Displaying items by tag: RHI Magnesita

Austria: RHI Magnesita’s revenue from its cement and lime market fell by 12.1% year-on-year to Euro160m in the first half of 2020 from Euro182m in the same period of 2019. It said that the segment performed well in the first quarter of 2020 as producers maintained and repaired plants. Second quarter performance was negatively affected by coronavirus, “with a sharp contraction in demand in key end-markets, leading to reduced production and some temporary closures of cement plants in certain regions.” The group forecasts that its cement and lime segment will continue to follow the trend of the second quarter of 2020 although government stimulus projects, especially for infrastructure projects, may improve the situation.

Austria: RHI Magnesita has published a trading update in which it says that ‘the difficult market environment of the second half of 2019 continued into the first quarter of 2020, with limited impact from the COVID-19 outbreak.’ Demand remained consistent year-on-year, with its industrial division continuing to perform well, particularly in cement.” The company noted lower raw material costs due to ‘reduction in overall demand and uninterrupted supply from China.’ RHI Magnesita has increased its focus on cost management, temporarily closing one Mexican and three European plants, introducing short-time working and deferring at least Euro45.0m of capital expenditure in 2020.

In the second quarter 2020, RHI Magnesita said, “The trading environment has become increasingly challenging” as a result of the COVID-19 outbreak, which caused a drop in ‘customer activity and order book levels.’ In spite of this, cement sector sales ‘remained relatively resilient,’ with some producers ‘accelerating maintenance work in shutdowns,’ partially offsetting the effects of project postponements.

As India reaches two weeks into its 21 day lockdown to combat coronavirus, the financial analysts are starting to publish their forecasts as to what the effects will be for the cement industry. The results are gloomy, with demand predicted to drop by up to 25% in the financial year to March 2021 by one analyst and 40% in March 2020 alone by another.

Graph 1: Indian cement production, rolling annual by month, January 2018 – February 2020. Source: Indian Ministry of Commerce & Industry.

The graph above sets the scene for what may be to come by showing the state of production in India in recent years. From early 2018 it picked up by 17% to 337Mt by March 2019 and stayed around there through the rest of year before breeching 340Mt in January and February 2020. The (relative) lull in production growth in 2019 was blamed by some analysts on the general election in mid-2019 and then the monsoon rains. In summary the market was improving and seemed set for further growth in 2020. Alas, this does not now seem to be the case.

Looking ahead, Rating’s agency CRISIL has published a research paper on the topic and here are some of the highlights. They break the damage down into two separate scenarios. The first, where the social distancing measures last until the end of April, cause a 10 – 15% fall in cement demand with the pain limited to the first quarter of the Indian financial year, which starts on 1 April. The second, where distancing measures last until June, cause a 20 – 25% decrease in demand, with the problems extended into the second quarter. Salient points that it makes about the anticipated recovery include a delay in infrastructure spending due to the government diverting funds to healthcare, reduced private and real estate markets and a divide between state-led affordable housing schemes in urban and rural areas. It pins its hopes on rural housing to grab demand first, followed by key infrastructure projects, especially transport schemes.

Examining the cement producers directly, CRISIL reckons that prices will fall in the face of dropping demand but that power, fuel and freight costs are all expected to fall also. Profit margins are forecast to drop compared to the 2019 – 2020 financial year but still remain higher than the two previous ones. Finally, it looked at the credit profiles of 23 companies, representing over 70% of installed production capacity. Together they had a total debt of US$7bn. It flagged up four of these companies as having high debt/earnings ratios and five with low interest coverage. The latter were described as ‘small regional firms with weak cash balances.’

That’s one view on what may happen but two recent general industry news stories offer snapshots on what may be to come for the Indian market. The first is an immediate consequence of a nationwide lockdown in a country with a population of 1.3bn and a low cost of labour. 400 construction workers at a grinding plant build for Ramco Cements in Haridaspur, Odisha, were stranded at the site when the quarantine restrictions stopped them travelling home to Bihar, Jharkhand and West Bengal. They took up residence at the building site and then protested when the food ran out. This point about migrant labour is noteworthy because how the Indian government relaxes the lockdown could have massive consequences upon how the construction industry recovers. A possible parallel from elsewhere in the world is the slowdown effect the Saudi Arabian cement industry suffered in late 2013 when the government took action against illegal foreign workers in the construction industry.

The second news story to keep in mind is the annual results from refractory manufacturer RHI Magnesita this week. It reported growing revenue from its cement and lime customers in 2019 but it blamed a weaker market in Europe on producers stockpiling product due to tightening magnesite and dolomite raw material availability. The takeaway here is that if supply chains supporting the cement sector and the rest of the construction industry in India at the moment are affected by the coronavirus outbreak, and government action to stop it, then there may be consequences later on. So far Global Cement hasn’t seen anything like this but the preparation for coronavirus advice from industry expert John Kilne has been to indentify and secure medium term needs, including refractory and critical spare parts and to consider potential disruption to supply chains.

