Displaying items by tag: LafargeHolcim
Third quarter 2020 update for the major cement producers
11 November 20202020 has been a year like no other and this clearly shows in the financial results of the major cement producers so far.
The first jolt is that several major Chinese cement producers have seen their sales fall. Following a tough first quarter due to coronavirus, the Chinese industry then overcame floods in the summer, to eventually report a decrease in cement output of 1.1% year-on-year to 1.68Bnt in the first nine months of 2020. The world’s largest cement producer, CNBM, reported a slightly smaller drop in sales year-on-year in the first nine months of 2020. This relatively small fall, just below 1%, may be due to CNBM’s size and diversity of business interests. Other large Chinese producers have noted bigger losses, such as Huaxin Cement’s 9% sales decline to US$3.04bn and Jidong Cement’s 5% sales fall to US$3.8bn. However, Anhui Conch actually saw a 12% rise in sales to US$18.7bn.
Graph 1: Sales revenue from selected cement producers, Q1 - 3 2020. Source: Company reports.
Graph 2: Cement sales volumes from selected cement producers, Q1 - 3 2020. Source: Company reports.
LafargeHolcim’s sales look worse in Graph 1 than they really are because the group was busy divesting assets in 2019. Its net sales fell by 7.9% on a like-for-like basis to US$18.7bn in the first nine months of 2020, a rate of change similar to HeidelbergCement’s. Being a properly multinational building materials producer brings mixed benefits given that these companies have suffered from coronavirus-related lockdowns in different times in different places but they have also been able to hedge themselves from this effect through their many locations. In the third quarter of 2020, for example, LafargeHolcim was reporting recovering cement sales in its Asia-Pacific, Latin America and western/central parts of its Europe regions but problems in North America. Again, HeidelbergCement noted a similar picture with cement deliveries up in its Africa-Eastern Mediterranean Basin Group area, stable in Northern and Eastern Europe-Central Asia and down elsewhere. How the latest round of public health-related lockdowns in Europe round off a bad year remains to be seen.
The other more regional producers are noteworthy particularly due to their different geographical distribution. Cemex has seen a lower fall in sales revenue and cement sales volumes so far in 2020, possibly due to its greater presence in North America. What happens in the fourth quarter is uncertain at best, with US coronavirus cases rising and the Portland Cement Association (PCA) expecting a small decline in cement consumption overall in 2020. Along similar lines, Buzzi Unicem appears to have benefitted from its strong presence in Germany and the US, leading it to report a below 1% drop in sales revenue so far in 2020, the lowest of the decreases reported here for the western multinational cement companies.
Looking more widely, UltraTech Cement, India’s largest producer, had to contend with a near complete government-mandated plant shutdown in late March 2021. The figures presented here are calculated for comparison with other companies around the world due to the difference between the standard calendar financial year (January to December) and the Indian financial year (April to March). However, they suggest that Ultratech Cement suffered a 14% fall in sales to US$3.9bn and an 8% decline in sales volumes to 56Mt, among the worst decline of all the companies featured here. This is unsurprising given that UltraTech mostly operates in one country. Sure enough it bounced back in its second quarter (June – September 2020) with jumps in revenue, earnings and volumes.
Finally, for a view of a region that hasn’t had to face coronavirus-related economic disruption of anything like the same scale, Dangote Cement has reported solid growth so far in 2020, with rises in sales and volumes both above 5%. Economic problems at home in Nigeria have seen relatively higher growth elsewhere in Africa in recent years but now the pendulum has swung back home again. The big news has been that the company has pushed ahead with plans to turn Nigeria into a cement export hub, with a maiden shipment of clinker from Nigeria to Senegal in June 2020. The vision behind this has expanded from making Nigeria self-sufficient in cement from a few years ago into making the entirety of West and Central Africa cement and clinker ‘independent.’
The big news internationally this week was of the reported effectiveness of a Covid-19 vaccine in early trials by Pfizer and BioNTech. It might not yet make it into people’s arms at scale but it shows that the vaccine appears to work and that others in development and testing may do too. Building material manufacturer share prices didn’t rally as much as airlines or cinema chains on the news, construction has carried on after all, but this is a positive sign that normality for both health and wealth is on the way back at some point in 2021. One point to consider, given the wide regional variation with the economic effects of coronavirus, is what effect a disjointed global rollout of a vaccine or vaccines might have. A building material manufacturer dependent on a region that stamps out the virus later than other places might face an economic penalty. Recovery seems likely in 2021 but it isn’t guaranteed and the implications of the coronavirus crisis seem set to persist for a while yet. Here’s hoping for a different outlook at this point in 2021.
Mbeya Cement launches new pozzolana cement product
11 November 2020Tanzania: Mbeya Cement, part of LafargeHolcim Tanzania, has launched Lafarge Tembo Pozzi, a pozzolana-based cement product. It is intended to replace imports of fly ash, according to the Daily News newspaper. At present the country imports 40,000t/yr of fly ash for the construction industry.
