Displaying items by tag: Holcim
2021 roundup for the cement multinationals
02 March 2022Cement markets have mostly recovered following the shock emergence of coronavirus in 2020. Most of the producers that have released their results so far for 2021 have reported strong boosts to sales revenue and racing earnings as something more like normality resumed. The following roundup covers a selective group of cement companies around the world.
The recovery in 2021 has made the outliers in the companies covered here noteworthy. UltraTech Cement, Semen Indonesia and Dangote Cement are all large regional companies with dominant positions domestically and varying degrees of international spread. As can be seen in Graph 1, UltraTech Cement and Dangote Cement both reported very large increases in sales, over 20% year-on-year. By contrast, Semen Indonesia sales fell very slightly.
Graph 1: Sales revenue from selected cement producers in 2020 and 2021. Source: Company reports. Note: Figures calculated for UltraTech Cement.
One reason for UltraTech Cement and Dangote Cement’s success can be seen in Graph 2 (below). Both companies managed to sell more cement in 2021. Semen Indonesia did not due to Indonesia’s production overcapacity and new competitors. It also blamed a significant rises in coal prices for a 9% drop in its earnings before interest, taxation, depreciation and amortisation (EBITDA).
UltraTech Cement has been wary of successive waves of coronavirus throughout its 2022 financial year, but generally the Indian regional markets have recovered and government-backed rural housing and infrastructure spending have supported growth. It did note rising coal prices earlier in the year, but these were reported to have somewhat softened during the quarter to 31 December 2021. It is worth noting that the ongoing war in Ukraine is affecting energy markets but more on this at the end of this article. Dangote Cement’s performance was slowed somewhat by the start of coronavirus but it has since resumed its turbo-charged trajectory with volumes, revenue and earnings growth all above 10% in 2021. Mostly this performance is supported by the Nigerian market but the company is doing well internationally too.
Graph 2: Cement sales volumes from selected cement producers in 2019 and 2020. Source: Company reports. Note: Figures calculated for UltraTech Cement.
Holcim and HeidelbergCement’s increase in sales revenue in 2021 are actually fairly similar on a like-for-like basis, both with around 10%. The former’s sales volumes were up across cement, ready-mixed concrete and aggregates in each of its regions around the world, as were sales revenue. Holcim’s big move in 2021 has been the expansion of its Solutions & Products segment with the acquisition of Firestone in April 2021. Now this has continued with the completion of the Malarkey Roofing Products purchase on 1 March 2022, a few days after it released its 2021 results. Chief executive officer Jan Jenisch described the move towards lightweight building materials as generating, “further double-digit growth engines for the company.” As an aside, it was fascinating to see CRH leave the building envelope business this week, mostly based in the US, with an agreement to sell up its division for US$3.8bn to private equity. The business CRH is divesting sells architectural glass, storefront systems, architectural glazing systems and related hardware to customers primarily in North America. CRH is clearly pursuing a different business strategy to Holcim.
HeidelbergCement has also reported a strong year in 2021 albeit without the Holcim razzle-dazzle of barging into new market areas. It noted significant increases in energy prices and pandemic‐related lockdowns in some key markets in Asia. It described a very slight cement sales volume decline in Africa and the Middle East and a drop in earnings in Asia. Its trump cards are its carbon capture projects coming down the pipeline. It’s keen to remind investors about this with the unspoken implication that it might save the company money in the future when carbon taxes bite further.
Both Cemex and Buzzi Unicem followed the growth pattern seen in sales and earnings by the other larger multinational producers covered above. Central and South American markets really took off for Cemex in 2021, starting with its home market in Mexico. However, growth was present, although slower, in both its largest markets in the US and its Europe, Middle East, Africa and Asia region. Notably cement volumes in the Philippines grew by 7% and that’s even with the devastation caused by typhoons at the end of the year taken into account. Similarly, Buzzi Unicem performed well in 2021 due to growth in Italy, the US and Eastern Europe compensating for a small sales decline in Germany. As mentioned in Update on Ukraine, February 2022 Buzzi Unicem has particular exposure to the war in Ukraine as it operates two cement plants in Ukraine and two units in Russia but this is a problem for the 2022 financial year.
To finish on Ukraine, first and foremost, a human tragedy is unfolding. Yet the war also presents many economic challenges to financial markets through sanctions and counter-actions. A recession in Russia looks likely as do energy price surges in the US and Europe leading to further inflation and, perhaps, recessions too. All this potentially lies ahead. For now, the dilemma for US and European-based cement companies and suppliers with operations in Russia is reputational. Should they continue to do business in Russia as public opinion hardens and companies like BP, Shell, Equinor, HSBC and AerCap head for the exit? The Russian government has blocked foreign companies and individuals from selling shares locally but pressure looks set to intensify for such companies to do something.
