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LafargeHolcim has stopped clinker production at its Voskresenskcement plant in the Moscow region of Russia. The move is part of reorganisation of the company's structure in Russia following market contraction. LafargeHolcim warned of declining cement volumes in its third quarter report for 2015 blaming a 'volatile' economic situation and low oil and gas prices negatively affecting construction activity.

Lafarge, before the merger with Holcim, reported that its cement volumes in Russia grew by 9% in 2014 compared to 2013 owing to the opening of its 2Mt/yr Ferzikovo plant in the Kaluga region in May 2014. It noted at that time that the construction market had slowed down in the fourth quarter of 2014. The Voskresenskcement plant had a Euro5m FLSmidth electrostatic precipitator fitted on one of its kilns in June 2014. This was part of a Euro60m upgrade project on Lafarge Russia's cement plants between 2008 and 2013. Also, in the run-up to the merger Lafarge Holcim sold its UralCement plant in Korkino to Buzzi Unicem.

LafargeHolcim is a relatively small player in the Russian cement industry but its experiences may be symbolic. Eurocement, the Russian market leader with 33% of cement production capacity, forecast that cement consumption in the country might fall by 5 – 10% in 2015. At that time, in June 2015, Eurocement president Mikhail Skorokhod blamed the high cost of borrowing and its effects on slowing new construction projects. Previously, the Russian Cement Association predicted that it expected domestic cement consumption to fall by 15% in 2015.

Unfortunately, it looks like the most pessimistic end of Eurocement's forecast may be correct. CMPRO data shows that cement consumption fell by 9.4% year-on-year to 49Mt in the first nine months of 2015. Data is yet to be publicly released for December 2015 but the cumulative totals for the first eleven months of 2015 hold with that decrease in cement consumption. Prior to this Russian cement production and consumption had been growing annually since 2009.

Particular declines in cement consumption for the first nine months of 2015 have been reported in the Volga Federal District, the Siberian Federal District, the Ural Federal district and the Northwestern Federal District of Russia. However, it should be noted that these regions had all had a production deficit of cement for most of 2010 to 2013 according to EY analysis. These regions all had cement oversupply problems during the boom years of growth and are now suffering even more as the market contracts. The three biggest cement producing regions in Russia are the Central Federal District followed by the Volga Federal District and then the Siberian Federal District.

Alongside all of this, Eurocement planned to sign US$280m of contracts with Sinoma in November 2014 to build new clinker production lines at three plants. This followed an earlier US$580m set of deals with CNBM and Sinoma to build new plants. On 1 February 2016 Rolt Company announced that it had started project development on four power plants for Eurocement.

Eurocement's financial status is unknown but it may now be regretting all that spending. Last week, on 25 January 2016, Sherbank CIB announced that it held 6% of LafargeHolcim's shares following a repurchase deal with Eurocement. This follows a request for a US$634m loan from Sherbank in mid-2015. Unless growth resumes in the construction market it may have paid over US$850m to build new cement plants at the peak of the Russian market. Add in currency exchange effects and 2016 may be a bumpy year for Eurocement and the Russian cement market as a whole.

India: Kakatiya Cement Sugar & Industries has appointed Shri P Veeraiah as its chairman and managing director effective from 3 February 2016. He was previously the joint managing director of the company. The appointment has been made following the death of Shri P Venkateswarlu. It is subject to the approval of shareholders, which is expected to be obtained at the next annual general meeting.

UK: Untha UK has appointed Marcus Brew as its new managing director. Brew was previously the sales director. The previous managing director since 1997, Chris Oldfield, will become the company chairman.

"Having been a part of the business for seven years, it is a pleasure to now lead the company through our next phase of growth. In truth, Chris and I won't feel much of a change, as we've both been concentrating on these responsibilities for some time – the new titles are really just a formality," commented Brew.

Mexico: Cemex has announced its results for the fourth quarter and full year 2015. On a like-for-like basis, for ongoing operations and adjusting for currency fluctuations, consolidated net sales increased by 2% during the fourth quarter of 2015 to US$3.4bn. They rose by 5% for the full year to US$14.1bn. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) (also on a like-for-like basis) increased by 7% during the fourth quarter to US$663m and went up by 9% for the full year to US$2.6bn.

The increase in consolidated net sales, on a like-to-like basis, was due to higher prices of Cemex's products, in local currency terms, across most of its operations, as well as higher volumes in the US, the Mediterranean and Asia. On a like-for-like basis, operating earnings before other expenses, net, in the fourth quarter increased by 11% to US$410m and in the full year increased by 17% to US$1.7bn versus the same periods in 2014.

Fernando A Gonzalez, Cemex Chief Executive Officer, said, "Despite a challenging macroeconomic environment, which has affected many of our markets, our industry and Cemex in particular, we have been able to meet these challenges and deliver strong operating and financial results, on a like-to-like basis."

"Our full-year net income was positive for the first time in six years. In addition, our operating EBITDA increased by 9%, on a like-to-like basis, reflecting our cost-reduction program of US$150m as well as a positive operating leverage in several of our markets, which translated into a 1.1 percentage-point improvement in operating EBITDA margin. I am particularly pleased with the growth in our free cash flow after maintenance capex of more than US$480 million, which enabled us to reduce our debt by close to US$1bn during the year."

Sales in Cemex's Mexican operations decreased 19% in the fourth quarter of 2015 to US$672m, compared with US$827m in the fourth quarter of 2014. Operating EBITDA decreased by 10% to US$231m versus the same period of last year.

Cemex's operations in the United States reported net sales of US$967m in the fourth quarter of 2015, up by 5% from the same period in 2014. Operating EBITDA increased 26% to US$173m in the quarter, versus US$138m in the same quarter of 2014.

