Displaying items by tag: HeidelbergCement
HeidelbergCement issues Euro625m of debt certificates
15 January 2016Germany: HeidelbergCement has successfully issued debt certificates in the amount of Euro625m, further strengthening its financing structure. Due to high demand, it was possible to significantly increase the issue volume from Euro400m to Euro625m.
The newly-issued debt certificates, with a maturity date of 20 January 2022, consist of two tranches; one tranche with a floating rate and the other with a fixed rate. The fixed rate tranche yields at 1.85%/yr and the floating tranche at 1.5%/yr over six months Euribor.
The proceeds will be utilised to pre-fund the upcoming Italcementi acquisition and thereby reduce the volume of the bridge financing from Euro3.3bn to Euro2.7bn. The refinancing needs in the bond market decline to below Euro2bn, correspondingly.
Issuance of the debt certificates was secured with the assistance of Landesbank Baden-Württemberg, Landesbank Hessen-Thüringen and Raiffeisen Bank International.
As previously reported, the bridge financing should be refinanced by free cash flow, the sale of production sites and the issuance of bonds. The reduction in the volume of bridge financing thus also reduces the need for refinancing in the bond market by the same amount.
HeidelbergCement Ukraine appoints Thiede as Board Chairperson
12 January 2016Ukraine: Dnipropetrovsk-based HeidelbergCement Ukraine has appointed Silvio Thiede as the Board Chairperson, effective from 11 January 2016.
2015 in cement
16 December 2015Here are the major stories from the cement industry in 2015 as the year draws to a close. Remember this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..
Will the year of the mega-mergers pay off?
2015 showed a global cement industry that was consolidating. Amongst the multinational producers Lafarge and Holcim finished their merger and HeidelbergCement announced that it was buying Italcementi. Yet alongside this international trend the large Chinese cement producers, who represent over a quarter of the world's production capacity, have continued their own-government-favoured consolidation. The on-going boardroom scuffles at Shanshui have been a lively example of this.
Where this will leave the cement industry as a whole in 2016 is uncertain but mergers and consolidation are no 'magic bullet' for difficult market conditions. After the fanfare subsided from the launch of LafargeHolcim the first quarterly report emerged in late November 2015 reporting falling net sales, net volumes and profit markers.
BRICing it – growth stalls in Brazil, Russia, India and China
The economies of the BRIC nations – Brazil, Russia, India and China – have all suffered in 2015. Brazil and Russia are enduring recessions. Growth in China and India is slowing down. All of this has a knock on in their respective construction sectors.
Over in China, we report today that production capacity utilisation is estimated to be 65% and that cement companies lost US$2.63bn in the first nine months of 2015. The same source says that at least 500Mt/yr of production capacity needs to be eliminated. That represents nearly a third of Chinese total production capacity or about an eighth of global cement production capacity.
Multinationals African plans accelerate
One consequence of all these international mergers is the transformation of the situation in Africa. Suddenly LafargeHolcim has become the biggest cement producer on the continent, followed by HeidelbergCement, Dangote and PPC. Africa becomes the big hope for the multinationals as established markets continues to flounder and growth in Asian and South American markets slackens. Perversely though, should African development growth slow it may cast a poor light on the mega-mergers of 2015 in the coming years.
Dangote Cement is growing fast and it may overtake HeidlebergCement soon as the second largest cement producer in Africa. Yet it may not be plain sailing for the Nigerian company. As we report today, sources in Gambia say that Dangote's plans to open a cement plant are on hold in part to protect its domestic suppliers.
The Gambian government has denied a licence to Dangote to open a cement plant. Dangote has built its empire in recent years by forcing out cement importers from Nigeria. As it expands in other countries in Africa it may now be facing a backlash to playing the nationalist card at home as other countries too desire 'self-sufficiency' in cement production.
Iran shakes off the sanctions
In July 2015 Iran and the P5+1 countries agreed to lift trade sanctions from Iran. The implications for the local cement industry are immense given that the country was the joint-fourth largest producer in 2014, based on United States Geological Survey data. Remove the sanctions and, in theory, the local economy should boom leading to plenty of construction activity. Notably, at the launch of LafargeHolcim the new CEO Eric Olsen was asked for the new group's position on Iran. It didn't have one but this will change.
China expands along the Silk Road
China's cement industry may be suffering at home but it has been steadily expanding in Central Asia. Notably Huaxin Cement has plants in Kazakhstan and Tajikistan and it has new projects in the pipeline. Business may be down at home but steady advancement abroad may offer the Chinese cement industry the lifeline it needs.
