Displaying items by tag: LafargeHolcim
Philippines: The Philippine Competition Commission (PCC) is preparing to investigate the cement industry for alleged violations of competitive practice. It says it has found reasonable grounds to proceed to a full administrative investigation on the cement industry for possible violations of Sections 14 and 15 of the Philippine Competition Act, according to the Philippine Star newspaper. This follows a legal statement by Victorio Dimagiba, a former trade undersecretary, in August 2016 accusing the Cement Manufacturers Association of the Philippines (CEMAP), LafargeHolcim Philippines and Republic Cement and Building Materials of engaging in anti-competitive agreements.
Dimagiba has accused the cement producers of striking illegal agreements including, “restricting competition as to price or components thereof or other terms of trade, abusing their dominant position by engaging in conduct that substantially prevents, restricts, or lessens competition, imposing barriers to entry, or committing acts that prevent competitors from growing within the market.” He has also alleged that Ernesto Ordonez, the head of CEMAP, has used the trade association to justify violating the Philippine Competition Act, as well as maintaining prices of domestic cement in the retail market ‘unreasonably’ high.
Ordonez responded to the claims saying that he was puzzled about the PCC’s decision and that CEMAP had not been informed about a preliminary inquiry.
Jordan: The General Association for Construction Workers has opposed Lafarge Jordan's decision to give workers at its Fuheis cement plant a three-month paid holiday. The worker’s body has requested that Lafarge provide staff with guarantees that they will receive their full rights after the holiday period ends, according to the Jordan Times. The paid leave started on 2 March 2017 and was implemented to reduce costs at the plant. Clinker production stopped at the plant in 2013 and cement grinding and packaging stopped in July 2016. Around 200 workers are affected by the arrangements.
Algeria: Serge Dubois, the head of communications at LafargeHolcim Algeria, says that Algeria faces a cement production overcapacity of 10Mt by 2019. In an interview with a local radio station he added that the country will overproduce 1Mt in 2017 and that it imported 3.5Mt in 2016, according to Maghreb Emergent. LafargeHolcim intends to diversify its product range to cope with this anticipated production glut with a focus on roads, airports and industrial users.
Colombia: Gebr. Pfeiffer has sold a Ready2Grind modular grinding system with a MVR 2500 C-4 mill to LafargeHolcim Colombia. The order consists of a Ready2Grind with a finished product storage area and a packing plant supplied by Claudius Peters. No value for the sale has been disclosed.
LafargeHolcim admits to deals with armed groups in Syria
02 March 2017Syria: LafargeHolcim has accepted that its conduct at a cement plant in Syria in 2013 and 2014 was ‘unacceptable.’ An internal investigation by the group into Lafarge’s behaviour has reported that staff committed ‘significant errors in judgment.’ The probe, supervised of the Finance and Audit Committee of the Board, was started in response to media allegations in 2016 that legacy Lafarge operations had engaged in dealings with armed groups and with sanctioned parties during 2013 until the plant was ultimately evacuated in September 2014.
The investigation has found that the Lafarge subsidiary appears to have provided funds to third parties to work out arrangements with a number of armed groups, including sanctioned parties, in order to maintain operations and ensure safe passage of employees and supplies to and from the plant. The investigation could not establish with certainty the ultimate recipients of funds beyond those third parties engaged. However, LafargeHolcim says that it believes its staff acted in a manner they believed was in the best interests of the company and its employees.
Following the review, the board has approved the creation of a new Ethics, Integrity & Risk committee, supervised by a member of the Executive Committee. The group will also adopt a more rigorous risk assessment process focusing in particular on high risk third parties and joint venture partners, a restricted party screening program, a new sanctions and export control program and further efforts resulting from a benchmarking exercise it has undertaken.
Finally, LafargeHolcim does not believe that its culpability poses any financial impact to its business. It says that its operations in Syria operated at a loss during the time period in question and represented less than 1% of the group’s sales at the time.
LafargeHolcim sales crumble as earnings grow in 2016
02 March 2017Switzerland: LafargeHolcim’s net sales took a tumble of 8.7% to Euro26.9bn in 2016 from Euro29.5bn in 2015. Although on a like-for-like basis it says they declined by just 1.7%. However, its adjusted operating earning before interest, taxation, depreciation and amortisation (EBITDA) rose by 1.3% to Euro5.83bn from Euro5.75bn, with a higher improvement rate on a like-for-like basis. The building materials company didn’t explain why its sales had fallen in 2016. Instead it focused on its efforts on cutting costs, building benefits from synergies, working on pricing and growing its earnings.
“Our strong execution was visible across our five regions, which all grew earnings for the quarter and for the year. This performance underlines the strength of our diversified portfolio, which has a good balance of mature and developing markets. I am also pleased with the positive trajectory of markets such as the US, Nigeria, India and key countries in Europe, which we have singled out as important drivers for growth in 2017 and beyond,” said chief executive officer Eric Olsen.
The group’s sales volumes of cement fell by 8.8% to 233Mt from 256Mt with decreases in all regions. It reported that production overcapacity hit cement volumes and prices in Indonesia, Brazil continued to face challenging operating conditions with its ongoing recession and both Nigeria and Egypt faced difficult markets in the period. Of particular note its sales volumes fell in North America due to an economic downturn in Western Canada and a strong fourth quarter in 2015 to measure against. Operating EBITDA rose on a constant basis in Europe and North America only.
