Displaying items by tag: GCW672

Votorantim Cimentos released its half-year results this week giving us the opportunity to assess how well some of the larger cement producers are doing so far 2024. The general picture from the western multinational cement companies has been one of sluggish sales in the first half of the year but respectable earnings. So, for example, both Holcim and CRH were reporting static sales or revenue but earnings increases of over 10%. Heidelberg Materials and Cemex noted similar situations.

Graph 1: Sales revenue for selected multinational cement producers in the first half of 2024 and the first half of 2023. Source: Company financial reports.

Holcim was keen to play up that its net sales actually rose on a local currency basis. However, its recurring earnings before interest and taxation definitely rose, by 12% year-on-year to €2.33bn. Net sales were down in both North America and Europe, the group’s main two regions, but earnings were strong in both. Sales revenue for cement and aggregates may have been down across the group but earnings were up sharply. No such luck for ready-mixed concrete though, with both sales and earnings down overall. Another trend to watch is that sales and earnings were both up in the group’s Solutions & Products division. This part of the business has been growing due to merger and acquisition activity, and it is nearly the group’s second largest division after Europe.

CRH reported similar things overall. However, it has been busy selling off its Europe-based lime business, finishing the acquisition of its new assets in Texas and buying a majority stake in Australia-based AdBri. Its Americas Materials Solutions division reported both increasing revenues and earnings in the second quarter of 2024, at least, and the acquisitions in Texas helped too. Revenue in its Europe Materials Solutions division fell by 5% on an organic basis and this was blamed on subdued markets in Western Europe and poor weather.

Heidelberg Materials had a tougher time of it in the first half of 2024, with revenue down by 5% to around €10bn. It attributed the falling revenue to decreasing sales volumes across all business lines. It described its second quarter as follows, “The pressure on volumes is largely attributable to prolonged weak activity in the construction industry and adverse weather conditions in individual core markets. Active cost and price management largely offset the impact.” For clinker and cement this was noticed prominently in Europe despite volumes increasing in North America and Asia-Pacific. However, its result from current operations rose slightly. One reason for this appeared to be a ‘significant’ fall in material costs including energy.

Similarly, Cemex’s net sales were flat but its operating earnings were positive. Drilling down between its main geographical markets revealed a strong market in Mexico, a stable one in the US and declines in Europe, Middle East, and Africa (EMEA). In the US Cemex apportioned falls in cement and ready-mix concrete sales volumes to “...difficult weather conditions, a softening residential sector, portfolio rationalisation, competitive dynamics in certain micro markets and timing of several large projects.” Operating earnings were also hit by higher maintenance costs. In its EMEA region the trend was downwards but this was due to volume declines in Western Europe and geopolitical issues in the Middle East.

Votorantim Cimentos’ net revenue and adjusted earnings were down slightly in the first half of 2024 stemming from softer results in North America and Brazil in the first quarter. Revenue in Brazil was flat for the half year after a better second quarter. Revenue in North America though was hit by a slowdown in demand although price rises staved off some of this. Meanwhile, the group’s Europe, Africa and Asia region reported higher revenue due to higher volumes in most places.

Finally, UltraTech Cement is the odd company out in this group. The size of its annual revenue earns it a place in the list but it is more like some of the large China-based cement companies because it mostly sticks to one territory: India in this case. Yet, its revenue rose by nearly 6% to €4.2bn in the first half of 2024, making it the best performer in this article’s grouping. Domestic sales volumes increased at a similar rate in the April - June 2024 quarter. Similar to Heidelberg Materials, UltraTech Cement also reported that its energy costs fell by 17% year-on-year mainly due to reduced fuel prices. Its profit didn’t grow by much especially but the company is racing against Adani Cement to build capacity. It added 8.7Mt/yr alone in the April - June 2024 period compared to 13.3Mt/yr in its entire 2024 financial year that ended in March 2024.

The picture from the companies covered above suggests that the US market may have cooled for some since 2023. Despite this the earnings have mostly held up and cement companies enthusiasm for the market remains high led by Holcim’s impending market spin-off. Europe has been mixed, with declines in the west and stronger markets towards the east. Energy costs have finally fallen following the market shock when Russia invaded Ukraine in 2022 and this is helping earnings. That last point may be universal here given that it has affected both western multinationals and a large regional player such as UltraTech Cement. That’s it for now. In a future week Global Cement Weekly will take a look at how well the large China-based cement companies have done in so far in 2024.