Cop out at COP21?
And finally... The 2015 Paris Climate Conference announced a diplomatic coup d'etat in December 2015. However, it apparently forgot to include any binding targets. The Cement Sustainability Initiative (CSI) pre-empted the decision by announced its aim to reduce CO2 emissions by clinker producers by 20 - 25% by 2030... Provided the entire cement industry follows its lead. Cement plants burning vast swathes of dirty fossil fuels may not have to worry quite yet.
For more a more detailed look at trends in the cement industry check out the Global Cement Top 100 Report in the December 2015 issue of Global Cement Magazine.
Global Cement Weekly will return on 6 January 2016. Enjoy the holidays if you have them.
HeidelbergCement and Joule announce partnership to explore carbon-neutral fuel application
16 December 2015Germany: Joule, a producer of liquid fuels from recycled CO2, and HeidelbergCement have announced a partnership to explore the application of Joule's technology to mitigate carbon emissions in cement manufacturing. A successful partnership between Joule and HeidelbergCement could result in the co-location of Joule's Helioculture Technology at one or more HeidelbergCement sites around the world.
Since 1990, HeidelbergCement has worked to decrease its carbon emissions, initiating various programmes across the organisation that have reduced emissions by 23%. HeidelbergCement said that its partnership with Joule represents another example of its sustained dedication to leveraging innovative technologies and programmes for climate protection. As part of the agreement, emissions from various HeidelbergCement plants could provide Joule with the waste CO2 required to feed its advanced Helioculture platform that effectively recycles CO2 back into fuel.
"We've been focused on lowering carbon emissions for more than two decades and we are excited to take further steps to lower our CO2 emissions by working with a dedicated organisation with state-of-the-art technology that is committed to protecting the climate," said Jan Theulen, Director of Alternative Resources at HeidelbergCement. "Joule's process, which effectively recycles waste CO2 into liquid fuels, is a perfect match for HeidelbergCement and our core values and we look forward to starting the journey towards a long-term, mutually beneficial relationship."
Joule's Helioculture process directly and continuously converts sunlight and waste CO2 into infrastructure-ready fuels, including ethanol and alkanes that serve as highly blendable feedstock for diesel and jet fuel products. Only requiring abundantly available inputs, including sunlight, brackish or sea water and waste CO2, the process is well suited for global deployment. For organisations like HeidelbergCement, Joule turns a carbon challenge into a carbon solution by capturing and recycling waste CO2.
"Carbon emissions are a challenge faced by many industries that are of critical importance to everyday life, such as cement," said Brian Baynes, CEO of Joule. "We are pleased to have the opportunity to partner with HeidelbergCement in an attempt to develop a modern, ultra-low carbon cement manufacturing process."
HeidelbergCement’s Burglengenfeld cement plant to be upgraded
09 December 2015Germany: HeidelbergCement has decided to modernise its Burglengenfeld cement plant in Germany with parts and services from IKN and Gebr. Pfeiffer.
IKN won the contract for the engineering, supply and installation of a complete 4000t/day pyro line, from raw meal feeding to clinker discharge. Included in the scope of supply are integration engineering, supply and installation of add-on components for the raw meal grinding plant. The upgraded plant will feature state-of-the-art technology to comply with the targeted production level and future emission limits.
The new line will consist of a two-string, five-stage preheater tower with inline calciner. IKN's preheater and calciner design will ensure minimum pressure drop at maximum performance and high efficiency. The kiln line will be optimised to use of a variety of alternative fuels. Among several innovative features will be a tertiary air duct damper, which has proven successful in operation for more than three years with outstanding reliability and performance. Another essential component of the plant is IKN's Pendulum Cooler, which is highly reliable and has low maintenance and operational costs. Its design allows recirculating bypass gas into the recuperation zone to boost cooler efficiency.
As part of the modernisation of the kiln line, the four existing MPS vertical roller mills will be replaced after forty years of successful operation. HeidelbergCement has ordered two new Gebr. Pfeiffer MPS 4250 B roller mills as replacements. Each mill is designed to achieve a capacity of 200t/hr of cement raw material ground to a fineness of 12% R90µm. The drive power per mill is 2250kW. Gebr. Pfeiffer will also supply the complete equipment for the external material circulation system as well as the cyclone collectors and mill fans. The supply of the mechanical equipment will be completed by engineering services covering the plant layout and the integration of the process-related ductwork within the existing, complex plant. Raw mill 1 is scheduled to go on stream at the end of 2016 and raw mill 2 is scheduled to start operations in 2017.
