Displaying items by tag: Czech Republic
Czech-mate for Cemex?
04 September 2013Cemex's decision to head deeper into eastern Europe as part of the Cemex-Holcim asset swap announced this week suggests some nerve. Cement production levels started to fall in the region from 2012, according to Cembureau figures, with continued problems reported so far by the multinational cement producers in 2013. Cemex seems likely to lose money from the start with its new assets in the Czech Republic.
In more detail, Cemex will acquire all of Holcim's assets in the Czech Republic, which include a 1.1Mt/yr cement plant, four aggregates quarries and 17 ready-mix plants. In return Holcim will give Cemex Euro70m and Cemex will give Holcim its assets in western Germany including one cement plant and two grinding mills that encompass a total capacity of 2.5Mt/yr, one slag granulator, 22 aggregates quarries and 79 ready-mix plants.
Cemex must believe that it can wait out the recovery of the construction sector in eastern Europe or make savings from having a more easterly spread of assets. Certainly Cemex said in its press release on the asset swap that its earnings before interest, tax, depreciation and amortisation (EBITDA) would start to rise from US$20m to US$30m from 2014.
The question for the buyers at Cemex who considered this deal is whether the construction market has bottomed out in the Czech Republic yet. According to World Bank figures, following the 2008 financial crisis Czech Gross Domestic Product (GDP) fell to a low of US$197bn in 2009, rose again until 2011 but then fell to US$196bn in 2012. Currently the Czech National Bank is anticipating a further fall in growth in 2013. Meanwhile, data from a third quarter 2013 Czech construction sector analysis by CEEC Research reported that a drop of at least 4.7% was expected in 2013 with a follow-on decline of 2.7% in 2014.
Possibly one deal-maker for Cemex was the prospect of combined operations with Holcim in Spain across cement, aggregates and ready-mix. Similar to the Lafarge-Tarmac joint-venture in the UK, the move offers reduced risk in a declining western European market. How the Spanish competition authorities will respond remains to be seen. Elsewhere on the continent this week the decision by the Belgian Competition Council to fine the Belgian cement sector shows an example of behaviour the Spanish authorities will want to avoid.
Holcim and Cemex to swap assets in Europe
29 August 2013Europe: Mexican cement producer Cemex and Swiss multinational cement maker Holcim have announced that they have reached an agreement to conduct a series of transactions in Europe. The transactions will are expected to be complete in the final quarter of 2013, subject to regulatory approval.
Cemex will acquire all of Holcim's assets in the Czech Republic, which include a 1.1Mt/yr cement plant, four aggregates quarries and 17 ready-mix plants.
Cemex will sell its assets in the western part of Germany to Holcim, which include one cement plant and two grinding mills that encompass a total capacity of 2.5Mt/yr, one slag granulator, 22 aggregates quarries and 79 ready-mix plants. Cemex will retain its interests in other parts of the country.
In Spain, Cemex and Holcim will combine all their cement, ready-mix and aggregates operations. Cemex will have a 75% controlling interest over the combined operational assets and Holcim will control 25%.
As part of these transactions, Holcim will pay Cemex Euro70m in cash. Additionally, the transactions are expected to generate synergies that will result in a recurring improvement in Cemex's EBITDA (earnings before interest, tax, depreciation and amortisation) of US$20-30m, which will begin to be realised in 2014.
"When finalised, this will be an important strategic step that should allow Cemex to improve its footprint in Europe and it will consolidate our portfolio in the continent," said Lorenzo H Zambrano, Chairman and CEO of Cemex.
"This transaction will significantly strengthen our presence in Germany while at the same time giving us the necessary flexibility in Spain," said Holcim CEO Bernard Fontana. "Overall, our footprint in Europe will be considerably strengthened."
Tajikistan: Tojikcement, Tajikistan's largest cement plant, has been accused of failing to replay US$2.5m to the Export Guarantee and Insurance Corporation (EGAP), a Czech state-owned credit insurance company. However, the Tajikistan Ministry of Energy and Industries has announced that a Chinese firm has started preparations for a major upgrade costing US$7.73m.
