Displaying items by tag: France
CRH sells 45% stake in Doras for Euro37m
15 April 2015France: CRH has sold its stake in a French joint venture company called Doras to its partner, Samse, for just under Euro37m. Doras operates specialist and general builders merchants and is particularly prominent in the Burgundy and Franche Comté regions in eastern France. CRH has now sold its 45% stake in the company to the Samse Group, which already holds a 55% share in the firm, for Euro36.6m. The move was recently given the green light by the Competition Authority.
On the face of it this week's 'news' that CRH expects to receive the regulatory decisions it needs on its Euro6.5bn purchase of Lafarge and Holcim's joint divestments without significant delay is not particularly ground-breaking. However, the press release helpfully suggests that the deal will proceed according to CRH's desired outcome and only needs to be rubber-stamped. This is not strictly the case, with approval required in the EU, Philippines, Brazil, Canada and Serbia.
So... this story could just be incidental 'puffery' and the timing irrelevant. However, if read in the context of the letter concerning the acquisition from CRH Chairman Nicholas Hartery to company shareholders, it makes for a far more interesting read. Issued on 20 February 2015, the letter notifies shareholders of CRH's planned Extraordinary General Meeting (EGM) on 19 March 2015 and it starts fairly innocuously. The Chairman recommends that shareholders approve CRH's resolution to proceed with the acquisition of the LafargeHolcim assets. He describes the strong overlap between the divestments and CRH's existing portfolio, as well as the financial reasons behind the move. So far, as expected.
However, later in the document, the language gets fairly heated, bordering on bizarre in places. Hartery says that CRH has given 'hell or high-water' commitments to Lafarge and Holcim regarding the purchase This language indicates the importance of the deal to the board and possibly the level of personal involvement in the process to this point.
'What has CRH done?' we are supposed to ask. Are we led to believe that CRH has, in poker parlance, gone 'all in?' Any shareholders that are in doubt as to the board's position need look no further than the section concerning 'break fees.' If CRH backs away from the deal for any reason, for example by failing to approve the resolution at the EGM, the company will have to give a combined Euro158m to Lafarge and Holcim. This would be a sizeable headache and CRH can take no chances.
Returning to CRH's press release, its timing is even more intriguing when we consider reports out of Switzerland this week. Swiss newspaper Sonntagszeitung reports that Holcim has considered offering its shareholders a 'sweetener' to win their approval for the merger. It says that this could involve 'creative methods' to sway its shareholders into backing the deal, including a generous special dividend or a share buyback. The paper reports that Holcim is wary of not securing investor approval for a capital increase for financing, which is required for it to satisfy its side of the deal.
Holcim's actions may in turn be motivated by Reuters reports from 23 February 2015, which state that analysts have seen a potential divergence in earnings outlooks between Lafarge and Holcim as a potential 'spanner in the works' of the deal. This is in response to Lafarge's apparent poor performance relative to Holcim in the fourth quarter of 2014. Reuters even refers to analysts' rumblings that the terms of the whole mega-merger may be up for renegotiation in light of this.
CRH has said that it is prepared to move hell and high water to buy the LafargeHolcim divestments, but will it be able to if there is no LafargeHolcim from which to divest?
The full letter to CRH shareholders and associated information about the proposed CRH acquisition of Lafarge and Holcim's proposed divestments can be seen here.
KORFEZ ENG reports two new European orders
24 February 2015France/Germany: KORFEZ ENG has signed a contract with Italcementi for the supply of a new second compartment mill shell lining for one of its cement plants in France. The system is intended for a 3.8m diameter two-compartment raw mill. A total grinding compartment of 7250mm will be equipped with a combination of lifter and sorting liners. The design work will be carried out in the technical sales office in Neubeckum, North Rhine-Westphalia. Operation is expected to start in the summer of 2015.