France: LafargeHolcim subsidiary Lafarge France says that it will continue to provide its regular service to customers as operations continue into a second national coronavirus lockdown in 2020. This was made possible by the government’s decision to permit the continuation of construction and industrial activities, according to the company.
It said, “The company has learned a lot since the containment last spring and is prepared to guarantee the best possible service for all of its markets, even under the specific conditions linked to the acceleration of the Covid-19 epidemic. All activities - cements, concretes and aggregates - will therefore operate normally throughout the country.” It added, “All our sites are now showing sufficient stock levels to deal calmly with the coming months.”
LafargeHolcim and Witteveen + Bos launch 3D Printing Hackathon
06 November 2020France: Switzerland-based LafargeHolcim and Netherlands-based Witteveen + Bos have launched the 3D Printing Hackathon, an event in which engineering, architecture, and materials science students will compete to develop a new product leveraging 3D concrete printing technology to solve major problems in construction.
LafargeHolcim will supply concrete and provide technical mentorship to contestants. The company said that, while construction accounts for 40% of global carbon dioxide (CO2) emissions, 1.6bn people are altogether without adequate housing. “Building more with less accelerates the speed of construction and reduces a building’s footprint. Leading the way in green building solutions, LafargeHolcim is actively deploying 3D printing towards addressing these challenges.” Research and development head Edelio Bermejo added, “We need to join forces to make this ground-breaking technology a reality. Join us on this exciting adventure!”
The group is offering a prize pool of Euro15,000 and operational support for full-scale implementation of the winning 3D printing solution.
Aggregate Industries to sell new Lafarge bagged cement and concretes
05 November 2020UK: LafargeHolcim subsidiary Aggregate Industries has launched three Lafarge branded packed cement and concrete products: High Performance Concrete; Instant Concrete; and Premium Cement. The company says that the products are “a response to rising demand from merchants and their customers alike to offer more specialised packed cement solutions,” and are suited to various domestic applications.
Product manager Lee Dunderdale said, “Through our on-going engagement with builders and builders’ merchants in the UK, we’ve had growing calls to offer more specialised solutions which offer the level of superior quality our brand has become known for. As such, we’ve invested heavily in creating these additional three products, which have been purposely manufactured to provide our customers with an incredibly easy, quick and exceptional quality cement solution for a range of typical applications. We believe that these new additions - alongside our well-established packed cement range - will see us continue in our position as the one-stop-shop provider for cement product excellence here in the UK. “We’d encourage all merchants and their customers to make use of these high-quality products, which will no doubt enable even greater ease of use and convenience for busy builders and DIYers.”
Who wants a piece of Eurocement?
04 November 2020Eurocement changed owners this week when Sberbank took control of the company’s parent organisation. Due to a ‘difficult financial situation’ the state-owned bank said it had consolidated 100% of the shares of Eurocement’s parent company GFI Investment Limited. It’s uncertain quite how difficult this situation is but in 2016 the cement producer owed the bank Euro700m. Local media agency RosBiznesConsulting (RBC) reported in September 2020 that the ‘problem borrower’ that had caused a record increase in overdue debt at Sberbank in July 2020 was none other than Eurocement. Whilst Sberbank has said so far that it does not have operational control of the group, it is seeking a strategic investor for the asset.
This is a major story given that Eurocement is Russia’s largest cement producer and it operates 19 cement plants Russia, Ukraine and Uzbekistan. It said it produced 16.5Mt of cement domestically in 2019 but this compares to a production capacity of around 50Mt/yr suggesting a considerably low utilisation rate of just one third! The producer has embarked on a modernisation programme in recent years but many of its plants are old and use wet-process production lines.
2019 finally saw the Russian cement market turn around following decline since 2015. Unfortunately, CM Pro reports that cement production in Russia as a whole fell by 5% year-on-year to 25.1Mt in the first half of 2020. Cement shipments fell by a similar rate. This trend appears to have carried on through July and August 2020. Cement consumption has fallen fairly uniformly in most regions with the exception of the Northwestern Federal District, which has seen a modest increase. In the middle of the year, Soyuzcement - the Union of Russian Cement Producers, was expecting wildly different scenarios ranging from falls of up to 10% in a negative situation to rebound of up to 3% in a positive one. It was pinning its hopes on government support for the construction industry in various ways. With the trend to August 2020, record breaking numbers of new coronavirus cases in early November 2020 and the onset of winter, it seems unlikely that Soyuzcement’s positive thinking will come to pass.