Hana Hikelova, chair of the EGAP PR department, made the accusation and has been quoted by Asia Plus news agency. According to Hikelova, EGAP in insured a loan provided by the Czech Export Bank to Tojikcement for modernisation of the Dushanbe cement plant in 2006. According to a statement released by the Czech Embassy in Tashkent in February 2013, "The main problem of further development of Czech exports is the unsettled debt of Tojikcement."
Meanwhile, on 10 May 2013 the Ministry of Energy and Industries (MoEI) Secretariat announced that Beijing Uni-Construction Group had started preparations works at Tojikcement, to install a coal-fired rotary kiln. Eleven Chinese specialists are reportedly working in the plant in Dushanbe. The coal-firing kiln is expected to be delivered to Dushanbe in mid-June 2013 and the installation work is expected to be completed by mid-September 2013, an official source at a MoEI said. The total cost of the upgrade is US$7.73m, with US$150,000 provided by Tojikcement and the remainder by Beijing Uni-Construction Group.
Tojikcement, which has a cement production capacity of 1.1Mt/yr, is the largest cement producer in Tajikistan. The plant has not been operational since the beginning of 2013 due to a lack of natural gas supplies. Currently there are five cement plants operational in Tajikistan with a combined cement capacity of 1.3Mt/yr. In 2012, Tajikistan produced 235,000t, including 203,000t produced by Tojikcement.
Cement Hranice sees 2011 sales rise by 14.5%
12 September 2012Czech Republic: Czech cement producer Cement Hranice has reported a rise in sales of 14.5% year-on-year to Euro68.8m in 2011, due to higher exports. Its net profit increased by 10% to Euro20.3m following a previous drop, the company said in its annual report.
In 2010 the producer's sales dropped by 15% to Euro60.4m and its profit decreased by 26% to Euro18.5m. Cement Hranice's results improved in 2011 due to supplies to a sister company in Poland, according to the firm's chairman Jaromir Chmela. Sales of cement were also favourably influenced by good weather in 2011. The company raised the amount of sold products by 25% in 2011 as a result.
"Poland has not been affected by a crisis in the construction segment because it was preparing infrastructure for the European football championship," said Chmela.
Although Cement Hranice's sales increased in 2011, revenue fell due to a decrease in prices. Before 2011 the company sold 75% to 80% of its production on the Czech market but in 2011 its share dropped to 65%. The remaining 35% of production was exported to Poland, Hungary and Slovakia, increasing Cement Hranice's exports.
Cement Hranice's expects a drop in sales, as well as in profit, in 2012. The company's results will be influenced by the economic crisis and a continuing fall in construction output, according to Chmela. Cement Hranice, whose owner is German company Dyckerhoff AG, employed 166 people in 2011.
Czech production down 14% in Q1
28 May 2012Czech Republic: Czech cement production posted a year-on-year drop of 14% to 466,000t in the Jan-March 2012 period owing to the fall of the construction sector and a colder winter, according to the latest data of the Czech Cement Producers' Association. Cement producers commented that domestic consumption and cement exports also went down.
"A combination of several effects was behind the significant drop in Czech cement production and consumption in the first quarter," said Ceskomoravsky cement board chairman Jan Hrozek. He also blamed unclear policies from the Czech Transport Ministry and the resulting changes that these had on priorities in infrastructure projects.
First-quarter cement sales on the domestic market were 8% lower at 404,000t. Exports sank by 24% over the same period. Cement producers have said that the outlook for 2012 is currently uncertain.
"Overall I expect domestic cement consumption to stagnate in 2012, with possible recovery to come at the end of the third quarter," Hrozek added.
Leading cement producers in the Czech Republic include Ceskomoravsky cement of the German group HeidelbergCement, French group Lafarge, Swiss company Holcim and the Czech branch of Dyckerhoff of Germany.