Displaying items by tag: Hope Construction Materials

UK: Breedon Group’s sales revenue and profits have been expanded by its acquisition of Hope Construction Materials in 2016. Its revenue rose by 43% year-on-year to Euro523m in 2016 from Euro367m in 2015. Its profit before tax rose by 50% to Euro53.9m from Euro36m. The group also attributed its success to its aggregate business.

“2016 was arguably the most eventful year in the group’s history. We completed our largest acquisition to date, invested a record amount in our business, began supplying our biggest ever contract and delivered an excellent financial performance – all against the background of an uncertain economic environment and challenging trading conditions in many of our markets,” said executive chairman Peter Tom.

The building materials company added cement production to its portfolio when it purchased Hope in mid-2016. It added a cement plant, five new quarries, a network of concrete plants and eight rail-linked distribution depots. In November 2016 it bought Sherburn Minerals, including two terminals in northeast England and eastern Scotland, that are used to import cement and ground granulated blast-furnace slag (GGBS).

UK: The Competition and Markets Authority (CMA) has approved the acquisition by Breedon Aggregates of Hope Construction Materials subject to a sale of selected assets. Breedon has offered to sell 14 ready-mix concrete sites to Tarmac and the Concrete Company, which has been accepted by the CMA. As indicated in Breedon’s announcement on 21 July 2016, it now expects to complete the acquisition of Hope on 1 August 2016.

“The way is now clear for Hope to join us and create the UK’s largest independent construction materials group. It will give us a stronger platform for growth, with a broader geographical footprint, increased scale, an improved product mix, greater financial capacity and a team of highly talented people,” said Breedon’s Chairman, Peter Tom.

With the acquisition of Hope, Breedon Group, as the company will be named from 1 August 2016, Breedon will become the UK’s largest independent construction materials group, with the country’s largest cement plant, around 60 quarries, nearly 30 asphalt plants, approaching 200 ready-mixed concrete plants, some 2100 employees and approximately 750Mt of mineral reserves and resources. The enlarged group’s strategy will be to continue growing organically and through consolidation of the UK heavyside building materials sector.

UK: The Competition and Markets Authority (CMA) has referred the proposed acquisition of Hope Construction Materials by Breedon Aggregates for further investigation unless Breedon can take action to address competition concerns. An initial study by the CMA found that competition issues might arise in 27 ready-mixed concrete sites, causing potential price rises for end consumers. The study ruled out any competition issues with regards to the companies’ aggregates and cement markets.

“The vast majority of the merger raises no concerns but there are a number of areas where the companies compete strongly with each other for customers and the concern is that the loss of such rivalry could lead to price rises for customers. The businesses may now resolve these concerns or face a detailed investigation,” said Sheldon Mills, CMA Senior Director of Mergers. Unless Breedon takes action an in-depth phase two investigation will be conducted by the CMA.

Breedon responded that the CMA’s response was expected. Subject to agreement with the CMA on appropriate remedies, Breedon expects to complete the acquisition later in 2016. Breedon announced in November 2015 that is was planning to buy Hope Construction Materials for Euro480m.

UK: Hope Construction Materials has announced the launch of a new bagged cement product scheduled for later in 2016. The new product, called Professional Grade Cement, will be marketed in the south of England.

“Hope Works has been making cement for more than 80 years and has an outstanding reputation for consistent quality and service. We are delighted to be able to offer our product in our own branded bag to customers for the very first time,” said Hope’s Commercial Director for Cement, Gary Brennand.

The new product packaging will feature a large ram, paying homage to the company’s origin in Derbyshire, which is transparent to ensure the consistent colour of Hope cement is always clearly visible. All the bags will be plastic, weatherproof and packed to give end users confidence that they can store the bags outdoors.

Hope cement had previously been available in bags through a third party supplier. This launch marks the first time Hope cement will be on the company’s packaging. The new product follows an 18-month research and development process with consultation of merchants and professional builders.

UK: Breedon Aggregates plans to acquire Hope Construction Materials for Euro480m. In a statement, Breedon said that the transaction would create 'the UK's leading independent producer of cement, concrete and aggregates.'

Hope has 160 operational sites, including a cement works in Derbyshire, five quarries and 152 concrete plants. In the first six months of 2015, Hope sold 1.6Mt of cement, 4.7Mt of aggregate and 2.3Mm3 of concrete, generating revenue of Euro407m and underlying earnings before interest depreciation and amortisation of Euro52.8m.

The acquisition is conditional upon UK competition authority approval and is expected to be completed in the second quarter of 2016. "This acquisition is well-timed, with UK construction output forecast to expand by around 15% over the next four years and volumes of all our major products expected to grow strongly," said Peter Tom, Breedon Executive Chairman. "We are confident that we will be able to continue delivering significant value for our shareholders in the coming years, with an even stronger platform for growth."

The Chief Executive of Aggregate Industries, part of LafargeHolcim, Pat Ward, will take over as Breedon Chief Executive early in 2016.