KORFEZ ENG has also received an order from a building materials group in Germany for a dip tube cast lining system for its pre-heater, cyclone stage 2. The dip tubes will be executed as a locked hanging segment system tailor-fit to the existing dip tube. KORFEZ ENG determined the optimum material alloy for the application, which is being used for the first time. Manufacturing will be completed in about two months and delivery is planned for April 2015.
France: Lafarge has reported that during the fourth quarter of 2014, its sales were up by 2% year-on-year to Euro3.21bn, its earnings before interest, taxes, depreciation and amortisation (EBITDA) were down by 4% to Euro679m and operating income fell by 8% year-on-year to Euro450m. In the entirety of 2014, Lafarge's sales were down by 2% year-on-year to Euro12.8bn, EBITDA was down by 3% to Euro2.72bn and operating income fell by 3% to Euro1.88bn.
"2015 will be an exceptional year for Lafarge. Over the past few years, we have undertaken a structural and fundamental transformation. We have focused on our customers, promoted innovation and reshaped our portfolio to concentrate on fast growing market segments," said Bruno Lafont, chairman and CEO of Lafarge. "In 2014, we completed our 2012 - 2015 cost reduction and innovation objectives a full year ahead of schedule, supporting our solid operating results. Lafarge is now perfectly-positioned to best benefit from upswings in any and all of its markets in an economic environment that, while remaining volatile, will be more favourable in 2015. I am confident that we will drive significant growth of our results and we do expect EBITDA of Euro3 – 3.2bn in 2015."
Cement sales volumes were up by 4% in 2014 thanks to continued growth in most emerging markets and the US, the benefit from innovation actions and the start-up of new plants in India and Russia. Lafarge delivered its 2014 cost cutting and innovation target, generating Euro600m in 2014, Euro370m from cost cutting and Euro230m from innovation. Net debt was further reduced to Euro9.3bn as of 31 December 2014.
Overall, Lafarge sees cement demand increasing in 2015 by 2 – 5% year-on-year, predominantly driven by growth in emerging markets. Cost inflation in 2015 should continue, at a slower pace than in 2014 given the recent changes of fuel oil prices. Lafarge has confirmed its target to generate at least Euro1.1bn of additional EBITDA from its cost reduction and innovation measures in 2015 - 2016. Its capital expenditures in 2015 will be limited to Euro1.1bn. Net debt should be reduced to Euro8.5 – 9bn by 31 December 2015.
CRH wins the race to the LafargeHolcim gold
04 February 2015CRH has made good on its intentions. This week it stumped up Euro6.5bn to buy assets from Lafarge and Holcim in four continents. The move follows preparation since at least May 2014 when the Irish building materials group announced a divestment programme. In October 2014 it announced that it would sell its brickwork division.
CRH is finding the cash through a mix of existing cash, debt and equity placing. Interestingly, back in 2012 an Irish stockbroking analyst who was interviewed reckoned that the company could spend up to Euro3.5bn on acquisitions whilst remaining within its banking agreements. Throw in the recent sales and planned divestments and the planned acquisition from LafargeHolcim doesn't seem like too much of a stretch for CRH.
If completed, the purchase will see CRH take on 24 cement plants with a production capacity of 36Mt/yr. As a back of the envelope calculation suggests the sale price of Euro6.5bn isn't far off the occasionally used price of US$200/t for western cement production. The deal also includes aggregates, ready mixed concrete and asphalt assets.
The purchase marks a change in CRH's buying strategy both in terms of scale and distribution. Much of CRH's previous acquisitions have been minority shareholdings that make it difficult to accurately report the company's position in the cement industry. For example, in our Top 100 Report CRH was reported to have a production capacity of 6.49Mt/yr for majority shareholdings with another 19.9Mt/yr for minority shareholdings. The new cement capacity being purchased blows this away because it more than doubles CRH's total capacity and it appears to be all majority owned. CRH thinks that this will propel it to become the world's third biggest building materials manufacturer after LafargeHolcim and Saint-Gobain, leapfrogging Cemex and HeidelbergCement in the process. Strangely there is no mention of the huge Chinese players in the top five manufacturers in CRH's acquisition presentation.
