Displaying items by tag: Ireland
Green cement executive speaks out over ETS 'anomalies'
14 January 2013Ireland: The chief executive of Ecocem, which has 'green' cement plants in Ireland, France and the Netherlands, has called for an 80% windfall tax on cement manufacturers in Ireland, which are currently making profits from the EU Emissions Trading Scheme (ETS). Donal O'Riain says that the Irish cement sector has lost 75% of the demand seen during the boom years of the mid-2000s and that 'anomalies' between its current output and the ETS mean that the Irish economy is losing out.
It is thought that the over-allocation of carbon credits, which now far exceed production requirements, have cost the Irish exchequer Euro120m since 2005 and could cost double that in the seven years to 2020. The Irish cement industry currently gets tens of millions of Euros every year in 'profits' as a result of the scheme.
Previously, the Irish Department of Finance increased the tax on profits from the sale of the credits, from 12.5% to 30%, by ruling that they have to be taxed as a capital gain rather than at the corporation tax rate. O'Riain said they should be taxed at up to 80%. He said that a system that was designed to encourage cement producers to reduce their CO2 emissions was instead incentivising them to produce CO2 at the public's expense.
O'Riain has called on the Irish government, while it holds the European presidency, to change the rules governing the ETS system. He said one of the effects of the way the system operated was to subsidise those plants using environmentally unfriendly practices. "Every 1t of polluting cement in Ireland is sold with a taxpayer subsidy of 17% of the selling price," said O'Riain.
CRH confirms continued interest in India
04 January 2013Ireland: CRH chief executive Myles Lee has confirmed that the building materials group is interested in expanding its presence in India. The comment follows rumours from the Indian media that CRH and Holcim are both in separate talks with the Shriram Group to buy a stake in Sree Jayajothi Cements (SJJCL).
Lee said that CRH remained interested in expanding its presence in India, but declined to comment on Sree Jayajothi. CRH 'terminated' negotiations with Jaypee Cement Corporation in October 2012 because the parties were unable to agree terms.
"We have been on the lookout for a partner for quite some time and we keep having several discussions with different players both strategic and financial," said T Shivaraman, managing director and chief executive of Shriram Engineering and Procurement Company, which owns SJJCL. He refused to comment on the involvement of either CRH or Holcim. It has been reported that private equity giants Blackstone and KKR are also in separate preliminary talks with Shriram about its stake in the cement manufacturer. SJJCL owns a cement plant with a production capacity of 3.2Mt/yr based in Andhra Pradesh.
The rumours arrived at the same time that CRH announced it had made acquisitions and investments valued at Euro630m in 2012. The bulk of the money was spent in the US, where Euro256m was spent in the second half of the year. In Europe CRH spent Euro119m in the second half of 2012 in acquisitions in Finland and the UK. Lee confirmed that CRH holds between Euro1bn and Euro1.5bn to spend on deals.
Both CRH and Holcim have a combined capacity of around 61Mt/yr in India. Holcim controls ACC and Ambuja Cements while CRH has a venture with Hyderabad-based My Home Industries, which owns a 4.2Mt/yr plant.
Quinn and Lagan propose Irish joint venture
20 December 2012Ireland: Quinn Building Products and Lagan Cement Group have signed a memorandum of understanding that could lead to a joint venture (JV) between the two groups.
The businesses, which will become part of the proposed JV, are the combined cement and building products businesses based in Ballyconnell, Derrylin, Kinnegad, Belfast, Cork and Benelux. Quinn Therm, Quinn Litepac, Quinn Tarmac and Lagan Sand are not included in this proposal.
Commenting on the proposed JV, the CEO of Quinn Manufacturing Group, Paul O'Brien, and the CEO of Lagan Cement Group, Jude Lagan, said, "By combining two stable Irish businesses the proposed JV will create a sustainable independent cement manufacturer that can continue to support its customers on a competitive basis."
The joint venture discussions are likely to take up to three months to complete and will involve the development of a business plan to combine the Quinn/Lagan cement and building products operations.
"While it is the intention of both parties to conclude a JV Agreement, no certainty can be assumed prior to the completion of these discussions and the relevant Competition Authority approvals," said a joint statement.
In a separate development, Quinn Manufacturing has also announced a Euro15m investment to upgrade its Ballyconnell cement plant, which, when completed, will facilitate the use of alternative fuels. The plant will be adapted to use solid recovered fuel (SRF), a move that will help to bring Quinn Cement's cost of production more into line with its Irish and European competitors.