Focus on Australia
01 March 2017A couple of news stories from Australia this week give us a reason to look at the country’s cement industry. All the main producers have now released their preliminary reports for the second half of 2016, with the exception of LafargeHolcim, one of the joint owners of Cement Australia. Essentially, the picture is mixed from two of the three main producers - Adelaide Brighton and Boral - with falling sales revenues but growing sales in the east. In mid-2016 the Australian Industry Group Construction Outlook survey predicted that the infrastructure, commercial and residential sectors would start to recover in the second half of 2016 leading to an upturn in 2017, although falling mining and heavy engineering construction was expected to continue to contrast in 2016.
The local market is split in clinker production terms with most of the producers (relatively) concentrated in the south and east of the country. Cement Australia leads in cement production capacity with 2.8Mt/yr or 42% of the country's production base from two integrated plants. Adelaide Brighton then comes next with 2.3Mt/yr or 35% from three plants and Boral follows with 1.5Mt/yr from one plant since the closure of clinker production at its Waum Ponds Plant in Victoria in 2012. The cement grinding plant situation is more varied with Adelaide Brighton's Northern Cement plant in the Northern Territory and BGC Cement plant in Western Australia amongst the country's 12 units, according to Global Cement Directory 2017 data. This total also includes a few slag cement grinding plants such as the Australian Steel Mill Services' plant and the Cement Australia-Ecocem plant that are both in Port Kembla.
Adelaide Brighton reported that its sales volumes of cement were down in 2016 due to major declines in Western Australia and the Northern Territory. Here, volumes had fallen by around 20% year-on-year. Unfortunately, a revival in southern and eastern Australia in the second half of the year wasn’t enough to stem the tide of poor sales. Power supply issues in Southern Australia also caused disruptions at both the company’s own plants and at those of its customers, leading to reduced sales. The cement producer also said that its import volumes had fallen by 2Mt due to lower sales in Western Australia and the Northern Territory and that import costs had increased due to a drop in the value of the Australian Dollar. Adelaide Brighton's reliance on imports is interesting given that this week Semen Padang, a subsidiary of Semen Indonesia, announced that it had started exporting cement to Australia.
Meanwhile, Boral Australia said that its cement revenue had fallen by 3% year-on-year to US$95.3m for its first half to 31 December 2016. However, cement sales volumes grew by 3% driven by higher direct sales. It also noted that competition and energy costs had increased in the period. HeidelbergCement, the other joint owner of Cement Australia, along with LafargeHolcim, said that its operations in Australia had delivered solid development due to strong residential construction demand and strong demand on the East Coast that compensated for a weaker mining sector. LafargeHolcim confirmed this in its half-year report adding that road infrastructure projects had also helped. It also noted that benefits to its adjusted operating earnings before interest, taxation, depreciation and amortisation (EBITDA) had been accrued through energy savings and lower clinker import costs.
LafargeHolcim's financial results for 2016 are due later this week on 2 March 2017. Potentially they have big implications for the Australian cement market given the rumours that were swirling around a year ago about a potential divestment. Although the signs so far suggest that its subsidiary Cement Australia did okay in 2016, pressure elsewhere in the group might prompt a sale of its share. We discussed this issue in December 2015 but since then Adelaide Brighton publicly said it was working on an acquisition plan, including strategy on how to cope with any potential competition issues. All eyes will be on LafargeHolcim later in the week.
CRH to sell cement plants in Germany
01 March 2017Germany: CRH has agreed to sell one integrated cement plant and one grinding plant in Germany to an unnamed party. These assets were purchased as part of a group of sites acquitted by CRH from LafargeHolcim in 2015. The transaction is subject to approval by the German Competition Authority (Bundeskartellamt). No exact value for the transaction has been released but the Irish building materials company has placed a sale including these assets and others including a clay business in Northern Europe and a concrete business in Belgium, the Netherlands and Luxembourg for Euro400m. CRH currently operates two integrated cement plants in Germany at Wössingen and Karsdorf.
LafargeHolcim Morocco to build two cement plants in Souss-Massa
27 February 2017Morocco: LafargeHolcim Morocco plans to build two new cement plants at Tizgilt, Chtouka Ait-Baha and Tidmi, Taroudant in the Souss-Massa region. The project is budgeted at Euro720m and it is expected to create 1400 jobs, according to the Challenge newspaper. Marcel Kobuz, the chief executive officer for the cement producer, has met with region head Zineb El Adaoui to discuss the initiatives including the allocation of land.
Canada: The Greater Vancouver Water District (GVWD) has struck a deal with Lafarge Canada to sell drinking water treatment residuals to the Richmond cement plant for use in cement production. The contract is for a three-year agreement up to a total cost of just under US$1m, according to Postmedia News. The deal follows a 12-month industrial trial that started in mid-2016.
The residuals will be used as a substitute for shale in the production process. Around 10,000t/yr of residuals will be used to replace 2100t/yr of red shale and conglomerate that are currently supplied from a quarry at Sumas Mountain, Abbotsford. The use of residuals doesn’t affect the plant’s Air Quality Permit following stack tests. As part of the agreement Lafarge will need to build additional storage capacity at its plant.