CRH has avoided buying plants in southern Europe but it is relying on the slowly improving growing UK market, where CRH will pick up four plants, to balance the risk. Elsewhere in Europe, the three Holcim plants in France have been suffering from continued low construction rates in that country and the two Lafarge cement plants in Romania are unlikely to have recovered from a production fall in 2013. Outside of Europe growth has been poor in Quebec in 2013 and 2014, where CRH is buying two plants from Holcim. Both Lafarge and Holcim have also seen a slowdown in Brazil. However, the Philippines does seem like a better bet for CRH, with solid cement volumes growth seen by Lafarge in 2013 and the first three quarters of 2014.
With CRH now looking like a company that wants to produce cement rather than one that owns parts of companies that produce cement, all eyes are on the construction markets. 14 of the 24 cement plants CRH are buying are in Europe. Buying at the bottom of a sustained production slump makes sense because the asking price will be low. However, has the bottom been reached yet?
Vicat sales rise by 6% in 2014
04 February 2015France: Vicat's total sales rose by 6% year-on-year to Euro2.42bn in 2014 from Euro2.29bn in 2013. Cement sales rose by 13.7% to Euro1.26bn. The French building materials manufacturer attributed the growth to markets in Asia and improvement in the US and Egypt.
By region, cement sales fell by 4.4% year-on-year in France to Euro356m with an increased decline seen in the fourth quarter of 2014. This was blamed on a slowdown in the construction sector. In the rest of Europe cement sales declined less sharply by 5% to Euro174m. In the US cement sales rose by 16.7% to Euro114m. In Asia, including Turkey, India and Kazakhstan, sales rose by 20% to Euro466m. In Africa and the Middle East cement sales rose by 23% to Euro374m.
France/Switzerland: Holcim and Lafarge have announced the executive committee for the proposed merged company, LafargeHolcim, due to be formed in the first half of 2015. As previously announced, Lafarge's current CEO Bruno Lafont will become LafargeHolcim's first CEO and the chairman of the new board will be Wolfgang Reitzle, currently chairman of Holcim.
Lafont will lead a project team of 10 managers from both Holcim and Lafarge to handle the transition. Once the merger is finalised, the members of this project team will be officially appointed members of the Executive Committee.
The future executive committee is composed of:
- Finance: Thomas Aebischer, currently in charge of Finance at Holcim;
- Integration, Organisation and Human Resources: Jean-Jacques Gauthier, currently in charge of Finance at Lafarge;
- Europe: Roland Köhler, currently in charge of Europe at Holcim;
- Asia Pacific: Ian Thackwray, currently in charge of East Asia Pacific and Trading at Holcim;
- Middle-East Africa: Eric Olsen, currently in charge of Operations at Lafarge;
- North America: Alain Bourguignon, previously in charge of North America and UK at Holcim;
- Latin America: Saâd Sebbar, currently in charge of Morocco at Lafarge;
- Performance and Cost: Urs Bleisch, currently in charge of Corporate Functions at Holcim;
- Growth and Innovation: Gérard Kuperfarb, currently in charge of Innovation at Lafarge;
In India both companies are well on track in preparing the merger of Holcim and Lafarge, with the future structure for the subcontinent to be announced in due course upon clearance by the Competition Commission of India.
The current executive committees of Holcim and Lafarge remain in charge and accountable for the activity and operations of their respective groups until completion of the merger. Both groups continue to operate entirely separately as competitors until the merger is completed.