UK: Saxlund International has collaborated with Hope Construction Materials to install and commission a new waste-derived fuel solution for Hope Construction Materials' cement plant in Derbyshire, UK. The solution has been designed to provide storage, transportation, weighing and injection of solid waste fuel (SWF) to the two kilns. The goal is to increase the rate at which Hope can replace fossil fuels with waste-derived alternatives to more than 50%, a key part of its long-term sustainability targets.

The project incorporates a fuel reception and push-floor storage solution, reclaim conveyors, process tower with drum magnet and star screen, together with a weighing and pneumatic injection system to the main burners. The system facilitates stable and reliable process conditions to help minimise build-up in the pre-heater tower. It also offers a 'future-proof' solution with the flexibility to handle changing fuel characteristics and different types of waste-derived fuels, should suppliers change in the future.

"This is a flagship project for us. Once fully operational, the new solid waste fuel (SWF) system will run on a 24/7 basis delivering fuel at a rate of up to 5t/hr to each kiln," said Matt Drew, managing director Saxlund International. "It means that Hope Works will soon be operating with a significantly larger proportion of waste-derived fuels, in the process diverting up to 80,000t/yr of bulk solid waste from landfill and representing significant carbon savings to the business."

UK: Hope Construction Materials is investing Euro17.8m to boost production at its Hope Works cement plant. The upgrades include a completed 20,000t clinker store, a system to increase the plant's capacity to use waste-derived fuels and an internal upgrade of the plant's chimney, improvements to the way the raw materials are fed into the twin kilns and maintenance and refurbishment of a large section of one of the kilns.

"The installation of the new kiln shell section is a spectacular piece of engineering involving several teams and very careful planning. We are delighted with the way that this individual project has evolved and look forward to seeing the others progress to schedule... We are very excited to be involved in the largest investment programme on site for many years," said Hope Works Operations Manager Ed Cavanagh.

The announcement comes on Hope Construction Materials' second birthday. Hope has owned and operated the 85 year old cement plant since January 2013.

The single most notable observation regarding the last seven days is that the cement industry news has been overwhelmingly positive. After many years of consolidations, buy-outs and financial losses, it seems the global cement industry is finally turning itself around, with reports citing numerous expansion projects and growing cement demand in most regions.

The Indian government is taking control of its coal shortage problem with the appointment of a new Inter-Ministerial Task Force (IMTF) to rationalise existing coal resources. India's Ultratech Cement reported a 12% increase in cement sales in the April - June 2014 period, while both Shree Cement and Maha Cement are investing heavily to increase production capacity for the Indian and nearby Sri Lankan markets. In Myanmar, Thailand's Siam Cement Group (SCG) plans to construct a new 1.8Mt/yr capacity cement plant, while China's Guangdong Province has cut another 3.23Mt/yr of cement production capacity to meet overcapacity issues and reduce harmful emissions.

Signs also point to an anticipated upswing in cement demand in Europe. The UK's Hope Construction Materials has invested in 36 new Mercedes-Benz trucks for cement dispatch, while in Croatia, Holcim has predicted a 15% revenue increase in 2015, having finally completed consolidation of its unprofitable operations. Eurocement plans to construct a new 2.4Mt/yr capacity cement plant at the site of its Akhangarancement plant in Uzbekistan, although the existing plant is currently under scrutiny by the State Competition Committee and the subject of a nationalisation attempt by the Uzbek authorities.

In the US, Eagle Materials has reported a 4% increase in cement sales volumes in the April – June 2014 period, while Holcim has broken ground on its Hagerstown, Maryland cement plant modernisation project. Similarly, cement demand in Latin and South America continues to grow. Cemex Latam Holdings reported a 6% year-on-year increase in cement sales for the first half of 2014, while Mexico's Cemex reported that net sales grew by 4% year-on-year during the second quarter of 2014. Cemento Andino is building a new line that will triple the cement production capacity of its Trujillo plant in Venezuela to 600,000t/yr.

In Africa, Tanga Cement Company Limited (TCCL) plans to increase its cement production capacity, having signed an agreement to double its power supply to 40MW. Tunisia's Carthage Cement has reported a 419% increase in turnover for the first six months of 2014, while in Egypt, Suez Cement reported a 1% increase in cement demand. Lafarge's Nigerian subsidiary, Ashaka Cement, is fast-tracking the expansion of its Gombe State plant to meet demand, while the Standards Organisation of Nigeria (SON) is forging ahead to improve cement standards and consumer confidence. ARM Cement's revenues grew by 16% for the first half of 2014, including a 10% increase in Kenya and a 33% increase in Tanzania.

Finally, Lafarge and Holcim are moving forward with their mega-merger, officially notifying various competition authorities around the world. While the global cement industry will undergo some major changes as a result, the upheaval could prove positive for those players willing to seize the day.

UK: Hope Construction Materials is bolstering its 300-strong concrete mixer fleet with 36 new Mercedes-Benz trucks. The new Arocs 3236 8x4 B11 4-axle mixer trucks, each equipped with a McPhee mixer system, are Euro 6 compliant, built to the latest diesel engine emission legislation from the European Commission.