India: Prism Johnson has appointed Raakesh Jain as Executive Director & CEO (Cement) with effect from 17 August 2024. His appointment will last for three years until mid-2027. He will succeed Vivek K Agnihotri, who has resigned.

Jain holds 30 years of experience in the building material industry working as the CEO of the cement division of Prism Johnson from late 2021. Before this he was the Chief Sales Officer for Nuvoco Vistas. Earlier in his career he spent nearly a decade with Lafarge India in sales roles. Before this he held sales positions for the white cement division of UltraTech Cement from the late 1990s onwards. He is a commerce graduate from Devi Ahilya University and holds a master of business administration in Marketing from Vikram University.

Pakistan: Bestway Cement has appointed Muhammad Danish Khan as its Chief Financial Officer. Khan has worked for Bestway Cement since 2019 first as Head of Budgeting, Treasury and Reporting and then Acting Chief Financial Officer. Before this he worked for Three, the AA, Deloitte and Ernst & Young in the UK. He is a graduate of the Government College University in Lahore and is a chartered accountant.

Finland: Tana has appointed Henri Kinnunen as VP, Product Management and Business. He previously worked as the CEO of WOIMA Corporation, a waste-to-energy engineering company , from 2018 to 2024. Prior to this he worked with Wärtsilä from 2007 to 2017 in both Finland and overseas.

Finland-based Tana operates in the waste management sector producing products such as shredders, compactors and separators.

UAE: Sharjah Cement and Industrial Development raised its sales by 12% year-on-year to US$92m, Reuters has reported. The producer recorded a profit of US$2.61m, compared with a loss of US$1.58m in the first half of 2023.

UAE: RAK White Cement’s revenues declined by 3% year-on-year to US$34.1m in the first half of 2024. Nonetheless, the company more than tripled its net profit, to US$5.3m.

Brazil: Votorantim Cimentos ended the second quarter of 2024 with global net revenue of US$1.3bn, up by 1% from 2023. The company recorded a net profit of US$2.8m, a 10% rise from the same period of 2023. In North America, revenue fell by 13% to US$403m, impacted by reduced demand, though this was partially offset by price increases and improved operational efficiency. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) stood at US$112m, down from US$119m in 2023.

In Latin America, revenue grew by 2%, with Bolivia showing improved volumes. However, adjusted EBITDA dropped by 25% to US$5.3m, affected by tough market conditions in Uruguay and maintenance schedules. In Brazil, revenue was stable at US$586m, with adjusted EBITDA also stable at US$104m, supported by new business growth and cost improvements.

Osvaldo Ayres, global CEO of Votorantim Cimentos, said "At the end of the first half of the year, our results demonstrate the resilience and effectiveness of our diversification and capital allocation strategy. We remain focused on strengthening our structural competitiveness, advancing decarbonisation projects and new businesses, while maintaining our solid financial discipline. We stay on course with our investment plan, aligned with our global strategy and strategic mandate."

Egypt: Cementir Holding’s Aalborg Portland Holding has acquired an additional 25% stake in Sinai White Portland Cement (SWCC) from Sinai Cement Company for approximately €30m. This represents Sinai Cement Company’s entire stake. Following this transaction, Cementir will indirectly hold 96.5% of SWCC’s share capital.

New Zealand: Golden Bay Cement has resolved the breakdown of its Marine Vessel Aotearoa Chief (MVAC) earlier than anticipated, returning the vessel to service after necessary checks with marine authorities. The company made use of alternative transport options to distribute cement and sourced alternative cement supplies due to the disruption.

The earlier resolution has resulted in a reduced impact on earnings, estimated to be on the lower end of US$10m – 30m.

Austria: Alpacem will invest €50m to modernise its Wietersdorf plant, including a new cement grinding plant, reportedly capable of saving up to 21,000t/yr of CO₂ and reducing electricity consumption, according to the Kronen Zeitung. The plant is scheduled for completion and commissioning in 2027. In the future, a new cement silo plant will also be built in the Görtschitztal valley, directly connected to the railroad.

Florian Salzer, technical director at Alpacem Zement Austria said "With this new project, we are investing in a sustainable future and laying the foundations for energy-efficient and environmentally conscious cement grinding."

Managing director Lutz Weber added "Alpacem has a clear goal: CO₂-neutral production by 2035. To achieve this ambitious goal, we need a package of measures and a concrete path."