Displaying items by tag: Holcim
Holcim simplifies Indian business to cut costs
31 July 2013India: Multinational buildings material producer Holcim has released plans to simplify its structure in India by merging Holcim India with its subsidiary Ambuja Cements. Both Holcim's Indian subsidiaries, Ambuja and ACC, have seen net profits fall in the second quarter of 2013.
Holcim intends to increase its shares in Ambuja to 61.39% and Ambuja will acquire Holcim's 50.01% stake in ACC. Both Ambuja and ACC will continue to operate as separately with their own brands. However, the restructuring will allow for closer back-end cooperation between the companies as well as simplifying the group structure.
"This transaction further improves Holcim's holding structure in India, strengthens the platform for future growth and is expected to generate synergy benefits of US$150m/yr. These benefits, which will be realised in a phased manner over two years, will be shared by both companies equally through supply chain, shared services and fixed costs optimisation. The transaction is expected to be neutral on Holcim's EPS in the first full year following the completion of the transaction and accretive thereafter," said Holcim CEO Bernard Fontana.
In a two stage deal, Ambuja will first acquire, through a purchase, a 24% stake in Holcim India for a cash consideration of around US$600m, followed by a stock merger between Holcim India and Ambuja. As part of the merger, Holcim will receive 584 million new equity shares in Ambuja resulting in an increase of its ownership in Ambuja from the current 50.55% to 61.39%.
The transaction is subject to Ambuja's shareholder and regulatory approvals in India.
Sri Lanka – destination or stopover?
24 July 2013Sri Lankan cement demand fell in the first half of 2013. Yet this doesn't seem to be stopping the cement industry's slow recovery following the civil war that ended in 2009.
As reported by Sri Lankan media around the launch of Holcim Lanka's 2012 Sustainability Report, the local cement industry has seen volumes fall by 7% but this is expected to improve in the second half. Tokyo Cement, a grinding plant operator, confirmed a similar drop in the first quarter of 2013.
Despite the talk of downturn so far in 2013, Tokyo Cement has announced plans for a 1Mt/yr cement plant costing US$50m complete with its own captive biomass power plant. In addition, plans have emerged of a joint venture involving Pakistan's D.G. Khan Cement to build a grinding plant at Hambantota in the south of the island. Costing US$15m, the plant is intended to process exports to South Africa and Kenya.
The explicit intention to produce clinker in Pakistan and then grind it in Sri Lanka before export to a third destination makes an interesting notion. The Pakistan cement producer may benefit from being able to export cement from Sri Lanka with the added security of knowing that the grinding plant is located in a growing market itself. A helpful strategy given Pakistan's cement production overcapacity.
The Hambantota project is also noteworthy because another Pakistan-based company, Thatta Cement, announced in April 2013 that it had signed an agreement with the Sri Lanka Ports Authority to a build a grinding and bagging plant at Hambantota. Also in 2013 the Nepali entrepreneur Binod Chaudhary submitted a US$75m plan for a cement plant in the north of the island.
Of course all of this appears miniscule in comparison to the level of investment Semen Indonesia has chalked up to spend between now and 2016: up to a whopping US$2bn.
Elsewhere in the news this week the price of extending a US Environmental Protection Agency (EPA) deadline has revealed itself to be US$1.5m. Lafarge North America has succeeded in pushing back pollution controls at its Ravena plant by over a year in exchange for interim limits and an investment in air pollution projects in the local community. It's not a fine but the announcement follows other pollution-related payments at cement plants run by Holcim and Ash Grove. Let's hope that any new plants in Sri Lanka avoid these kind of payments.
Sri Lankan market could rebound in 2013
22 July 2013Sri Lanka: Sri Lanka's cement demand will pick up in the second half 2013, ending a slump that began in 2012, according to Philippe Richart, the head of Holcim (Lanka) Ltd. However, he added that cement volumes were 7 - 9% down year-on-year in the first half of 2013. In 2012 the firm posted revenues of US$152.9m.
"We expect the second half to be better, whereas 2012 saw a little bit of a decline," said Richart. "Overall we think the market this year will be probably down by 2%."
Tokyo Cement, another Sri Lankan firm which operates grinding plants had also said demand has fallen by 7% in the first quarter but that an improvement was expected.
