Displaying items by tag: GCW225
Tricky times in India
04 November 2015The past week has seen several quarterly financial results from producers in the world's second-largest cement industry: India. So far, they do not make for a great read from an economic perspective, although some players, including Birla Group and Sanghi Cement are yet to show their hands.
So let's kick off. For the quarter that ended on 30 September 2015, LafargeHolcim subsidiary Ambuja Cements saw its net profit slide by 36% year-on-year to US$23.6m compared to the same period of 2014. Its income fell by 4% to US$324m as it battled a one-off charge. ACC, LafargeHolcim's other Indian subsidiary, saw a profit of US$17.5m for the quarter, a year-on-year fall of 40% compared to 2014. Not great for the global number one player.
Other players to announce so far have included JK Cements, which reported a 58% fall in consolidated net profit to US$2.1m. Meanwhile, Century Textiles, which owns Century Cement, fared even worse. It actually posted a loss compared to a marginal profit in 2014, despite an increase in total income.
It has not been all doom and gloom however. UltraTech Cement, while it reported a drop in profit, was not as badly affected as the firms listed above. It recorded a 3.9% fall to a net profit of US$59.7m for the quarter, down from US$62.3m in the same period of 2014. This was reported as being better than expected according to a senior research analyst at Angel Broking, perhaps hinting at shaky ground under even these results.
So far, the exception to the lower profits and losses has been India Cements Ltd (ICL), which posted an almost five-fold growth in its net profit. It profit grew from US$1.14m to US$6.26m, which it said stemmed mainly from improved operating parameters and substantial reductions in its variable costs. Its operating profit grew to US$35.4m from US$27.9m. It expects performance to improve as it increases its capacity utilisation rate up, currently languishing at just 60%.
Does the company provide a model for other producers to follow? Perhaps. The company's managing director and vice-chairman of ICL, N Srinivasan, said that the company was poised for improved conditions in its markets. In the company's results he said, "Going forward, we see better times ahead. We had a tough time for two years and have achieved a turnaround by cutting costs and maintaining a healthy cement price." The fact that ICL has managed to 'maintain a healthy cement price' in times of low requires scrutiny in a separate column.
However, a possible take-away from the results released so far is that the larger producers seem to have greater immunity to the problems surrounding over-supply in India. Economies-of-scale and the ability to spread risk around different Indian markets tends to favour larger players like UltraTech. Conversely, a smaller player that finds itself 'stuck' in one of the weaker regional markets, must just sit tight and weather the storm. Either that or it can make itself into a strategic acquisition target for one of the larger groups.
We are still awaiting results from other players in the Indian market, but with low demand, it would be foolish to expect them to be significantly different from the above. Given this, two key factors will help determine whether the decline in profits continues or not. Firstly, India's Modi government is promising large-scale infrastructure projects, which would help boost demand for cement. The industry has heard such promises in the past, however, and may chose to be skeptical. Secondly, it is important to remember that lower profits are being seen at the moment, even despite lower coal costs. Any upward change in these costs and the pace may become too fast for some of the country's smaller producers.
Jorge Mario Velasquez to become new Argos group President
04 November 2015Colombia: As of 1 March 2016, the current President of Cementos Argos, Jorge Mario Velasquez, will be the new President of the entire Argos group in Colombia.
Velasquez, born in Bogota in 1960, will replace the retiring Jose Alberto Velez. Velasquez joined Cementos Argos in 1984 and, on his way up within the company, has served as General Director of Cementos del Nare, President of Cementos Paz del Rio and Vice President of Logistics at Cementos Argos. He became the latter's President in June 2012. Velez has said that the main challenges awaiting Velasquez are the integration of Odinsa into Grupo Argos, the consolidation of Pactia (the property fund established with Conconcreto) and the expansion of Cementos Argos and Celsia.
