Displaying items by tag: Lafarge
Lafarge plans to increase cement production capacity
01 August 2014Zambia: Lafarge Cement Zambia plans to double its cement production capacity from its two local plants to meet the growing demand, according to CEO Emmanuel Rigaux. In 2013, the domestic market for cement grew by 17%, largely driven by the continued increase in government infrastructure projects, mining expansion activities and to a smaller extent by individual home building projects.
"Lafarge Zambia is planning to double its capacity in Ndola and Chilanga through debottlenecking and construction of a new line," said Rigaux. "This will enable us to remain the market leader and preferred supplier of construction solutions in Zambia." Rigaux said that in 2013 production volumes improved by 105,000t to 1.18Mt from 1.07Mt in 2012, representing 9% growth. Volumes are expected to continue to improve on the back of strong growth in the construction industry in both domestic and export markets. Rigaux said that domestic sales volumes grew by 18% in 2013, while export sales volumes declined by 25% due to increased focus on the domestic market.
"The second half of 2013 saw a sharp improvement in operational and industrial results both at both our Ndola and Chilanga plants," said Rigaux. "Lafarge Zambia also implemented targeted cost reductions and logistical optimisations, which enabled us to improve our operating margins." Rigaux said that Lafarge Cement Zambia's financial position and cash flow remained solid with strong cash position and no external debt.
Germany: HeidelbergCement has reported that its profit for the second quarter of 2014 declined to Euro233m from Euro368m in the same period of 2013. However, earnings before interest and income taxes (EBIT) grew to Euro527m from Euro511m in 2013. Revenues for the quarter were Euro3.57bn, down from Euro3.59bn in 2013. HeidelbergCement's cement and clinker sales volumes rose by 4% to 22.3Mt compared to 21.4Mt during the second quarter of 2014.
HeidelbergCement announced that it plans to start a process to divest its building materials unit in September 2014 and expects to conclude the sale quickly. Potential buyers include private equity funds, not industrial enterprises, according to Bernd Scheifele, HeidelbergCement's CEO. Scheifele added that HeidlerbergCement would consider buying assets to be sold by Lafarge and Holcim, except for assets located in the UK and Germany.
LafargeHolcim: A half-time reality check?
30 July 2014It has been another week of financial results from the global cement industry, with big hitters Lafarge and Holcim reporting what some might call 'concerning' numbers for the first half of the year. Both cement producers are, of course, making preparations ahead of their proposed merger, which could come to pass within 12 months, all being well. But are things well?
In the first half of 2014, Lafarge saw its earnings before interest, tax, depreciation and amortisation (EBITDA) decrease by 2%, with sales down by 5%. Lafarge noted that its shrinking size, this week highlighted by the sale of its Pakistani assets, and adverse exchange rate effects did not help matters. CEO Bruno Lafont was up-beat in asserting that North American and European markets would see improvements over the rest of 2014. Meanwhile, things are slightly better at Holcim, which reported an increased EBITDA (albeit just by 0.2%) as well as like-for-like sales that were up by 4.8% compared to the first half of 2013. However, its increased sales volumes and revenues could not prevent a fall in net income.
If one takes these results together, the first half of 2014 seems to been one of general stagnation for the future LafargeHolcim. It is important to remember that even more asset sales are inevitable, mainly from the weaker performer Lafarge. We are left to ponder how the new LafargeHolcim will perform in 12 months time.
At present, without serious improvement across all world economies, it is likely that LafargeHolcim (and other multinational producers) will continue to be on relatively shaky ground post-merger. The reality is that many of the promising markets that the company will serve are no longer rapidly-growing emerging economies, but are instead caught up in lower-than-expected growth (for example in Indonesia, India, China and Brazil), political disputes (for example in Algeria, Thailand, Eastern Ukraine and the Middle East) and other damaging events (for example the Ebola outbreak in West Africa). The global economy is certainly 'uneven,' as Holcim's CEO Bernard Fontana said in Holcim's results statement, but it also seems to be getting more uneven. Simple geographical and income groupings for countries, for example 'Far East = Profit,' are becoming increasingly out of date.