Official data shows that Sri Lanka's domestic cement production was down by 3.4% year-on-year to 320,000t in the first two months of 2013. Imports were down by 34% to 593,000t. However, production picked up in March 2013 and first quarter production was up by 0.7% year-on-year. Imports for the first quarter also surged by 118% to 854,000t.
Holcim agrees to pay fine at Hagerstown
17 July 2013US: Holcim (US), the current owner-operator of the Hagerstown cement plant in Hagerstown, Maryland and St. Lawrence Cement, which previously owned the same facility, have agreed to pay a US$700,000 fine and improve emission controls at the facility to settle alleged air pollution violations, according to the US Environmental Protection Agency (EPA). The action against the Hagerstown plant is part of an on-going nationwide EPA effort to tighten pollution controls in the cement industry.
The proposed federal court consent decree requires Holcim to install 'advanced pollution controls' at the plant, Holcim also pledged to spend at least US$150,000 to replace outdated environmental protection equipment.
"It has been a long standing issue and now the company feels that it really is in its best interest to find a resolution," said Holcim spokeswoman Robin DeCarlo.
The Department of Justice filed suit on behalf of EPA in 2011 accusing Holcim and the plant's prior owner, St. Lawrence Cement, of violating the federal Clean Air Act from 2003 to 2007 by modifying the facility's cement kiln in a way that produced 'significant' increased emissions of SO2.
Switzerland: Xavier Dedullen has been appointed Head of the newly-created Legal and Compliance function at international cement producer Holcim, as well as Group General Counsel. As Corporate Functional Manager, he became a member of Holcim Senior Management, effective 28 June 2013. He reports directly to the Group CEO. As Chief Legal and Compliance Officer and Group General Counsel, Xavier Dedullen assumes responsibility for all legal and compliance matters.
Pouring into the Philippines cement industry
29 May 2013Three stories this week from the Philippines build a complex picture of a booming cement industry. San Miguel purchased a 25% stake in Northern Cement, Lafarge Republic announced its capital expenditure budget for 2013 and the country's on-going price probe reported on its progress.
San Miguel's entry into the market should raise the most interest since its president stated that the company intends to spend US$750m on the construction of three cement plants. Each plant will have a cement production capacity of 2Mt/yr with construction timed to start in 2013 and finish by the end of 2015.
This level of investment, if it happens, surpasses the last major build announcement in the Philippines. In May 2013 Holcim released details of a US$550m plant in Bulacan with a capacity of 2.5Mt/yr. Some indication of the viability of San Miguel's plans may be gleaned from the comparative costs of the projects. San Miguel's plans will cost US$125/t of installed capacity, less than half of Holcim's US$220/t. Possible reasons for this difference may lie in San Miguel releasing the wrong figures or a reliance on lower build quality. However San Miguel's sheer size - its net income was US$2.25bn in 2011 - may itself herald the start of a major player in the domestic cement industry.
Meanwhile the Department of Trade and Industry (DTI) has continued to investigate why the price of cement has risen since 2012. Currently prices are about 5% above the suggested retail price for cement. Cement producers blamed the increases on a higher cost of coal.
The Philippines is currently experiencing massive cement sales increases. In 2012 sales rose by 17.5% to 18.4Mt from 15.6Mt in 2011. With a total capacity of 21Mt/yr and a capacity utilisation rate of 85% in 2012, this growth looks set to continue in 2013, as confirmed by more rises in sales in the first quarter.
Philippines: The Department of Trade and Industry (DTI) has asked cement producers in the Philippines to justify recent price hikes that led prices to exceed the suggested levels set by the agency.
Trade Undersecretary Zenaida C Maglaya said the three largest cement firms in the country - Holcim Philippines, Lafarge Republic, Cemex Philippines - have started submitting documents to support adjustments in their prices. Eagle Cement is set to meet with DTI and Board of Investment (BOI) officials to explain its pricing scheme. Maglaya said one of the large cement manufacturers had made a submission but had yet to complete all requested data due to 'antitrust issues', referring to laws addressing anti-competitive behavior among corporations.
In April 2013, Maglaya said that cement companies had increased their prices due to the higher cost of coal, a raw material that accounted for about 25% of the cement industry's manufacturing costs. Holcim reportedly raised its price by 11%, Lafarge by 7%, Cemex by 15% and Eagle Cement by 5%.
