Displaying items by tag: GCW228

Malaysia: Lafarge Malaysia Bhd has bought Holcim Sdn Bhd from PT Holcim Indonesia in a deal worth US$71.2m.

"With this merger, our installed cement capacity will rise to 14.1Mt/yr from 12.9Mt/yr through the combined strength of three integrated cement plants, two grinding stations, over 40 ready-mix concrete batching plants and six aggregate quarries," said Lafarge in a statement. Lafarge Malaysia has now become part of LafargeHolcim.

Caribbean: Michael Subratie, a minority shareholder of Caribbean Cement Company (CCC), has asked the Jamaica Stock Exchange (JSE) to investigate whether the operating lease paid to parent Trinidad Cement Limited breaches accounting rules.

Subratie is contending that the operating lease over the cement plant's assets, which are owned by TCL, distorts its profits and stifles shareholder value, that it appears to contravene Generally Accepted Accounting Principles - GAAP - and should be replaced with a finance lease arrangement.

Caribbean Cement last paid a dividend in 2005, amounting to a total distribution of around US$9.34m at US$0.01/share. Subratie holds just over four million CCC shares in his own name and is now the tenth-largest shareholder of the operation with a 0.48% stake.

In 2014, Caribbean Cement paid US$377m to TCL as an operating lease. For 2015, it is projecting payments of US$364m. In 2015 – 2018, the plant expects to pay US$87m to TCL under the lease agreement. New rates will be negotiated for January 2019 to December 2028.

"The operating lease arrangement seems completely unfair to the minority shareholders as the true situation seems to be that of a finance lease as the equipment leased are permanent structures and equipment located at CCC in Jamaica," said Subratie. He is also contending that amounts already paid by Caribbean Cement, combined with the payments scheduled to 2018, more than equal the cost of equipment and structures.

Under operating lease contracts, the owner permits use of an asset for a particular period, which is shorter than the economic life of the asset, without any transfer of ownership rights. A finance lease is a commercial arrangement where the lessee pays a series of rentals or instalments for the use of the asset and has the option to acquire ownership.

Caribbean Cement has two operating lease agreements with TCL, covering kiln 5 and cement mill 5. Those structures were part of an expansion programme financed by TCL from external sources. The operating lease charge is accounted for on Caribbean Cement's financial statements as an expense. Without that expense, Caribbean Cement's earnings before interest, taxes, depreciation and amortisation (EBITDA) would be boosted by around US$31,386/yr.

TCL owns 74% of Caribbean Cement and, as the situation now stands, it is the only shareholder benefiting from payouts from the Rockfort plant, said Subratie.

Pakistan: Sindh, a Province of Pakistan, has claimed that it will establish cement plants based on new technology with 0% pollution and low energy consumption.

The Sindh government has signed Memorandum of Understanding (MoU) with Sinohydro Corporation and Deer International Group. It will bring US$250m of foreign direct investment, create 2500 new job opportunities, generate tax revenue of US$28.4m/yr, improve peripheral economic investment and offer top quality and cheaper cements to fulfil the demand of infrastructure projects. Chairman of Deer International Group, Qaim Ali Shah, said that since Sinohydro Corporation was the world's largest water conservancy and Hydro Power Construction Company, it could efficiently exploit the indigenous resources available at Sindh.

Rwanda: PPC has commissioned its 600,000t/yr cement plant in Rwanda to offset declining sales in South Africa as its expansion into African cement markets gathers pace. The company plans to derive 40% of its revenues from the rest of Africa by 2017.

"We see the population doubling and becoming wealthier, a lot of infrastructure spend taking place and new cities being built that aren't there today," said Darryll Castle, PPC's Chief Executive. "If we can maintain our market share and exposure in Africa, we have to double the size of the business in well under 10 years. We see Africa as a very positive environment and PPC becoming a major player in a big growth area."

Castle said that the company ultimately saw PPC as a global player, but were focusing on Africa first, although it would be open to global opportunities when they arose. The new vision is for PPC to become a world-class supplier of materials and solutions to the basic services sector and establish a vertically-integrated materials business. This business unit will house PPC's ready-mix, aggregates and related building materials businesses to offer clients end-to-end solutions. A bolt-on acquisition has been earmarked for early 2016. Castle stressed that 70 – 80% of PPC's focus would remain on its core product of cement, but over time it would gain earnings and revenue that was not currently core to its business.