Navigating such a rapidly-changing world is, in one sense, less difficult for larger companies than smaller ones because risk can be spread over a much wider range of economies. However, larger companies are also slower to react to changes and the appropriateness of their responses may not be ideally tailored to individual markets. When LafargeHolcim comes to be, it will likely suffer also due to the inherent difficulties of merging two such large firms that may not see eye-to-eye on all issues. This will have to be done without some of its best assets and a lot of its 'run-time' will be dedicated to the merging process. In such an environment it is easier to be distracted from its main tasks: is it possible that this effect is already becoming apparent? As Lafarge and Holcim's latest results show, there is little room for deterioration in their results.
There is a key question: Is the LafargeHolcim first half EBITDA slide a sign of poor markets or related to preparations for the merger that shareholders will tolerate as they anticipate future riches? Will LafargeHolcim be profitable in the long-run?
Lafarge reports 2% fall in EBITDA
25 July 2014France: Lafarge has posted another drop in quarterly sales and profit, mainly due to adverse exchange rates and its shrinking scale as it sheds assets to trim debt. It said that its planned merger with Holcim is on track and that its banks would give detailed information 'in the coming days' to potential buyers regarding the assets it plans to sell.
Lafarge's earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 2% to Euro812m in the second quarter of 2014 as sales fell by 5% to US$3.37bn. Lafarge said that it expected a smaller impact from adverse foreign exchange rates on its performance in the second half of 2014, after a drop in both sales and EBITDA in the second quarter. Lafarge aims to bring debt below Euro9bn in 2014 and confirmed that it expected cement demand to grow by 2 - 5% in its main markets.
"The situation in North America is improving, growth continues in emerging markets and we see the first signs of recovery in Europe," said Lafarge's chief executive Bruno Lafont. He cited Poland, the UK and Greece as countries showing improvement. However, the construction sector remains subdued in France.
Lafarge sells its Pakistan business
24 July 2014Pakistan: Lafarge has announced that it will sell its 75.86% stake in Lafarge Pakistan Cement Ltd and will use the proceeds, estimated at Euro190m, to cut its debt. BestWay Cement has been announced as the buyer. The transaction still requires the approval of local market and anti-trust authorities.
A rosy week for the global cement industry
23 July 2014The 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.
Thierry Legrand appointed as Lafarge’s senior vice president of transformation and acceleration
23 July 2014France: Thierry Legrand has been appointed as senior vice president of transformation and acceleration at Lafarge's head office in Paris. Legrand has been the chief executive of Lafarge South Africa for five years. Kenneth MacLean, who is currently Lafarge group's senior vice president for performance aggregate, will replace him from 1 August 2014.
During his time in South Africa, Legrand integrated the company's local cement, aggregates, ready-mix concrete, gypsum and fly ash business lines into a country organisation and drove its ambition of contributing to building better cities. MacLean said that he was excited to be in South Africa and looked forward to the challenge.
World: Holcim and Lafarge have begun to formally notify regulators as to how they will tackle antitrust concerns, according to Holcim's CEO Bernard Fontana. The two companies have filed formal notifications, which generally include information on what the combined entity will look like and steps it will take to prevent it from abusing its size, in about two-thirds of the 15 jurisdictions that require a review of the proposed deal. Those include the US, Canada, Mexico, India and Russia, among others.
Fontana said that discussions with the European Union (EU), where the two companies have some of their greatest overlap, were at an 'advanced' stage. He added that he expects formal notification to be made in the summer of 2014. "We are on track," said Fontana, who has run Holcim since 2012. "We will do what we planned to do."