In Northern Europe, net sales for the fourth quarter of 2015 decreased 18% to US$738m, compared with US$901m in the fourth quarter of 2014. Operating EBITDA was US$71m for the quarter, 14% lower than the same period of 2014.

Fourth-quarter net sales in the Mediterranean region were US$370m, 4% higher compared with US$357m during the fourth quarter of 2014. Operating EBITDA decreased 5% to US$63m for the quarter versus the same period in 2014.
Cemex's operations in South, Central America and the Caribbean reported net sales of US$436m during the fourth quarter of 2015, representing a decrease of 15% over the same period of 2014. Operating EBITDA decreased 25% to US$125m in the fourth quarter of 2015, from US$165m in the fourth quarter of 2014.

Operations in Asia reported a 4% increase in net sales for the fourth quarter of 2015 to US$162m, versus the fourth quarter of 2014, and operating EBITDA for the quarter was US$46m, up by 4% from the same period of 2014.

India: LafargeHolcim has confirmed that it is considering selling its subsidiary Lafarge India. The sale will require the approval of the Competition Commission of India (CCI) as an alternate remedy for the merger of the Group's legacy companies. Lafarge India has a cement production capacity of 11Mt/yr.

The announcement follows a regulatory filing by Birla Corporation stating that is considering taking legal action against LafargeHolcim for stopping a previous deal. However, LafargeHolcim has not said why it terminated the deal with Birla Corporation.

Originally LafargeHolcim was in discussion with Birla Corporation for the sale of the Jojobera and Sonadih cement plants in Eastern India that was previously announced. Both plants had a combined cement production capacity of 5.1Mt/yr. Due to the current regulatory issues relating to the transfer of mining rights captive and critical to the two plants, LafargeHolcim was obliged to submit an alternate remedy to the CCI to ensure compliance with the order.

LafargeHolcim now says that an 'alternate remedy' is under consideration by the CCI.

Philippines: Cement sales volumes grew by 14.3% to 24.4Mt in 2015 according to the Cement Manufacturer's Association of the Philippines (CEMAP). The sales volume was 21.3Mt in 2014. In the fourth quarter of 2015 cement sales rose by 16.6% year-on-year to 6.1Mt from 5.2Mt in the same period in 2014.

CEMAP president Ernie Ordonez attributed the growth to higher investments in construction of the public sector backed with the private sector's confidence in the government, new housing projects with low interest rates and better weather in 2015.

India: Birla Corporation said it will take legal action against Lafarge India over the firm's 'inability' to go ahead with the deal to sell its Jojobera and Sonadih cement plants. In August 2015 both firms signed an agreement, through which Birla Corporation was to acquire Jojobera and Sonadih cement businesses from Lafarge India for US$734m.

"Lafarge India has since informed its inability to proceed with the agreement. The company has since discussed the matter with its legal advisors and has decided not to accept its contention and is in the process of taking appropriate legal measures in consultation with lawyers," said Birla Corporation in a regulatory filing. The firm did not specify reasons behind Lafarge India expressing its inability to complete the deal.

Birla Corp was to acquire Lafarge India's cement business, which comprises an integrated cement unit at Sonadih, Chhattisgarh, a cement grinding unit at Jojobera, Jharkhand along with Concreto and PSC brands. The acquisition would have added an additional cement capacity of 5.15Mt/yr to Birla Corp and would have helped the firm consolidate its position in the eastern India cement market. The company has a total operational cement capacity of about 10Mt/yr with plants in Rajasthan, Madhya Pradesh, Uttar Pradesh and West Bengal.

Ghana: The Ghanaian Ministry of Trade and Industry (MTI) has announced that it will investigate Dangote Cement's operations, following allegations of predatory pricing made by Diamond Cement, according to the This Day newspaper. A ministry spokesman said that it was looking at the 'price of input' in manufacturing cement.

"There was no way Dangote could produce in Nigeria, bring goods into Ghana, pay tariffs and still sell at a price lower than Diamond Cement," said Ahmad Nasir, Deputy Communications Manager at the MTI. Diamond Cement are reported to have complained that competition from Dangote has reduced its cement production from 1.8 million bags to 1.3 million bags.

Peru: UNACEM has reported that its profit fell by over 50% to US$40m in 2015 from US$83m in 2014. The Peruvian cement producer blamed lower output, rising costs and a foreign exchange loss in a report to a regulator.

Sales rose by 3.4% to US$429m in 2015. However, cement production fell by 2.7% to 5.57Mt. Clinker output fell by 7.3% to 5.72Mt. The company attributed this to delays in infrastructure projects such as Line No. 2 of the Lima metro and a decline in homebuilding. Exports dropped by 5.2% to 0.97Mt.

UNACEM said that its domestic market share slipped to 49.6% in 2015 from 49.9% the previous year. Peru's cement production fell 2.5% to 10.4Mt in 2015, according to the cement producers' association Asocem. National exports increased to 0.36Mt from 0.31Mt.

Egypt: Suez Cement plans to spend US$77m to convert its Helwan and Torah cement plants to use coal and refuse derived fuel (RDF), according to local media. The Kattameya and Suez cement plants were converted in 2015.

The company intends to start the conversion process in February 2016 at Helwan and July 2016 at Torah. The upgrade is expected to take 12 - 18 months. Subsequently both plants would use 70% coal for their energy. Helwan Cement will supplement this with 20 – 25% RDF and 5% natural gas. Torah Cement will use 30% heavy fuel oil. These conversions are expected to reduce the company's operating costs.