Switzerland: Holcim has appointed Toufic Tabbara as Region Head North America and a member of the group executive committee. He succeeds René Thibault, who has decided to leave the company.
Tabbara was most recently working as the chief executive officer for US Cement. He joined the group in 1998 as Director Strategy & Development in the US and has led Holcim’s ready-mix concrete, aggregates and cement businesses in the US, Canada, Egypt, Jordan, Lebanon and Algeria.
He holds a Master of Business Administration from the Thunderbird School of Global Management in Arizona, US and a Bachelor of Business Administration from the American University of Beirut in Lebanon.
Switzerland: Holcim’s full-year 2021 results show a 16% year-on-year rise in the group’s consolidated sales to US$28.3bn from US$24.4bn. Its recurring earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 26% to US$5bn from US$3.98bn. The group’s net debt also rose, by 18% to US$10.8bn from US$9.17bn.
CEO Jan Jenisch said “2021 was a record year for Holcim, reaching new levels of performance, across our financial and environmental social governance (ESG) targets. What makes me most proud is how we navigated the Covid-19 pandemic with such extraordinary resilience and agility, working tirelessly to keep our people and communities safe.” Jenisch continued “We delivered our Strategy 2022 one year in advance, setting solid foundations for our next era of growth. Putting sustainability at the core of our strategy, we accelerated the deployment of our green building solutions, from ECOPact green concrete and ECOPlanet green cement to smart roofing and energy efficiency systems. My sincere thanks goes to our 70,000 people who made all of this possible while keeping safety top of mind at all times.”
US: Lafarge North America has reported that its Paulding, Ohio, plant achieved 99% alternative fuel (AF) substitution in its cement production, up from 95% in past years. The operator said that the fuel change saved 205,000t of CO2 emissions in 2021.
Lafarge Canada supplies ECOPact for Genesee power plant construction
23 February 2022Canada: Lafarge Canada is supplying its ECOPact reduced-CO2 concrete to contractor PCL for its construction of the upcoming Genesee power plant in Alberta.
Lafarge North America president and general manager Prez Skiba said "The original concrete proposed was already a low carbon design, but we knew we could take it further. We brought in further emissions reductions with our ECOPact design, and we were able to reduce embodied CO2 by an additional 20%. That's 20% over and above the original design, which already offered a 20% reduction. The combined 36% CO2 reduction is equivalent to the energy used by 70 houses in a year."
Lafarge Algeria exports 2.6Mt of cement in 2021
23 February 2022Algeria: Lafarge Algeria says it exported 2.6Mt of cement in 2021, more than double the 1.18Mt it exported in 2020. It aims to export over 3Mt in 2022. The subsidiary of Holcim also announced that it will carry out two new large simultaneous shipments from the port of Oran, one of 35,000t of cement in bulk, and the other of 30,000t of white cement in big bags. Both shipments will be exported to the Americas.
Ivory Coast: Société de Ciment de Côte d’Ivoire has inaugurated its second grinding plant in Abidjan. The producer says that the new facility doubles its installed cement production capacity to 3Mt/yr. The Afrique Sur 7 newspaper has reported that it will create 3000 new direct and indirect jobs.
ACC commissions expanded Tikaria grinding plant
15 February 2022India: ACC has commissioned its Tikaria grinding plant in Uttar Pradesh after completing work to expand its capacity by 69% to 3.91Mt/yr. The plant will help ACC to serve the country’s increasing demand and increase its presence in Central India, according to the producer. The United News of India newspaper has reported that the company commenced the project in January 2021.
CEO and managing director Sridhar Balakrishnan said "ACC's strong belief and resilience in these difficult times enabled the team to commission the additional capacity at the Tikaria grinding plant. Meticulous planning and the collaborative approach of the Tikaria team has been the driving force in ACC’s setting a new benchmark in these unprecedented times."
ACC buys Kannur limestone block
11 February 2022India: ACC has announced its successful purchase at auction of the Kannur limestone block mineral reserve in Wadi, Kalaburagi District, from the Karnataka government. The producer plans to use the block to supply limestone for its Wadi cement plant.
Catalan court orders closure of LafargeHolcim España’s Montcada i Reixac cement plant
10 February 2022Spain: The Catalonia government has received a court order to close down LafargeHolcim España’s Montcada i Reixac cement plant in Barcelona. The Spanish Collection newspaper has reported that the plant failed to conform to new environmental regulations. LafargeHolcim España has appealed the decision.
The Montcada i Reixac plant currently employs 300 people. A union involved in the issue said that the alleged breach is formal rather than substantive and that an administrative error by the regional government caused the plant to breach the regulations.