HeidelbergCement Romania completes merger of units
08 December 2015Romania: Germany's HeidelbergCement has completed the merger of the three companies it owns in Romania. The three companies that are now merged under HeidelbergCement are Carpatcement, Carpat Beton and Carpat Agregate.
"The merger process takes into account our strategic position in relation to the economic environment, which is to overcome future challenges in order to use our resources to their full potential and to have a more efficient management of costs," said General Manager Florian Aldea.
HeidelbergCement is one of the leading manufacturers of cement, concrete and aggregates in Romania with three cement plants in Tasca, Chiscadaga and in Fieni. It also owns 19 concrete plants, seven quarries and six gravel aggregates units.
HeidelbergCement’s Slantsev cement plant upgrades production
26 November 2015Russia: The Slantsev cement plant, part of HeidelbergCement and operating in Cesla, Leningrad, plans to upgrade its production and continue development of the quarry. The investments in the project will amount to Euro14.5m.
Lead up to the HeidelbergCement purchase of Italcementi
11 November 2015Both HeidelbergCement and Italcementi released their third quarter financial results for 2015 this week. The results are worth comparing given the impending acquisition of Italcementi by HeidelbergCement.
HeidelbergCement has reported a rise in revenue of 8% to Euro10.1bn for the first nine months of 2015. Its net profit rose by 27% to Euro762m from Euro599m. Its earnings before interest and income taxes (EBIT) rose by 17% to Euro1.4bn. By region, growth in revenue was reported everywhere except for the group's Eastern Europe-Central Asia region. Notably growth in the group's Asian region is slowing, growth is growing in Africa and markets are recovering in North America and the UK. It is also worth noting that the group's cement and clinker sales volumes fell by 1.1% to 60.6Mt in the first nine months of the year.
Italcementi has reported a rise in revenue of 3% to Euro3.2bn for the first nine months of 2015. It reported a loss of Euro8.1m, down from a loss of Euro63.8m in the previous period. Its EBIT fell slightly to Euro166m. By region the group reported that 'positive' trends in North America, India and Morocco, together with reducing operating expenses in Europe, would be insufficient to counteract revenue losses in France and Egypt. Overall cement and clinker sales fell by 1.4% to 32.1Mt.
Compared to its 2014 results, HeidelbergCement seems set to recover some of its revenue and profit growth after fluctuating income since 2008. Meanwhile, Italcementi has been continuing to cut costs, rebuild its business and profitability. So there are no obvious shocks to the apparent value of either company at this stage. It is also worth noting that the good geographical complementarity of each company's assets could make any potential renegotiation less likely. Everybody looks set to gain something should the purchase go through.
The deal in late July 2015 announced that HeidelbergCement would be purchasing 45% of Italcementi's shares at a price of Euro10.60 per Italcementi share for a total price of Euro1.67bn. The only clause mentioned so far has been 'subject to contractual purchase price reductions'. The deal is still expected to be completed in the first half of 2016 following approval from competition authorities. Approval from the Competition Commission of India was announced in September 2015.
The diverging values of Lafarge and Holcim before their merger in mid-2015 had consequences that led to haggling over the deal and the removal of Bruno Lafont as the proposed CEO of LafargeHolcim. The difference here is that HeidelbergCement is buying Italcementi as opposed to merging with it. However, the performances of both companies remain paramount. Now as then the question will be: is the cost worth it?
For more information read Global Cement's article on the HeidelbergCement purchase of Italcementi in our September 2015 issue.
Germany: HeidelbergCement's revenue rose by 3% to Euro3.61bn in the third quarter of 2015. Excluding consolidation and exchange rate effects, revenue decreased by 1.9%. The weakening of the Euro against numerous currencies had a Euro162m positive impact on revenue. Operating income before depreciation (OIBD) improved by 8% to Euro865m and operating income rose by 8% to Euro675m. Besides the price increases in key core markets and the successful implementation of the margin improvement programmes in the aggregates business line, in particular, the low cost of fuels also made a contribution to the positive development of results.
"Despite partly adverse market conditions, the third quarter saw us continue our successful development and further increase our results," said Chairman of the Managing Board, Bernd Scheifele. "This was largely due to our advantageous geographical positioning and our good overall cost management. Consequently, we were able to considerably improve our operating margins once again. From our perspective, the weaker development of sales volumes compared with the previous quarters is temporary. The acquisition of Italcementi is making good progress and we significantly increased the synergy target to Euro300m."