With this in mind who might want to buy into Eurocement? No doubt various private equity firms and local producers are watching the oil price carefully while they plan their next move. Internationally, LafargeHolcim seems the obvious western multinational contender with a presence in the country. Yet it seems unlikely it would want to take the risk, following its departure from certain regions like South-East Asia in recent years and persistent rumours about other divestment targets. HeidelbergCement’s balance sheet, credit lines and appetite for risk might not yet withstand a major investment in Russia. Buzzi Unicem has actually been expanding recently with an acquisition in Brazil but whether it’s prepared to bet on another market disrupted by coronavirus is unknown. China National Building Materials Group Corporation (CNBM) was reportedly planning on becoming a shareholder of Eurocement Group in 2016 but this may have just been bluster surrounding geopolitical links between Russia and China, and general cooperation between the companies on upgrading Eurocement’s old production lines. However, Russia is the next location in China’s Belt and Road initiative so it’s not ridiculous. Whoever steps up can expect the Russian government to take a keen interest, depending on how much control Sberbank wants to offer up of Eurocement. The story continues.
LafargeHolcim España and Carbon Clean sign carbon capture agreement
04 November 2020Spain: LafargeHolcim España has signed an agreement with Carbon Clean, ECCO2 and gas systems specialist Sistemas de Calor for the installation of a carbon capture and storage (CCS) unit at its Carboneras integrated cement plant in Almeria. The company say that the installation will start in 2022 to capture 10% of CO2 emissions with the eventual potential to capture 0.7Mt/yr of CO2 and achieve 100% decarbonisation at the plant. The producer will supply the captured CO2 to Sistemas de Calor for use in agricultural greenhouses, reducing the soil and water intensity of crop production.
Chief executive officer (CEO) Isidoro Miranda said, “Within the framework of our Ecological Transition Strategy, we are tackling climate change through innovative initiatives that allow us to develop low-carbon products and solutions. In our journey towards carbon neutrality, these types of collaborations are key. We hope that, working with our partners Carbon Clean, ECCO2 and Sistemas de Calor, we can develop this innovative circular model with the potential to revolutionise the cement sector and agriculture.”
On 20 November 2019 LafargeHolcim España committed a budget of around Euro20m to upgrades to reduce its cement plants’ CO2 emissions by 90,000t/yr.
LafargeHolcim boosts earnings in third quarter of 2020
30 October 2020Switzerland: LafargeHolcim’s like-for-like net sales fell by 2.6% year-on-year to Euro6.04bn in the third quarter of 2020 from Euro6.68bn in the same period in 2019. However, its recurring earnings before interest and taxation (EBIT) rose by 10% to Euro1.35bn from Euro1.33bn. It attributed recurring EBIT margin growth to margin increase in its cement business and cost management under the ‘Health, Cost & Cash’ action plan. For the first nine months of 2020 net sales fell by 7.9% year-on-year to Euro16.0bn from Euro18.9bn in the same period in 2019. Its EBIT decreased by 7.2% to Euro2.47bn from Euro2.88bn.
“Our third quarter results demonstrate the resilience of our business and the strength of our decentralized, empowered operating model,” said chief executive officer (CEO) Jan Jenisch. “In addition, the Group saw an increase in revenues from its branded products, which are sold across its broad distribution and retail network. For example, the company recorded a volume increase of 5% in its cement bag sales.”
Third quarter sales and earnings were either stable in improved in most regions with the exception of North America and Middle East Africa. In North America volumes were reduced by coronavirus and a slowdown in the oil and gas industry in western Canada. Overall sales fell in Middle East Africa but earnings were aided by sales volume growth in Nigeria. Elsewhere, cement market recovery was noted in Mexico and Brazil and weaker markets mentioned in the Philippines and Australia.
LafargeHolcim launches EcoLabel green cement and concrete brand
28 October 2020Switzerland: LafargeHolcim has announced the launch of EcoLabel, a brand to encapsulate its green cements and concretes. All products bearing the label must have either a 30% lower carbon dioxide (CO2) footprint compared to the local industry standard or use 20% recycled content. The company says that the reason behind EcoLabel is to “support builders in making greener choices” and to “accelerate the company’s Net Zero Journey.”
Chief sustainability officer Magali Anderson said, “I am very proud of how our company is turning our net zero pledge into action across more than 70 countries, with our broad range of green building solutions. The EcoLabel is a key milestone on this journey, confirming LafargeHolcim’s commitment to lead the way in sustainability and innovation.”
Lafarge Poland to upgrade Małogoszcz cement plant
27 October 2020Poland: Lafarge Poland has shared plans to modernise its 2Mt/yr Małogoszcz cement plant in Świętokrzyskie Voivodeship. The company says its planned investment of Euro100m will, “increase technical efficiency and minimise environmental impacts by reducing CO2 emissions by 20% and energy consumption by 33%.” The project, which will partly be carried out in partnership with Krakow Technology Park, is scheduled for completion in 2023.
Lafarge Poland president Xavier Guesnu said that the modernisation is part of the company’s effort to meet its commitment of 55% emissions reduction to 300kg/t of cement in 2030 from 667kg/t in 1990.