Vicat’s sales up by 1.9% in the first nine months of 2015
04 November 2015France: Vicat's sales in the first nine months of 2015 grew by 1.9% year-on-year to Euro1.88bn. In the third quarter of 2015, its sales grew by 1.7% to Euro640m on a reported basis and declined by 3.7% at constant scope and exchange rates. Vicat reported robust business trends in the US, activity growth in Asia underpinned by Turkey and India, a reduced down-trend in France and lower activity in West Africa and the Middle East.
"Vicat's third-quarter performance still reflects a contrasting picture from one region to another, but there were signs of improvement in certain markets," said Vicat's Chairman and CEO. "Strong increases were recorded in the US and Turkey, while volumes in India returned to growth in a still favourable pricing environment, and, lastly, our production unit in Kazakhstan ran at full capacity in a market nevertheless affected by a strong currency devaluation. In France, the shortfall compared with 2014 declined significantly in the cement business over the past quarter and the market currently appears to be gradually stabilising at an historically low level for French cement consumption. Against this backdrop, Vicat remains focused on its objectives of maximising its cash flow and reducing its debt, while leveraging the efficiency of its manufacturing facilities, its geographical diversification and its strong positions in its local markets."
Prism Cement’s net loss grew to US$5.08m in the second quarter of its 2016 fiscal year
04 November 2015India: Prism Cement's standalone net loss widened to US$5.08m for the second quarter of its 2016 fiscal year, which ended on 30 September 2015, compared to a net loss of US$3.02m in the same period of 2014. During the period, its net sales grew by 4.56% to US$213m. Prism Cement sold 1.35Mt of cement and clinker compared to 1.29Mt during the same quarter of its 2015 fiscal year.
Prism Cement said that the short term scenario remains 'challenging,' however, government initiatives such as housing, 'smart cities' and the push to infrastructure aided by a stable inflation and rate cut bodes well for the medium and long term economic outlook.
Gezhouba Cement to build cement plant in Kyzylorda
04 November 2015Kazakhstan: Gezhouba Cement Group Co Ltd plans to construct a cement plant in Shiyeli, Kyzylorda with partner Corporation Dan Ake to form the joint venture, Gezhouba - Shiyeli Cement. Construction of the 1Mt/yr cement plant will begin in February 2016 and create 400 new jobs.
Gezhouba Cement said that the region has created favourable conditions for investors and the implementation of joint projects. "Gezhouba Cement is known not only in China but also abroad. It is included in the list of the best companies for the production of cement. On 23 December 2014 an agreement for the implementation of joint projects in Kyzylorda was signed. We are grateful to the CEO of Corporation Dan Ake, Daulet Turlykhanov, for having helped to attract investors. In addition, our side will create all the conditions for the realisation of the project," said region Governor, K Kusherbayev.
Mexico’s Cemex closes Euro160m sale of Austrian and Hungarian units
03 November 2015Europe: Cemex has completed the sale of its business operations in Austria and Hungary to Germany's Rohrdorfer Group for about Euro160m.
Cemex's Austrian operations, which comprise 24 aggregate quarries and 34 ready-mix plants, reported Euro219m in net sales in 2014. The operations in Hungary include five aggregate quarries and 34 ready-mix facilities and had net sales of some Euro42.7m in 2014.
Cemex hired Bank of America Merrill Lynch, Citigroup, BNP Paribas and Morgan Stanley & Co International plc to act as financial advisors in this transaction. The proceeds from the sale will be used mainly to finance general corporate purposes and to pay off debt.
Suez Cement reports 18% revenue fall in the third quarter of 2015
03 November 2015Egypt: Suez Cement Group has reported that a much improved energy availability, driven by coal utilisation and a more steady supply of the heavy fuel oil known as mazut, has allowed the Egyptian cement industry to boost its production by 29% year-on-year in the third quarter of 2015 and 23% in the first nine months of 2015.