Holcim and France's Lafarge have moved quickly to satisfy regulators since unveiling their proposed transaction, which will create a cement company with combined sales of Euro31.8bn. The deal is expected to face significant challenges from competition authorities. EU antitrust chief Joaquin Almunia has already said that the deal is likely to face an extended probe by his agency.
Fontana said that the list of proposed businesses and plants it would sell in order to satisfy regulators, which it announced recently, would maintain entire businesses that function well and generate the greatest proceeds from the sale process. According to Fontana, Holcim and Lafarge have received more than 100 expressions of interest from potential buyers of the assets.
"We have had marks of interest from all kinds of prospective buyers," said Fontana. He added that potential buyers include private-equity groups and companies in the cement industry, including some from emerging markets. Holcim and Lafarge could also choose to sell some assets via initial public offerings.
Nigeria: The board of directors of Ashaka Cement plc, with the support of parent company Lafarge, has agreed to fast track the expansion of its US$617m cement plant in Ashaka, Gombe State. The move became imperative in order to guarantee the future of Ashaka Cement, to enhance job creation and to deliver economic and social welfare to the immediate communities. Chairman of the board of Ashaka Cement, Alhaji Umaru Kwairanga, confirmed the developments.
"Having secured sufficient limestone and coal reserves to support the existing plant as well as the new plant, the contracts have been signed with the main equipment and engineering suppliers," said Kwairanga. He added that credit facility lines of US$308m had been secured and signed in addition to internally generated cash flows to support the expansion project.
"Ashaka Cement has operated in harmony with all of its neighbouring communities to the mutual benefit of both parties," said Kwairanga. "In the last three years alone the company has spent US$2.47m on community-related projects and there is the opportunity for the company to do more as the partnership thrives."
An update on the algae bioreactor project at Votorantim's St Marys cement plant in Canada this week provides a good opportunity to review this particular aspect of carbon sequestration. The project, run with Pond Biofuels, went live in 2009. It has now reached its third generation bioreactor at the site.
Little or no performance data has been released generally so we have no way at present of knowing how viable the process is commercially. Cement backers, Brazilian firm Votorantim, are certainly excited by the project even if only for the sustainability kudos it gives them. Director Edvaldo Araújo Rabello presented the project as one of the company's highlights at a keynote presentation at the 6°CBC Congresso do Cimento held in São Paulo, Brazil in May 2014.
One hurdle for the St Marys pilot is the relative lack of light, a required input for algae photosynthesis, even in Canada's most southerly state. Pond Biofuels have reportedly dodged this by using continuously flashing LEDs to simulate artificially short days that encourage growth. On paper or powerpoint a process that could potentially cut even a proportion of CO2 emissions from a cement plant sounds enticing. Yet if it creates more CO2 than it saves, through electricity requirements for example, than it isn't worth using.
This is probably what shelved Lafarge's Carbon Capture and Transformation project. It ran a pilot project at its Val d'Azergues plant in France in 2009 with Salata GmbH. The pilot worked but the researchers decided that new advances in processes and biotechnology were required to make the economic and environmental results better. Other companies have also had problems. Holcim started its Aurantia – GreenFuel project in late 2007 at its Jerez cement plant in Spain, backing it with an investment US$92m. This project stalled when GreenFuel shut in 2009 citing lack of funding as the recession hit.
ACC in India also reportedly started its own algae project in 2007, mentioning it in its sustainability report, but nothing more has been reported since. Since this burst of interest InterCement has invested US$2.5m towards algae research in 2013 working with the Federal University of São Carlos, the Federal University of Santa Maria and Algae Biotecnologia.
Algae-based carbon projects for cement plants may remain stuck in the research stage but the market for biofuels continues to grow. For example, this week we report that Ohorongo Cement in Namibia plans to increase its use of blackthorn as a biofuel to use as an alternative fuel in co-processing. The prospects of turning waste CO2 into a valuable commodity remains uncertain, but the rewards are great. Let's wait and see what St Marys can do.