In terms of what happens next once the lockdown ends in India (and other countries), one media commentator has described the response to coronavrius as the ‘hammer and the dance.’ The hammer is the economy-busting measures many governments have implemented to stop local epidemics. The dance is/are the measures that countries are using before and after an outbreak to keep it suppressed until a vaccine is developed. The worry for building material producers is how much the ‘dance’ disrupts business over the next year. All eyes will be on the East Asian producer market figures for the first quarter to see how this plays out.

Austria: RHI Magnesita’s revenue from its cement and lime sector rose by 6.4% year-on-year to Euro344m in 2019 from Euro324m in 2018. It attributed the growth to selective price increases, product portfolio choices and market share gains specifically in China, the Middle East and Africa and the Commonwealth of Independent States. It said that demand for its products in Europe had been ‘slightly’ weaker in 2019 due to customer inventory build-up in 2018 as a result of tightening magnesite and dolomite raw material availability. It forecast a stable market in 2020 however it said that coronavirus was likely to affect this.

Overall, the company reported a 6.5% fall in revenue to Euro2.9bn in 2019 due to decreased revenue in its steel division. Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell at a similar rate. However, coronavirus aside, chief executive officer Stefan Borgas expected the company’s Production Optimisation Plan to continue strengthening the business.

Austria: Refractory manufacturer RHI Magnesita has launched a digital hub in Vienna to support the development of so-called ‘Industry 4.0’ initiatives. Projects the new hub will explore include automated process optimisation in data analysis and quick (QCK) and broadband spectral thermometer (BST) in measurement.

US: RHI Magnesita has acquired Missouri Refractories for an undisclosed sum. The refractory producer operates a plant at Pevely, Missouri. It produces over 400 high-quality monolithic mixes, which serve industries, including cement, lime, steel and glass.

“With its more than 45 years of experience in fulfilling the needs of demanding, highly loyal and satisfied customers, Missouri Refractories perfectly fits into RHI Magnesita’s strategy to strengthen our position in the North American refractory market,” said Stefan Borgas, chief executive officer (CEO) of RHI Magnesita.

Austria: RHI Magnesita, the leading global supplier of refractory products and solutions, is adding a new member to its Executive Management Team. Ticiana Kobel, 49, will join RHI Magnesita as Executive Vice President and General Counsel.

“We are really happy to have Ticiana Kobel on board,” said Stefan Borgas, CEO of RHI Magnesita. “With her more than 20 years of experience in different positions providing legal insight on a global scale, leading legal departments and making strategic decisions in legal and governance matters at multinational companies, she perfectly fits the needs of our global company and will be an asset in the future development of our success.”

Kobel, who completed a law degree with an emphasis in corporate law and an LLM in international economic law and European law in Lausanne and Geneva, Switzerland, has gained valuable management skills in a wide range of global business branches, leading legal departments in the manufacturing industry, the aviation industry, the technology industry, the service sector and the engineering industry. She has been in charge of crucial projects pertaining to all legal matters, such as spin-offs, entity sales, potential acquisition targets and corporate governance issues, and assisted with the design and implementation of compliance functions, mergers and acquisitions and partnerships.

Austria: RHI Magnesita has published details of a planned raw materials plant in Austria. The company will spend Euro40m in the construction of the Dolomite Resource Centre Europe for the processing of raw local dolomite into sintered dolomite for use in refractory products at Hochfilz in the state of Tyrol. State Governor Günther Platter and French ambassador to Austria François Saint-Paul joined local folkloric figures Krampus and Saint Nikolas in breaking ground at the site of the future plant, which will be the source of dolomite for all RHI Magnesita European operations from 2021. The plant is part of a raft of projects totalling Euro300m in additional investments by the Austria-based refractory products manufacturer in 2020.

Brazil: Refractory products supplier RHI Magnesita has announced a raft of investments totalling Euro300m in addition to its annual Euro120m maintenance expenditure. The investment will cover projects in all its operating regions, including a new raw materials plant in Austria and ‘significant’ expansions to its Contagem complex in Brazil and Cuttack non-basic brick plant in India. It further stated that it will ‘build secondary raw material sorting, cleaning and production capabilites’ to absorb waste streams.

India: The leading global supplier of cement kiln refractories, has produced its first test batch of magnesia carbon bricks (MCBs) for use in cement kilns at its 18,000Mt/yr Tangi plant near Cuttack in the state of Odisha. The company acquired the fully-equipped plant in August 2019 for Euro5.5m and has said production will be supported by a ‘new state-of-the-art world-class research and development centre currently under construction in Bhiwadi’ in serving the needs of the regional cement industry.