Displaying items by tag: HeidelbergCement
HeidelbergCement publishes first financial report with inclusion of Italcementi assets
09 November 2016Germany: HeidelbergCement has reported its first financial results following the completion of its takeover of Italcementi in mid-October 2016. Its revenue rose by 8% to Euro10.9bn in the first nine months of 2016 from Euro10.1bn in the same period in 2015. Its earnings before interest and taxation (EBIT) rose by 1.7% to Euro1.40bn from Euro1.38bn. However, its profit fell by 3% to Euro738m from Euro763m. The boost in sales revenue was attributed to the integration of Italcementi into the group but the drop in profits was blamed on higher taxes in North America.
Cement sales volumes grew by 21% to 73Mt from 60.6Mt. Although, on a like-for-like basis, with adjustments consolidation effects, this was reported as 2.5%. Particular growth was reported in the Western and Southern Europe territory due to the influx of new assets from Italcementi. The group’s sales revenue from cement grew by 12% to Euro5.24bn from Euro4.66bn.
HeidelbergCement appoints new board of directors for Italcementi
26 October 2016Italy: HeidelbergCement, the sole shareholder of Italcementi, has appointed a new board of directors its subsidiary at a shareholder meeting on 19 October 2016. The new members are Luca Sabelli as chairman, Dominik von Achten as executive vice president, Lorenz Näger as executive vice president and Roberto Callieri as chief executive officer.
On 12 October 2016, HeidelbergCement purchased the remaining Italcementi shares that had not been tendered in the mandatory tender offer. From this date HeidelbergCement became the sole shareholder of Italcementi and owns 100% of the share capital. Italcementi shares were delisted from the Italian Stock Exchange on the same day.
Belgium: HeidelbergCement has completed the sale of its operations in Belgium, primarily consisting of Italcementi’s subsidiary Compagnie des Ciments Belges (CCB) to an affiliate of Cementir Holding. The European Commission has approved the agreement.
“With the disposal of the Belgium assets we fulfill the obligation of the European Commission and improve the net financial position of HeidelbergCement after the acquisition of Italcementi,” said Bernd Scheifele, CEO of HeidelbergCement.
HeidelbergCement and Cementir Holding announced the sale on 25 July 2016. The transaction has an enterprise value of Euro312m on a cash and debt-free basis.
Siemens wins Materials Handling Engineers’ Association’s Innovation Award for work at Hanson UK cement plants
20 October 2016UK: Siemens has won the Materials Handling Engineers’ Association’s (MHEA) first Innovation Award for its work on energy efficiency savings at three Hanson UK plants. The work focused on fan and control improvements made to the clinker cooler and kiln systems at three Hanson UK sites, which have saved the company nearly Euro2m in energy savings and reduced CO2 emissions. The award was presented at the MEHA’s BULKEX conference in October 2016.
“It’s great to be recognised for this innovative work, where companies can enjoy long-term benefits from process improvements, and we’re particularly pleased to be the first recipients of this award,“ said Siemens application specialist Gary Palmer who worked on all three of the Hanson upgrades.
Croatian competition
12 October 2016The European Commission’s decision to investigate Duna-Dráva Cement’s (DDC) purchase of Cemex Croatia sticks out in a busy news week. There have been a few noteworthy news stories this week from the Indonesian government making preparations to fight overcapacity, LafargeHolcim retreating from Chile, Cemex restructuring its management in Colombia after investigations into a land deal and the announcement of merger plans between two of the larger refractory manufacturers. Yet the commission’s probe is a response to what may be in effect a ‘land grab’ by DDC. How on earth did HeidelbergCement and Schwenk, the joint-owners of DDC, think they were going to pass this one past the relevant competition bodies?!
As the commissions describes it, the “proposed transaction would combine Cemex Croatia, the largest producer in the area, and DDC, the largest importer.” So far, so bad. Then add the observation that Cemex Croatia and LafargeHolcim control all the cement terminals in ports along the Croatian coast. Cemex has three cement plants in the south of the country with no nearby competition. Giving the owners of DDC those assets ties up the market southern Croatia nicely. Understandably, the European Commission has concerns.
Croatia has five cement plants. LafargeHolcim runs a 0.45Mt/yr plant at Koromačno and Nasicecement run a 0.6Mt/yr plant at Nasice. Cemex’s three plants are all in the south near Split within about 10km of each other. When Global Cement visited in late 2014 Cemex Croatia told us that the plants were so close together that the company considered them as one plant. The sites also share one quarry for their raw materials. Only one of three plants, Sv Juraj the largest, has a bagging unit and Sv 10 Kolovoz was mothballed due to poor market demand. Together the plants have a cement production capacity of 1.92Mt/yr. This gives Cemex 65% of the market by production capacity.
Describing the three plants as one certainly makes sense for a company that might have been considering selling them. However, it is a fair comment given the close proximity of the plants to each other and the joint-capacity below that of some of the larger single site multi-kiln plants around the world. In this sense, the real questions for the European Commission will be how much of a dent to competition will it make to hand over the area’s main importer to the area’s main producer?
