Displaying items by tag: GCW649

Cement producers appear to have doubled down on the lessons they learned in 2022 by seeking profits wherever they could in 2023, despite stagnant markets in certain key places. Even with sales volumes of cement going down for most of the multinational cement companies covered here, revenues and earnings rose through price rises or business realignment.

Heidelberg Materials can often be relied upon to sprinkle a bit less sugar on its financial commentary compared to some of its competitors. Thus it is always worth reflecting on what it says. In its view, “In 2023, high inflation rates across the globe, increased financing costs, and persistently high energy and raw material prices significantly impaired construction activity and thus demand for our building materials. The decline in demand in private residential construction, which was massive in some cases, could not be offset by a solid development in industrial commercial construction and infrastructure projects.” Other opinions are available.

Graph 1: Sales revenue from selected cement producers in 2022 and 2023. Source: Company reports. Note: Figures calculated for UltraTech Cement.

Heidelberg Materials is notably missing in Graph 2 (below), though as the company is likely to be holding back its cement sales volume numbers until it releases its full annual report for 2023 towards the end of March 2024. However, Holcim and Heidelberg Materials reached similar sales volumes of cement in 2022 and this looks likely to have continued in 2023, or even gone further. Holcim divested its India-based and Brazil-based operations in 2022 and Africa-based ones in South Africa, Tanzania and Uganda in 2023. Heidelberg Materials has also slimmed down, albeit at a slower pace, with the sale of its businesses in Southern Spain in 2022 and The Gambia in 2023. Note that CRH and Holcim have swapped places in terms of sales revenue from 2022 to 2023. 65% of CRH’s sales came from its Americas divisions.

The outlier here is UltraTech Cement. It increased its sales volumes as the India-based market continues to push forward. Dangote Cement, meanwhile, delivered a surprise with a fall in volumes, due to poor trading at home in Nigeria. Sales outside of Nigeria grew significantly though. A real key moment for the evolution of Dangote Cement as a multinational player will be when its sales, volumes and earnings outside of Nigeria surpass those from back home. It’s not there yet but it looks likely to happen in the next few years.

Graph 2: Cement sales volumes from selected cement producers in 2022 and 2023. Source: Company reports. Note: Figures calculated for CRH and UltraTech Cement.

The progress of the construction market in the US compared to elsewhere has wielded an outsized effect on balance sheets for companies. Signs of this have been apparent for several years but it really picked up in 2023 with CRH switching its primary listing to the US in September 2023 and then Holcim announcing that it is planning to spin-off its North American business (for more on this see GCW 645). Heidelberg Materials was asked during its analysts’ conference call for its 2023 financial results what its plans were for the US. Chair Dominik von Achten said he was against splitting the business off from the rest of the group but that all other options were on the table. Various media outlets have interpreted this to mean that an initial public offering in the US is a likely possibility.

What Cemex does with this situation, if anything, might be worth watching. The company is already North America-focused. Its key markets are in Mexico, the US and Europe, and it is already listed in Mexico and the US. Subsequently in 2023 the market in Mexico bounced back and operating earnings rose sharply in both Mexico and the US. Finally on this theme, Buzzi, the fifth largest cement producer in the US by capacity, may also face a similar dilemma to its peers about what to do with its largest earning business area.

The increasing dominance of the US market for western-based multinational cement producers may be accelerating a trend towards large regional companies everywhere. China-based cement players already dominate the top 10 list of the world’s largest cement producers by capacity. Companies from India and elsewhere are on the way to do likewise as they grow and concentrate on one geographic area. The situation in the US meanwhile is persuading the multinationals to do the same thing in reverse as they reconfigure themselves based on market demand. In financial terms, this may mean chasing growth in the US, learning to cope with high carbon prices in Europe or diversifying away from heavy building materials. Elsewhere, despite the proliferation of regional giants, such as the China-based cement companies, few seem keen to become truly multinational in a hurry, although opportunities, such as the ongoing sale of InterCement in Brazil or CRH’s acquisition of AdBri in Australia, are still present.

Global Cement Weekly will return to look at the large China-based cement companies when they release their financial results later in March 2024

Qatar: Al Jabor Cement has appointed Rizwan Khan as its General Manager.