CRH terminates Jaypee acquisition
09 October 2012Ireland/India: International building materials group CRH has said that negotiations with Jaypee Cement Corporation have been terminated because the parties were unable to agree terms.
On 7 August 2012 CRH announced that it had entered into talks with Jaypee regarding the possible purchase by CRH of an equity stake in Jaypee's Gujarat cement business. The operations in Gujurat consisted of clinker plants with a total capacity of 3.6Mt/yr. There are also two cement grinding plants with a total capacity of 2.8Mt/yr.
CRH to cut 50 jobs in Ireland
04 September 2012Ireland: Irish Cement, a CRH subsidiary, intends to cut 50 jobs at its Castlemungret plant due to a decline in demand for cement. Management has opened talks with workers and unions on a restructuring programme. Irish Cement has been in production at the Limerick site since 1938.
"Management at Irish Cement has met with employees at the company's manufacturing facility at Castlemungret in County Limerick. The company advised workers and union representatives that the unprecedented deterioration in market conditions, combined with a sustained decline in the demand for cement products, have led to the need for a significant restructuring plan to be put in place at the Limerick facility," said a company spokesman.
According to the release the move follows almost five years of decline in the Irish construction industry, with activity now nearly 80% below peak levels in 2007. Currently there is little visible indication of any market improvement in the foreseeable future.
CRH expects stagnant earnings for 2012
15 August 2012Ireland: CRH expects the Eurozone's economic problems to deepen a slide in sales in the second half of 2012, preventing it from raising profits despite a recovery in the US construction market.
For its interim results for the six months ending on 30 June 2012 the Irish building materials group reported a 5% rise in sales revenue, to Euro8.59bn from Euro8.17bn in the same period in 2011. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 1% to Euro568m from Euro574m.
"The big question is whether Germany and some of the economies that are performing well can compensate and continue to deliver growth for the Eurozone overall," said chief executive Myles Lee.
"We just don't see how the Eurozone can get their act together in time to have a significant impact in the second half," chief financial officer Maeve Carton added.
Sales in the US, where CRH is the leading producer of asphalt for highway construction, rose 8% on a like-for-like basis in the first half compared with a 5% drop in Europe where bad weather added to governments' debt problems. But CRH noted that the rate of economic growth in the US is tailing off and forecast that sales growth in the second half in the region will be 'well below' the 8% sales growth in the first half.
First-half results were propped up by favourable weather conditions and improving construction markets in the US, with revenue, profit and margin growth across all three of its divisions in the first-half, said CRH. The company said that key European markets such as the Netherlands continue to struggle, while it is expecting a contraction in sales in Poland in the second half of 2012.
The company is seeking to cut costs by more than Euro2bn over a five-year period in response.
CRH seeks stake in Indian cement maker Jaypee
08 August 2012Ireland/India: International building materials group CRH has confirmed its entry into negotiations to buy an equity stake in Indian producer Jaypee Cement Corporation. Jaypee Cement owns three cement facilities in the Indian state of Gujurat, in the west of the country, and another in Andhra Pradesh, in the south-east.
CRH said in a statement that the operations in Gujurat consist of clinker plants with a total capacity of 3.6Mt/yr. There are also two cement grinding plants with a total capacity of 2.8Mt/yr. Jaypee Cement is India's third-largest cement maker.
"The completion of any transaction would be subject to satisfactory due diligence, the approval of the respective boards of directors and the granting of regulatory approval," said CRH.
CRH chief executive Myles Lee said at the group's AGM in May 2012 that the company was focused on opportunities in China and India in order to drive long-term growth. CRH has spent close to Euro250m on bolt-on acquisitions in the first half of 2012. This included a further equity injection into its China associate Yatai Building Materials. CRH first entered the Indian market in 2008 through a joint venture with My Home Industries, a cement maker in Andhra Pradesh.
CRH - swimming against the tide
06 June 2012Spend, spend, spend has been the advice for CRH this week. The suggestion by an industry analyst this week that Irish building material conglomerate CRH should go on a shopping spree seems almost perverse! Or at least like stockbrokers trying to drum up excitement.