The selection and nomination process for the rest of the leadership team is also well underway. Apart from the future executive committee, the following direct reports of the future CEO have been selected under project mode:
- Strategy and M&A, Christof Haessig, currently in charge of Corporate Finance and Treasury at Holcim;
- Communication, Public Affairs and Sustainable Development, Alexandra Rocca, currently in charge of Communication, Public Affairs and Sustainable Development at Lafarge;
- Legal, Xavier Dedullen, currently in charge of Legal & Compliance at Holcim;
- Health and Safety, Sapna Sood, currently in charge of Health and Safety at Lafarge.
HAVER & BOECKER wins Lafarge Global Supplier Award 2014
18 November 2014France: Lafarge has held its first global supplier competition, which had a total of seven categories, in a ceremony at its headquarters in Paris. With its ADAMS® technology for filling powder-type products into watertight PE bags, HAVER & BOECKER was able to win in the category of 'sustainability.' The jury's reasoning was that the technology showed 'an ability to operate in a sustainable manner, including the deployment of appropriate corrective actions.'
"Suppliers play an important role in our operations, delivering value year after year and pushing the boundaries in terms of innovation and cost competitiveness," said Thierry Metro, senior vice president of Energy and Strategic Sourcing at Lafarge. "The Global Supplier Awards represents a victory for our suppliers, for Lafarge and for our customers."
Lafarge profit falls by 28% to Euro218m in third quarter of 2014
05 November 2014France: Lafarge has reported that its net profit fell by 28% year-on-year to Euro218m in the third quarter of 2014 from Euro304m in the same period in 2013. The France-based building materials company blamed the drop on the war in Iraq and a sluggish construction market in France.
Overall sales revenue fell slightly to Euro3.64bn. Earnings before interest, taxation, depreciation and amortisation fell by 4% to Euro887m from Euro920m. Cement sales volumes fell slightly to 31Mt.
"In a quarter marked by more moderate growth, we continued to progress on implementing our actions to reduce debt, cut costs and promote innovation... We shall meet our 2014 Euro600m cost-cutting and innovation target and confirm our 2015 Euro550m objective," said Lafarge's CEO, Bruno Lafont.
The company noted that volume trends eased in the third quarter with a more challenging comparable in Europe, mostly in France, where the construction sector remains subdued and in Iraq, the ability to transport cement across the country was limited. Meanwhile, in most emerging markets and in the United States, growth continued and the company benefited from the start-up of its new plants in India and Russia.
Looking ahead, Lafarge confirmed its estimate of market growth of between 2% to 5% in 2014 versus 2013. The company added that it has decided to pause its stand-alone divestments pending completion of the planned merger with Holcim.
Environnement SA acquires monitoring firm PCME
08 August 2014France/UK: Environnement SA, the French supplier of environmental monitoring equipment and the company PCME Ltd, the UK-based supplier of continuous particulate monitors for industrial processes, have announced the acquisition of PCME by Environnement SA.
The firms say that the acquisition allows the enlarged group to offer the most advanced and wide range of solutions worldwide so that it can match present and future challenges in respect of process or regulatory environmental monitoring requirements for industrial processes. This new alliance will shortly launch a new range of flow emission monitors and will engage in innovative joint research and development projects towards the production of new product ranges. Each entity will keep its own autonomy, with PCME retaining its current management team and employees.
François Gourdon, president and founder of Environnement SA, said, "We are very enthusiastic about the opportunities that we'll be able to provide to our worldwide industrial customers. The expertise of PCME for the monitoring of particulate in industrial processes, combined with the expertise of Environnement SA in the monitoring and detection of very low concentrations of gas and fine particulate, including PM10 or PM2.5, will definitively provide a new generation of equipment for the industrial regulatory market."
William Averdieck, managing director and founder of PCME Ltd, said, "Both management teams have known each other for many years and have respect for the success they have both achieved in similar markets with complementary product lines. This strong partnership announced today will boost our organic growth plan and strategy, allowing us to double our revenue within five years, reaching new customers, new markets and new applications worldwide, while maintaining our strength as an innovative (and passionate) manufacturer of particulate and flow instruments."