Graph 1: Cement consumption in Croatia, 2011 - 2015 (Mt). Source: Croatian Bureau of Statistics.
Looking at the national cement market since 2011 in Graph 1 using data from the Croatian Bureau of Statistics, sales volumes fell to a low in 2013 and have picked up since then, although not to the same levels. Prior to this cement sales halved from 2008 to 2013. Under these kinds of conditions Nexe Grupa, the owner of Nasicecement, filed with pre-bankruptcy settlements in 2013. HeidelbergCement expressed interest in the cement assets around this time, although nothing eventually happened. Imports of cement grew by 11% year-on-year to 312,000t in 2015 from 280,000t in 2014. This compares to a 1% increase to 2.36Mt in domestic cement sales in 2015.
As the commission suggests, combining the region’s biggest producer and its biggest importer seems like a recipe for reduced competition and inflated prices. This could be mitigated, in theory, if DDC decided to flood the region with imports from HeidelbergCement’s new assets from Italcementi once it completes its purchase of that company. Although a dominant player in a region undercutting its own prices seems far fetched. Theoreticals aside, it seems very unlikely that the European Commission will let the purchase go ahead without taking some sort of action.
European Commission starts investigation into HeidelbergCement and Schwenk's joint acquisition of Cemex Croatia
11 October 2016Croatia: The European Commission has opened an investigation to check whether the proposed acquisition of Cemex Croatia by HeidelbergCement and Schwenk is in line with the European Union (EU) Merger Regulation. The commission has concerns that the proposed takeover may reduce competition for grey cement in Croatia. It will make its decision by 23 February 2017.
"The construction sector, like any other sector, needs competition. As cement is an essential part of the sector we need to make sure that consolidation does not lead to higher prices for construction companies and ultimately consumers in Croatia," said commissioner Margrethe Vestager.
The commission has concerns regarding the supply of grey cement in southern Croatia, including Dalmatia in particular, where Cemex Croatia operates three cement plants in Split and faces competition from DDC's imports from Bosnia and Herzegovina, which is not an EU member. The proposed transaction would combine Cemex Croatia, the largest producer in the area, and DDC, the largest importer. The commission's initial investigation indicates that the proposed transaction may remove a significant competitor from an already concentrated regional market.
The remaining actual or potential suppliers may exercise only limited competitive pressure on the merged entity because of the transport costs to reach southern Croatia. Additionally, the domestic cement suppliers Cemex Croatia and LafargeHolcim control all the cement terminals in ports along the Croatian coast. The commission has preliminary concerns that the transaction may strengthen the market power of Cemex Croatia in southern Croatia and result in price increases for grey cement.
HeidelbergCement and Schwenk plan to acquire, via their joint subsidiary DDC, assets in Croatia and Hungary that currently belonging to Cemex. The Hungarian part of the transaction as been referred to the Hungarian competition authority, so the commission's investigation will focuses on the acquisition of Cemex's Croatian assets.
Canada: The board of directors of Italcementi have met in Milan, Italy and have decided on integrate its operations in the Canadian market with the operations of HeidelbergCement, which from 1 July 2016 has been holding the majority stake in Italcementi and will take over the entire company following a mandatory takeover bid. The transaction involves the acquisition by Canadian Lehigh Hanson Materials (LHM), indirectly owned by HeidelbergCement, of the entire share capital, including ordinary and preference shares, of US-based Essroc Canada, which is indirectly owned by Italcementi, through vehicle company Essroc Netherlands. The price which Essroc will receive for the sale of Essroc Canada to LHM, equal to some US$281m, will be paid by assigning to Essroc 42,288 LHM shares of the new issue, or 15.5% in LHM share capital, and for the remainder - in cash US$151,000.
Italy: Industry minister Carlo Calenda has said he is a ‘little’ worried about the intentions of HeidelbergCement to reduce its business in Italy after it buys Italcementi. The government is negotiating with HeidelbergCement about the purchase and it has confirmed its readiness to support investments, according to the Il Sole 24 Ore newspaper. The government has also asked the German construction materials producer to make a wish list and has launched a series of meetings.
Hanson Permanente Cement files for bankruptcy
05 October 2016US: Hanson Permanente Cement has filed for Chapter 11 bankruptcy with the US Bankruptcy Court in the Western District of North Carolina. The cement producer based in California has blamed the move on liabilities related to the sale of products containing asbestos since 1978. As of 31 August 2016, the debtors were defendants in approximately 14,000 pending asbestos-related bodily injury lawsuits filed in state courts across the country, according to New Generation Research. Hanson Permanente Cement’s Chapter 11 petition indicates total assets greater than US$100m.
HeidelbergCement starts upgrade at Kaspi Plant
29 September 2016Georgia: HeidelbergCement has started work to upgrade its Kaspi plant with a new dry-process production line. The project officially started on 27 September 2016 with Prime Minister Giorgi Kvirikashvili laying a foundation stone at the site.
“We welcome that today HeidelbergCement is starting an US$100m investment project on the Kaspi plant for full modernisation of the plant and constructing a dry line for clinker production. This project will make the production process more efficient,” said Kvirikashvili.