The vehicles feature a string of active safety measures, including a vulnerable road user package, as well as a lane control system, collision-avoidance and smart system which warns the driver if pedestrians or cyclists are too close to the vehicle. The system, which was developed by Cycle Safety Shield using Mobileye technology, works to mitigate the risk of collisions and road departure. The Cycle Safety Solution warns drivers when a cyclist or pedestrian is within danger zones, such as the nearside blind spot area. All of the trucks are fitted with TomTom satnavs, allowing the driver to consistently take the most efficient route and for customers to be informed of the exact location of their order at any given point.

"The purchase represents a significant commitment by Hope to providing our drivers with the best possible vehicles," said Mike Cowell, COO at Hope Construction Materials. "They are the most advanced trucks on British roads and will benefit our drivers, customers and other road users."

"This is the first fleet of 8x4 Euro VI Arocs mixers to enter service in the UK and Hope has demonstrated how both safety and sustainability work hand in hand," said James Colbourne, Head of Strategic Accounts (Trucks) at Mercedes-Benz UK Ltd.

The news that Holcim and Lafarge are planning a merger should come as no great surprise to long-term observers of the industry. Such mega-mergers have been periodically mooted over the decades and have already come to pass.

Lafarge took its present form through many acquisitions, but it was the mega-merger with Blue Circle Industries that brought it to pre-eminence. That deal was hard fought, rapidly becoming a hostile takeover after the then-CEO of Blue Circle, Richard Haythornthwaite, decided that the amount that the CEO of Lafarge, Bertrand Coulomb, was offering for his company was not high enough.

A year of claims, counter-claims, offers, rebuffs and haggling ensued, leading to a higher offer that was eventually accepted by the Blue Circle board. However, as Lafarge was a Euro-denominated company and Blue Circle was resolutely British (and was thinking in UK pounds sterling) after exchange rate variations had been taken into account, Lafarge paid less after a year than it had offered in he first place. The British CEO got a big pay-off and went on to greater glory, having appeared to extract a great deal more money (in GB pounds) for his shareholders. Apparently they teach this as a case study in business schools.

Mega-mergers have also shaped other giants in the industry. For example Chichibu-Onoda and Sumitomo-Osaka came together to make Taiheiyo Cement and Ciments Français was added to Italcimenti, although in this last case they still retain their separate identities. Often the deals amount to an accretive takeover by one larger company of a smaller one, but transformative deals consisting of a 'merger' of 'equals' also happen in the cement industry, and with good reason. The merging of research efforts; the optimisation of management; the rationalisation of procurement strategies: all of these will immediately save plenty of money.

However, it's on the financial side that these larger merged companies can sometimes see the most benefit. The cost of borrowing money is inversely proportional to the size of the company (and of the sums involved); the colossal sums demanded by overpaid and greedy bankers will diminish in proportion if the sums involved are larger. So, the cost of borrowing money to be able to invest in takeovers or for capital expenditure will reduce as a proportion of overall cost.

There are other significant potential savings as well, from operational synergies, although these can be harder to quantify and - critically - harder to retain once the competition technocrats have run their slide rules over the proposed deal. They generally do not like too much of the market ending in the hands of too few players.

A good case in point is the recent mega of Tarmac and Lafarge in the UK. To allow the deal to take place the merged company was obliged to sell off one of its key assets, the Hope cement plant, which is now owned and operated by newcomer Hope Construction Materials. Even after the deal has been completed, the market regulator is considering the possibility of making the merged company sell additional facilities, something that strikes Global Cement as 'just not on.'

However, with operations in 90 countries, Lafarge and Holcim can expect to face competition scrutiny in at least 15 countries including Brazil, Canada, Ecuador, France, the UK, the US, Morocco and the Philippines. Meanwhile, in Serbia it has been reported the two companies have a combined market share of 97% across all their business lines!

Lafarge and Holcim have overlapping facilities and distribution networks in a number of countries, and any merged company will probably be required to sell some of them to its competitors. Other companies might be licking their lips at the prospect, as usual CRH is already being lined up in the Irish press, but the units will be sold at a market rate - and not a penny less. It might be that the merged company cannot control which facilities are sold, meaning that they might end up with a less than optimised system. Not so good after all.

If the deal goes through, it will create a Europe-based behemoth with a production capacity of over 200Mt, enough to retain a place on the global top 10 companies with the ever-rationalising and concatenating Chinese companies. When the news first broke we asked what might the new company called? We liked a short mash-up of the two names, like Lolcim (a humorous nod to today's 'youth-speak' perhaps) or Hafarge. However, the level of preparation backing the merger plan soon became clear from financial due-diligence right down to a new name: LafargeHolcim.

Yet for all this co-ordinated work from companies that were meant to be competitors until as recently as March 2014, we should remember what happened to the proposed BHP Billiton-Rio Tinto takeover. Valued at a high of US$170bn it shrivelled up as the global economy collapsed in 2008 amidst concerns from regulators. The idea may be out there but LafargeHolcim has a long way to go before it actually exists.