According to Castle, construction of the US$280m, 1Mt/yr cement plant in the Democratic Republic of Congo and the US$85m, 700,000t/yr mill in Harare were progressing well, with both on track for commissioning at the end of 2016. He said that the 1.4Mt/yr cement plant in Ethiopia would cost around US$170m, with commissioning scheduled for the second quarter of 2017.

Ethiopia: Dangote Cement is to invest US$450m to double its current production capacity to 5Mt/yr at its Oromia Plant. The Nigerian cement producer has already received a 36ha plot of land from Oromia State, near the plant's site in Mugher, Adebern Wereda.

The company requested the land from Oromia Investment Commission in September 2015. Now it is processing right of way issues at Wereda level. The new plant will employ 1300 people when it is completed, according to All Africa. The company also intends to open a bag factory to supply packaging for Dangote and others.

Ethiopia is estimated to have a cement production capacity of 15.1Mt/yr yet actual production is only 10Mt/yr. Cement production capacity is expected to reach 27Mt/yr by the end of country's second Growth and Transformation Plan.

Portugal: Cimpor has reported that its net loss grew by 52.5% year-on-year to Euro26.7m in the third quarter of 2015. The quarterly loss follows a general trend for the year as a whole. Sales volumes, revenue and profit are all down for both the third quarter and the year. The InterCement subsidiary has blamed the result on the slowdown of the Brazilian economy.

Cement and clinker volumes fell by 9.7% year-on-year to 7.07Mt in the third quarter of 2015. Sales revenue fell by 11.8% to Euro625m. Earnings before interest, taxes, depreciation and amortisation fell by 32.5% to Euro116m. For the first nine months of 2015, cement and clinker volumes fell by 7.2% to 21.1Mt. Sales revenue fell slightly by 1.2% to Euro1.93bn. EBITDA fell by 14.2% to Euro396m. Net loss grew by 90.2% to Euro33.7m.

By geographical area, Cimpor suffered from reduced demand for cement in Brazil due to the poor economy, along with increased competition and higher thermal costs. Elsewhere, some slowing has been observed in Africa in the third quarter as a result of one-off situations in Egypt, where an intensification of competition has lead to a fall in market prices, and Mozambique, where profitability was restricted by local energy limitations and the increase of costs pegged to the dollar.

Malaysia: Lafarge Malaysia has seen its profit rise by 28% year-on-year to US$16m for the third quarter of 2015. The boost has been attributed to higher sales revenue from its cement segment, improved plant performance, and higher foreign exchange gains. Overall revenue grew slightly to US$155m for the quarter. Lafarge Malaysia commented that the outlook for the construction sector remains positive in 2015.

Pakistan: The Ministry of Commerce has initiated World Trade Organisation (WTO) dispute settlement proceedings to fight South African anti-dumping duties on cement from Pakistan. The basis of Pakistan's argument is that the injury determination mechanism followed by South African authorities (ITAC) is flawed and does not reflect true analysis of the situation.

The Pakistan challenge has raised the issue that the South African authorities used an extended period of investigation of four years for causation analysis and didn't properly examine the evidence in the light of trends over that period. In addition, Pakistan considers that South Africa failed to examine the relationship between the alleged dumping and the worsening of the condition of the domestic industry especially by failing to consider the effects of the decartelization of the domestic cement producers. It also accuses South Africa of not properly examining the entire product under investigation and instead limiting its injury analysis to bagged cement and disregarded sales by the domestic industry of the bulk cement. Finally, the challenge has pointed out that the South African authorities didn't provide a fair opportunity to Pakistani cement exporters to defend their case, denying access to the trade statistics.

In May 2015 South Africa imposed various rates of duties on Pakistani cement exports ranging from 15 – 68% plus anti-dumping duty on the import of Pakistani cement. Since March 2015 Pakistan has been pursuing the matter on a legal and diplomatic basis.