In the third quarter of 2015, HeidelbergCement's cement and clinker sales volumes fell by 3% year-on-year to 21.8Mt. Whereas Africa registered double-digit growth, volumes in the other group areas remained stable or declined slightly. In Asia, the delayed start of the infrastructure projects announced by the Indonesian government had a negative impact on sales volumes. Volumes decreased in the Eastern Europe-Central Asia group area and in Russia, in particular, due to a downturn in investments. In the Western and Northern Europe group area, especially the Netherlands and the Baltic States, a decline in sales volumes was reported. In North America, deliveries remained more or less at the same level as in 2014, despite the bad weather in Texas and the unfavourable timing of building projects in Florida. In the first nine months of 2015, cement and clinker sales volumes decreased by 1% to 60.6Mt.
At the start of September 2015, joint work teams from Italcementi and HeidelbergCement started preparing for the integration. In the first instance, they embarked on best-practice comparisons and carried out an assessment of potential synergies. Based on the initial findings, it was able to increase the post-closing synergy target from an original Euro175m to Euro300m. The positive effects of financing costs and taxes were taken into account for the first time in the new synergy target. The combination of Italcementi's export-oriented cement plants in the Mediterranean Basin with the global trading business of HeidelbergCement following completion of the transaction also gives rise to significant potential beyond the identified synergies, as does the optimal use of Italcementi's production facilities. Import demand, for example in North America or Africa, that used to be bought from third party sources in the past, can be covered by Italcementi's plants in the future, thus leading to a higher capacity utilisation there. A savings potential in current assets of Euo100m could be confirmed. The bridge financing could be reduced by Euro1.1bn to Euro3.3bn because the initial risk of a mandatory takeover offer to minority shareholders in Morocco could be excluded and some of Italcementi's creditor banks have agreed to waive their change of control clauses. In addition, HeidelbergCement has reduced its target for cash-relevant investments from Euro1.2bn to Euro900m in accordance with the capital expenditure savings announced in the context of the Italcementi takeover. All necessary filings or pre-filings were lodged with the competition authorities in October 2015 as planned. The competition authority in India has already given its approval. HeidelbergCement expects the acquisition of the 45% stake to be completed in the first half of 2016.
In North America, HeidelbergCement expects a continuing economic recovery and a further increase in demand for building materials. Besides new residential building, commercial and infrastructure construction is also making an increasingly strong contribution to this growth. In Eastern Europe, markets should continue to stabilise and the first impetus is expected to stem from the EU's new infrastructure programme. In Western and Northern Europe, a stable overall market development is expected. This is based on the recovery in the UK, the stable development in Benelux and a slight slowdown in Germany as well as in Northern Europe, where exports are declining. In Asia, the delay in infrastructure projects in Indonesia is leading to a reduction in cement and ready-mixed concrete sales volumes. In Africa, the group is still counting on a sustained growth in demand. HeidelbergCement anticipates stable sales volumes for the core products of cement and ready-mixed concrete and an increase in the sales volumes of aggregates for the year.
As a result of the sustained fall in prices for crude oil and fuels, HeidelbergCement expects a moderately declining cost basis for energy in 2015. A modest rise in the cost of raw materials and personnel is still expected, partly owing to the devaluation of the Euro. It plans to offset this by means of suitable measures and to further improve the margins in the cement and aggregates business lines. Process optimisations are expected to achieve a sustainable improvement in results of at least Euro120m by the end of 2017. In addition, the optimisation of logistics activities in connection with the LEO programme will be pursued with the aim of reducing costs by Euro150m over a period of several years.
Based on the developments described in the first nine months, HeidelbergCement expects a moderate to significant growth in revenue and remains confident that the operating income and profit for the financial year before non-recurring items will increase significantly in 2015.
"We remain on track to significantly increase our results and substantially reduce our net debt in 2015," said Bernd Scheifele. "This provides us with a solid base for the acquisition of Italcementi. The acquisition process is on schedule and we expect the share purchase from Italmobiliare to be completed in the first half of 2016. Thereby, we significantly accelerate the growth of HeidelbergCement and create additional potential for higher returns for our shareholders. Following the acquisition, we want to reduce the leverage by the end of 2016 to a level that is in line with a solid investment grade rating."
India: HeidelbergCement India has appointed Juan-Francisco Defalque as an Additional Director on the Board of Directors of the Company with immediate effect.