (CEO) Fernando Gonzalez said, “Operation Resilience lays the foundation for our future. It allows Cemex to optimise its portfolio for profitable growth while securing its position as a leading vertically-integrated heavy building materials company with a focus on four core businesses: cement, ready-mix, aggregates and urbanisation solutions. We will concentrate on developing sustainable urbanisation solutions which meet the needs of growing metropolises while we ourselves progress towards achieving our long-term decarbonisation goals.”

UK: Cemex UK says that construction company Kier used concretes from its reduced-carbon dioxide (CO₂) Vertua range to complete a net-zero CO₂ residential construction project at the University Warwick. Sales executive Matthew Doran said that the student accommodation, called Cryfield, “was the first project for which Kier has chosen to use the Vertua range and it was an exciting opportunity for Cemex to demonstrate the value of this product as both a high-performance and sustainable choice.”

Colombia: Cemex España has requested authorisation by the Colombian Financial Superintendency (SFC) to make offers to buy the shares of all Cemex Latam Holdings shareholders with a view to taking over a 100% stake in the company. El Ceo News has reported that after receiving authorisation Cemex España must place a bid within five working days.

Mexico: Cemex has announced the awarding by its Scholarship Council of the Marcelo Zambrano Scholarship to architect Gonzalo Mendoza. The group says that the funding will support Mendoza through his post-graduate study abroad at the Architectural Association School of Architecture in London, UK.

Cemex said Scholarship Council member Jimena Hogrebe said, "Choosing a profile like Gonzalo's, due to his experience and interests, is important today because we are facing global situations in which it seems essential to have critical professionals who dare to propose new possibilities for architecture."

Mexico: Cemex has announced that its chief executive officer (CEO), Fernando González, will host a ‘virtual conversation,’ in which he will discuss aspects of the group’s financial and business strategy and its operation resilience post-Covid-19 performance enhancement programme, on 10 September 2020. The company says that chief financial officer (CFO) Maher Al-Haffar and strategic planning and business development executive vice president José González will also be on hand to answer questions.

UK: Mexico-based Cemex has published plans for the redundancy of its entire South Ferriby, Lincolnshire logistics team. A total of 26 jobs are at stake. The Lincolnshire Today newspaper has reported that “it is no longer financially viable for Cemex to continue to operate the fleet at South Ferriby” following the mothballing of its 0.8Mt/yr integrated South Ferriby cement plant, according to the company. Its Rugby, Warwickshire fleet, Tilbury, Essex fleet and Hull, East Riding of Yorkshire fleet will pick up the remaining footprint.

Cemex said, “We understand that this news will be a further disappointment to the local community following the previous announcements about mothballing the South Ferriby plant. Thank you for your on-going support – we remain proud to have been such a valued part of the community. We would like to reiterate that all commitments to the local community will be maintained, including the work agreed as part of the Environment Agency flood protection project.” The South Ferriby plant was devastated by a tidal surge and resulting flooding in December 2013.

Mexico: Cemex says that 70,000t of its concrete has been used in the construction of Park Garage, a 10,000 vehicle-capacity multi-storey car park in Heroica Veracruz, Veracruz State. The company used a 500m³/day Vince Hagan batching plant and 12 mixing trucks to distribute concrete throughout the complex. Mexico regional president Ricardo Naya said, “We supplied specialised high-resistance concrete to counteract the severe salinity conditions that prevail due to the edifice’s proximity to the sea. Park Garage is yet another example of our ability to offer the highest quality products and services designed to meet our customers’ most demanding requirements."

US: Mexico-based Cemex supplied 15,000t of cement to the Hartsfield-Jackson Airport in Atlanta, Georgia, for the construction of a 3770m runway and taxiway by McCarthy Improvement Company. Replacing an existing runway, the new runway is the longest at Hartsfield-Jackson, the world’s busiest airport.

Cemex USA president Jaime Muguiro said, “Infrastructure in the US needs improvements and updates so that Americans can remain connected and get where they need to go quickly, safely and efficiently. At Cemex, we are proud to securely support essential infrastructure projects that help achieve those goals and provide products that will enhance the experiences of travellers for years to come.”

Building materials manufacturer Saint-Gobain summed up the situation large companies face due to coronavirus in its second quarter results when it said that it faced, “very different situations from one country and market to the next.” Financial results are in from many of the largest multinational cement producers outside of China and the basic picture is as Saint-Gobain describes.

Sales revenue for LafargeHolcim, HeidelbergCement and Cemex are all down by around 10% year-on-year for the first half of the year. The variation between different geographical regions is large with some reporting sales declines of up to 20% and others noting rising sales, with one above 5%. Generally, recoveries were reported in June 2020 or when governments relaxed their lockdowns. There’s more variation with earnings figures although this may be down partly to the different figures each company likes to use. Around this is plenty of talk about liquidity and cost cutting programmes to sooth investors.

Figure 1: Sales of selected major multinational cement producers in first half of 2020. Source: Company financial reports.

Figure 2: Cement sales volumes of selected major multinational cement producers in first half of 2020. Source: Company financial reports.

Where it starts to become more interesting is when the companies talk about what they think will happen next. As Robert McCaffrey picked up upon in last week’s Global Cement Live there was a divergence between LafargeHolcim’s optimism for the second half of the year and HeidelbergCement’s caution. LafargeHolcim said it expected a, “Fast demand recovery with an encouraging outlook for the second half of 2020.” Instead, HeidelbergCement said, “A further wave of infections may occur at any time, which would have an impact on construction projects already started or announced in the individual countries. Against this backdrop, it is still not possible to estimate the full effect of the corona crisis on the company results for 2020.” Cemex sat on the fence with, “We expect that Covid-19 will continue to challenge our operations in new ways over the next few quarters.” Contrast this with Buzzi Unicem’s prediction, “Visibility for the second half of the year continues to be very limited and our forecasts are based on a scenario of gradual mitigation of the infections and related restrictions on economic activity.”

This difference in outlook may be subjective. Both LafargeHolcim and HeidelbergCement only had one geographical region each that reported growing sales in the first half of 2020 but LafargeHolcim’s ‘positive’ region represented a larger share of the group’s revenue. Alternatively, it may just be that the companies have different characters and this is reflected in their forecasts. Humans can be either be pessimistic or optimistic and so too can companies.

Of the large regional players, most of the Chinese cement producers are yet to release results for the second quarter of 2020 so there is little to say. Data out this week from China’s Ministry of Industry and Information Technology shows that cement output fell by 4.8% year-on-year to 1Bnt in the first half of 2020. UltraTech Cement, India’s largest producer, saw its revenue fall by 22.5% year-on-year to US$2.34bn for the first half of 2020. The worst of this was in the first quarter of the Indian financial year to 30 June 2020 with revenue falling by 33% with consolidated sales volumes down by 22% year-on-year to 14.7Mt. This coincided with the country’s ‘total’ lockdown period from late-March 2020 to 1 May 2020. Dangote Cement, a large African producer, reported growth in both sales and earnings with full or partial lockdown implemented in South Africa, Congo and Ghana in April 2020 before reopening in May 2020.

This is just a snapshot of what’s been happening with mid-year results awaited from the likes of CRH, Votorantim and, as mentioned above, the Chinese producers. Blanket lockdowns clearly damage construction markets, so future government strategies in tackling the ongoing wave of the pandemic or future waves will have consequences for the financial performance of construction material companies. In the meantime, in Europe at least at the moment, targeted regional lockdowns seem to be the public health measure of choice when outbreaks get out of control. How this translates to balance sheets will be revealed later in the year. In the meantime, while the world works out how to cope with coronavirus, expect more uncertainty.