He previously worked as the chief financial officer for Al Jabor Cement. Prior to this he held financial and analytical roles for LafargeHolcim in the UAE and Saudi Arabia from 2009. Earlier in his career he worked for Emirates Flight Catering from the late 1990s. Khan holds a master in business administration qualification with a focus on finance from the University of Bradford in the UK.

Al Jabor Cement has been an affiliate company to Holcim since 2003 when it formed a strategic partnership. It also uses the name Holcim Cement Qatar.

Denmark: Norway-based Geminor has appointed Per Mernelius as Country Manager for Geminor Denmark. He succeeds Kasper Thomsen in the position, who was recently appointed as the Operations Director for Geminor Group. Mernelius is currently the Country Manager for Sweden and he will add the new responsibilities to this role. Initially, he will be in charge of the Danish market for 12 months, pending the appointment of a new country manager in Denmark.

Mernelius commented “Denmark and Sweden are our two biggest downstream markets, with nearly 1Mt of imported refuse-derived fuel/solid recovered fuel in 2023. As such, many similarities open up for synergies in the coming year. An important factor is logistics, and how we can coordinate the two markets for more efficient operations. Our ambition is to grow further and to cater for the existing over-capacity within energy recovery in Scandinavia.”

Mernelius has worked for Geminor since 2016. Before this he worked for Sweden-based energy supplier Jönköping Energi. He is a graduate of the Swedish University of Agricultural Sciences.

Nigeria: Lafarge Africa revealed its 2023 financial results, with profit dropping by 4.7% year-on-year to US$32.6m, compared to US$34.2m in 2022.

CEO Lolu Alade-Akinyemi said “The fundamentals of our business remain strong in spite of extremely challenging macroeconomic headwinds.”

Egypt: The Arabian Cement Company has reported a 36% year-on-year rise in its sales, reaching US$124m in 2023. Profits also saw a substantial jump, up by 94% to US$14.3m in 2023 from US$7.37m in 2022.

Czech Republic: Engineering company Aliacem started trial operation in February 2024 of an upgrade project to the preheater at Cement Hranice’s integrated plant. The project was reportedly completed on schedule, met quality standards and occurred without any injuries. Cement Hranice is a subsidiary of Italy-based Buzzi.

Netherlands: EMC Cement and HES International plan to build a 1.2Mt/yr plant in Amsterdam to produce an alternative cement that contains 70% volcanic ash. The cement will also include recycled concrete fines. Production will be carbon neutral and consume 90% less energy than traditional ordinary Portland cement production. The Amsterdam plant is scheduled for commissioning by early 2026.

EMC Cement CEO Atle Lygren said "Our EMC Technology, by replacing 70% of Portland cement clinker, enables significant climate action without the need for costly carbon capture and storage, aligning with the demands of the United Nations Framework Convention on Climate Change and the Intergovernmental Panel on Climate Change."

Spain: Cemex España plans to install a new tertiary mill in its Alicante cement plant’s refuse-derived fuel (RDF) line. The project, called Molentis, is scheduled for completion in early 2025 and will cost €6m. The Molentis upgrade will help the Alicante cement plant to raise its RDF substitution rate by 8%, according to the producer. This in turn will reduce its CO₂ emissions by 6700t/yr. The Spanish Ministry of Industry, Energy and Tourism granted €4.4m toward the project to Cemex España under its Innovation and Sustainability Plan.

Cemex España director of operations Benjamín Cabrera said "Molentis will enable us to advance towards climate neutrality and position the Alicante factory at the forefront of new technologies in the decarbonised industry."

India: Everest Industries is constructing a fibre cement boards and wall panels plant in Chamarajanagar district, Karnataka, with an investment of US$22.6m. The new facility, located on an 8.09 hectare plot in the Kellambali-Badanaguppe industrial area, will be operational later in March 2024. It will produce 72,000Mt/yr of fibre cement boards and 19,000Mt/yr of Rapicon wall panels. The company specialises in the production of fibre cement boards.

The plant is expected to generate 127 job opportunities.

India: Adani Group will invest US$603m in the construction of a 4Mt/yr clinker plant at Chorgadi and grinding plants in Dewas and Bhopal. The combined capacity will be 8Mt/yr. The move is part of a US$9bn investment which the company says will create 15,000 jobs across various sectors.