In 2012, the Cement Manufacturers' Association of the Philippines (Cemap) reported record-high sales of 18.4Mt, up by 17.5% from 15.6Mt in 2011. This was due to the boom in public and private construction projects. In the fourth quarter of 2012, 4.4Mt of cement were sold compared to 4Mt in the fourth quarter of 2011.
Holcim renames Mexican unit
29 May 2013Mexico: Swiss construction materials company Holcim's subsidiary Holcim Apasco will be renamed Holcim México. Holcim Latinoamérica's CEO Andreas Leu said that the move had been taken in order to "Unify the brand and strengthen its presence as a global leader in the Mexican market."
A slowdown in the Mexican construction industry has caused a 10% decline in cement demand in the country in the first three months of 2013, but the firm expects cement sales to increase by 1-2% in 2013, according to Holcim Mexico's CEO Eduardo Kretschmer.
"Mexico has great potential in the construction sector, as it is an emerging economy with strong macroeconomic fundamentals, a young population that in the coming years will demand more and better housing and infrastructure," said Kretschmer.
Holcim to build US$550m cement plant in Bulacan
09 May 2013Philippines: Holcim Philippines plans to construct a 2.5Mt/yr cement plant in Bulacan costing US$550m. Holcim Philippines chief executive Ed Sahagun said in a news briefing that the company had obtained first phase approval from its parent company Holcim.
The approval will allow the cement producer to obtain quotations, organise a project team and proceed with securing permit requirements. Final approval will be discussed in September 2013. Holcim Philippines plans to have the new plant on stream by 2016. Sahagun said that he expected demand for cement to further improve, once the public-private partnership projects were implemented.
Holcim Philippines' net income in the first quarter of 2013 grew by 77.2% to US$35.1m from US$19.8m in the same period in 2012, due to increased demand and higher cement prices.
European Q1 cement round-up
08 May 2013Once again the winter weather was bad in Europe. Once again the major European cement producers reported a fall in sales. So what has changed between the first quarters of 2012 and 2013?
Lafarge's cement sales volumes in Western Europe for the first quarter of 2013 fell by 24% year-on-year, compared to an 11% drop in 2012. Holcim's decline in volumes stabilised, compared to a 13.2% drop in 2012. HeidelbergCement's volume decline increased slightly, from a drop of 8% in 2012 to one of 10% in 2013. Cemex didn't release sales volumes figures for cement but overall net sales in its Northern Europe region fell by 13% in 2013 compared to 11% in 2012. Italcementi's cement sales volumes maintained a steady decline in both the first quarters of 2012 and 2013 at about 19%.
Even with the reduced number of working days for the quarter in 2013 taken into account, things are not looking good. Generally the results fit the prediction made by the UK Mineral Products Association (in the UK at least) that construction activity remains subdued in 2013 so far.
Profitability measures for the European divisions of the big producers, such as earnings before interest, taxes, depreciation and amortisation (EBITDA), reinforce the gloomy outlook, suggesting that most of the cost cutting exercises aren't having much effect on investor balance sheets quite yet. Lafarge's EBITDA in Western Europe fell by 94% to Euro5m. HeidelbergCement's loss before interest and taxes (EBIT) increased to Euro91m. Cemex's operating EBITDA fell from US$55m in 2012 to a loss of US$17m in 2013. Italcementi's EBITDA decreased to Euro12.8m.
Only Holcim reversed this trend, growing its EBITDA by 43% to Euro23.5m. The Holcim Leadership Journey appears to be working. Although the sale of a 25% stake in Cement Australia certainly helped.
Elsewhere, we have an additional story at add to last week's focus on Iraq, with the announcement that Mondi has opened an industrial bags plant in Iraq. It's based in Sulaimaniyah in northern Iraq near to the new Sinoma-Lafarge project that we reported on.
Finally, the news that the Competition Commission of India has been asked to investigate a complaint against a Chinese waste heat recovery vendor raises tensions between the world's largest two cement producers. The story echoes similar trends in the gypsum wallboard business in April 2013 where a selective anti-dumping duty was imposed on imports from China, Indonesia, Thailand and the UAE. Watch this space.