Just as all of the big multinational cement producers are selling assets and tightening management structures to cope with the ongoing financial turmoil, CRH is the only player that hasn't ruled out acquisitions in 2012. The analyst from Dublin stockbroking firm Davy predicted that CRH could spend up to Euro3.5bn on acquisitions while remaining within its banking agreements; a more level-headed figure was given as Euro1.5bn.
CRH broke down its revenue in 2011 to 55% to the European divisions and 45% to the American ones, with European Distribution, Americas Materials and European Materials being its top three sections. European Materials, the worldwide division containing cement assets generated Euro2.99bn, 16.5% of total group revenue.
With 85% of CRH's European Materials division concentrated on Switzerland, Finland, Benelux, Eastern Europe, Turkey and Asia its exposure to the Eurozone economic slowdown has been reduced compared to the competition. Yet what to buy next is fraught with risk. If Greece exits the Euro for example, then there may be some bargains going, but how long it would take these assets to become profitable is a big unknown.
Similarly, the over-indebted Mediterranean countries present opportunities and challenges. CRH's decision to transfer its 49% holding in Portuguese cement joint venture Secil to Semapa in May 2012 may indicate CRH's intention to stay well away from the Eurozone until the dust settles. Given the amount of cash that CRH could potentially throw around however, it seems odd that the company didn't try to disrupt the ongoing Cimpor takeover by two Brazilian firms. If anything happened to the bid by Camargo Corrêa and Votorantim then CRH would be in a prime position to benefit should it wish.
Whatever CRH decides to do with its money, it's a good problem to have! Lafarge, Cemex, HeidelbergCement and Holcim must all wish they had the same dilemma.
CRH urged to go on spending spree
06 June 2012Ireland: CRH could benefit as some of its bigger European competitors sell assets to strengthen their balance sheets, according to one senior industry analyst.
Robert Gardiner of Dublin stockbroking firm Davy says that CRH could spend up to Euro3.5bn on acquisitions while remaining within its banking agreements. However, the group's commitments to ensuring that its earnings are over six times net interest payments means that a more realistic estimate of the amount it has to spend on buying up rival businesses is closer to Euro1.5bn.
Gardiner says that the Irish group is alone among European operators in saying it intends to continue spending money on acquiring businesses. Many of its rivals, including Holcim, HeidelbergCement and Lafarge, are preparing to sell off assets to boost their own balance sheets. Gardiner adds that CRH can hopefully 'cherry pick' some of these businesses as they come on the market.
Lafarge sold Euro2.1bn worth of businesses in Asia, Australia and the US in 2011. Gardiner points out that it has signalled that there is another Euro1bn to come in 2012. He says there is speculation that its South African cement business is likely to be put on the block soon. In addition, the British authorities want Lafarge and Tarmac to sell some businesses, including cement, asphalt and readymix concrete plants, and a number of quarries, in return for allowing them to pursue a joint venture in that market. Similarly Holcim's new chief executive, Bernard Fontana, has signalled it could 'selectively' dispose of some of its businesses in 2012 as it moves ahead with a cost-cutting programme, while the group will restrict spending on expansion.
Mexican giant Cemex, which in is in the process of completing the takeover of the old Readymix plc in Ireland, wants to sell US$1bn worth of assets by the end of 2013, and intends to offload about US$500m in 2012. US operator Vulcan is looking at disposing of a similar level of assets.
CRH, which had revenues of Euro18m in 2011, spent Euro230m on acquisitions in the first four months of 2012. Much of the group's growth over the last 30 years has come through acquisition. In 2009, it raised Euro1.2bn through a rights issue in what was the largest such exercise in Irish corporate history. Its aim was to use the cash to buy businesses which it believed its rivals would be forced by to put on the market by high debts repayments. However, a fall in interest rates and other factors helped ease the burden on some of the industry's players and the opportunities that CRH foresaw did not materialise. Acquisition activity at the group has since picked up. In 2011 it spent over Euro600m on 45 purchases.
CRH set to build on stake in China
16 May 2012China: Irish building materials group CRH has said at its annual meeting that it planned to increase its stake in the Yatai cement business in China to 49% from 26% as part of a wider push into emerging markets.
Chief Executive Myles Lee said CRH was preparing to exercise an option, opening in January 2013, to raise the stake. "We are setting the scene at the moment for that and we are keen to increase that stake. Obviously in everything valuation is key, so it has to be at a valuation that makes sense for our shareholders," Lee said.