Displaying items by tag: GCW263

LafargeHolcim was the last major European cement producer to release its second quarter financial results last week. The collective picture is confused. Cement sales volumes have risen but sales revenue have fallen.

Most of the producers have blamed negative currency effects for their falls in revenue during the first half of 2016. Holding a mixed geographical portfolio of building materials production assets has kept these companies afloat over the last decade but this has come with a price. The recent appreciation of the Euro versus currencies in various key markets, such as in Egypt, has hit balance sheets, since the majority of these firms are based in Europe and mostly use the Euro for their accounting. Meanwhile, sales volumes of cement have mostly risen for the companies we have examined making currency effects a major contributor.

Graph 1 - Changes in cement sales volumes for major non-Chinese cement producers in the first half of 2016 compared to the first half of 2015 (%). Data labels are the volumes reported in 2016. Source: Company reports.

As can be seen in Graph 1, sales volumes have risen for most of the producers, with the exception of LafargeHolcim. Despite blaming shortages of gas in Nigeria for hitting its operating income, LafargeHolcim actually saw its biggest drop in sales volumes in Latin America by 13.2% year-on-year to 11.8Mt. The other surprise here was that its North American region reported a 2.7% fall to 8.8Mt with Canada the likely cause. Vicat deserves mention here for its giant boost in sales volumes due to recovery in France and good performance in Egypt and the US, amongst other territories.

Graph 2 - Changes in sales revenue for major non-Chinese cement producers in the first half of 2016 compared to the first half of 2015 (%). Data labels are the sales reported in 2016. Source: Company reports.

Overall sales revenue for these companies presents a gloomier scenario with the majority of them losing revenue in the first half of the year, with most of them blaming negative currency effects for this. Titan is included in this graph to show that it’s not all bad news. Its growth in revenue was supported by good performance in the US and Egypt. Likewise, good performance in Eastern Europe and the US helped Buzzi Unicem turn in a positive increase in its sales revenue. They remain, however, the exception.

Looking at sales revenue generated from cement offers one way to disentangle currency effects from performance. Unfortunately, only about half of the companies looked at here actually published this for the reporting period. Of these, LafargeHolcim reported a massive rise that was probably due to the accounting coping with the merger process that finalised in 2015. Of the rest - HeidelbergCement, Italcementi and Vicat – the sales revenue from each company’s cement businesses fell at a faster rate than overall sales. Like-for-like figures here would help clarify this situation.

Meanwhile, a mixed global patchwork of cement demand is focusing multinational attention on key countries with growing economies like Egypt and Nigeria. Both of these countries have undergone currency devaluation versus the Euro and are facing energy shortages for various reasons. The exposure of the multinational cement producers to such places may become clearer in the second half of the year.

Switzerland: Alain Bourguignon, region head for North America, and Ian Thackwray, region head for Asia Pacific will leave LafargeHolcim following a reorganisation of its executive committee. The group said the changes reflected an evolution of its portfolio following recent divestments and the closure of its integration phase following the merger between Lafarge and Holcim.

Pascal Casanova, currently responsible for the Latin America Region, will take responsibility for North America including Mexico. Roland Köhler, currently responsible for the Europe Region will add Australia, New Zealand and Trading to his responsibilities. Martin Kriegner, currently responsible for India, will join the Executive Committee and take additional responsibility for South East Asia. Oliver Osswald, currently responsible for our operations in Argentina, will join the Executive Committee with responsibility for Central and South America.

As of 5 August 2016, the executive committee, chaired by Eric Olsen, will be composed of the following members:

• Urs Bleisch, Group Head of Performance & Cost;
• Pascal Casanova, Region Head North America including Mexico;
• Roland Köhler, Region Head Europe & Australia / New Zealand & Trading;
• Martin Kriegner, Region Head India & South East Asia;
• Gérard Kuperfarb, Group Head of Growth & Innovation;
• Caroline Luscombe, Group Head of Organization and Human Resources;
• Oliver Osswald, Region Head Central & South America;
• Saâd Sebbar, Region Head Middle East & Africa and
• Ron Wirahadiraksa, Chief Financial Officer.

Egypt: Arabian Cement has appointed Sergio Alcantarilla as its CEO with effect from 3 August 2016. He succeeds Jose Maria Magriña Vadillo.

Alcantarilla was previously the Chief Operation Officer of Arabian Cement. He graduated from the Superior Industrial Engineering School at the University of Seville in Spain. After entering the cement industry in 2002 he worked for five years as a plant manager in Spain before moving to Egypt in 2009.