During the third quarter of 2015, market demand grew by 2.1%, while cement demand grew by 1.6% in the first nine months of 2015. Combined with a steep reduction in exports, this resulted in a marked oversupply of cement products in the domestic market, causing prices to decline. This trend was exacerbated in the third quarter of 2015 with a market demand slowed down by an unfavourable calendar and strong production activity in contrast with summer 2014, when energy supply was at its lowest. Simultaneously, traditional energy prices grew by around 30% with the implementation by the government of the subsidy lifting programme. Suez Cement was able to maintain its market leadership, but saw its sales volumes decline slightly as it tried to defend its pricing. Exports to regional markets, such as Libya and Yemen, remained limited because of political and economic instability.
Suez Cement reported an 18% decrease in revenues for the third quarter of 2015 and a 12% fall for the first nine months of the year. The company continued to implement its action plans to improve internal efficiencies and modify its energy mix, with two plants now fully converted to use coal and waste-derived fuel. The resulting cost improvement was insufficient to offset the impact from pricing, energy price and cost of labour increases.
Suez Cement expects Egypt's supply-demand imbalance and lower cement prices to remain negative for the rest of 2015. However, it foresees improved cement demand and rebounding prices in 2016. Egypt will move forward with the implementation of several large national projects under the auspices of government stimulation initiatives designed to boost demand for cement across the country.
Suez Cement is currently preparing for the implementation of coal conversion projects at the Helwan and Tourah plants in the next two years. The company's energy diversification programme is focused on increasing the use of waste-derived fuels, petroleum coke, coal and renewable energy in order to prevent fluctuating natural gas and mazut prices from negatively impacting the company's bottom line. Suez Cement anticipates that its energy programme will continue to improve its manufacturing capacity and decrease operational and production overheads.
Rwanda delists Kilimanjaro Cement from preferential treatment
03 November 2015Rwanda: Rwanda has delisted Kilimanjaro Cement produced by Amson's Tanzania Ltd from preferential treatment as part of its anti-dumping campaign to check external competition threatening the domestic market. However, Tanzania Ltd has appealed to the East African Community (EAC) committee on non-tariff barriers against the decision on Rwanda.
Rwanda, once a net importer of cement, is slowly building production capacity among local cement makers. Cimerwa and Kigali Cement have increased production capacity and will soon be able to supply local demand and also position the country to start exporting cement. Kilimanjaro Cement now attracts a 25% import duty like other goods imported from outside the EAC and the Common Market for Eastern and Southern Africa (COMESA).
Rwandan officials have alleged that Kilimanjaro Cement is imported from Pakistan and repackaged in local bags and so is not qualified to be treated as manufactured within the region. William Musoni, Commissioner Customs Services at the Rwanda Revenue Authority, said that before the government blacklisted Kilimanjaro cement, they had jointly carried out investigations with officials from the EAC Secretariat that confirmed that some of the cement exported from Tanzania is repackaged.
Birla Corporation commissions cement blending unit in Uttar Pradesh
03 November 2015India: Birla Corporation has commissioned its 50,000t/yr cement blending unit in Raebareli, Uttar Pradesh. In August 2015 it agreed to acquire, either directly or through its wholly-owned subsidiary, Lafarge India's Jojobera and Sonadih cement businesses for US$763m.
The India Cements’ net profit grew almost five-fold in the second quarter of its 2016 fiscal year
03 November 2015India: The India Cements Limited (ICL) has posted a nearly five-fold growth in its net profit for the second quarter of its 2016 fiscal year, which ended on 30 September 2015.
Its net profit grew from US$1.14m to US$6.26m in the second quarter of its 2016 fiscal year. Growth mainly stemmed from improved operating parameters and substantial reductions in variable costs. Its operating profit grew to US$35.4m from US$27.9m. Cement capacity utilisation was at 60% and is expected to rise.
According to Managing Director and Vice-Chairman of ICL, N Srinivasan, the last three quarters have seen the company posting consistent profits, a development that Srinivasan said had resulted in the company seeing better times ahead. "We have remained on the profit track for three consecutive quarters. Going forward, we see better times ahead. We had a tough time for two years and have achieved a turnaround by cutting costs and maintaining a healthy cement price," said Srinivasan. "With expected the increase in cement demand in the southern states and Andhra Pradesh building its new capital city Amaravati, we hope that the company will do well in the coming years."