Displaying items by tag: Results
Titan benefits from US market so far in 2017
02 November 2017Greece: Titan Cement’s sales and operating profit have all benefited from growth in the US so far in 2017. The group’s net sales grew by 1.8% year-on-year to Euro1.14bn in the first nine months of 2017 from 1.12bn in the same period in 2016. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 4.6% to Euro215m from Euro205m.
In the US sales grew by 14% to Euro667m in the year to date, despite a poor third quarter due to disruption by hurricanes and other weather events. In the group’s Greece and Western Europe region, sales fell by 3% to Euro190m and earnings fell also. However, sales rose in Southeastern Europe by 10.5% to Euro173m although rising fuels costs dented its earnings. Market conditions remained ‘challenging’ in Egypt with demand for building materials in 2017 estimated to be about 8% below the previous year’s levels and prices still impacted by the low value of the Egyptian Pound. Overall, the group’s Eastern Mediterranean region saw its sales fall by 39% to Euro114m and earnings fell by 66% to Euro11.1m. Further issues were reported in Turkey due to competition but joint venture operations in Brazil saw faint improvements in the third quarter of the year.
Jenisch hits the reboot button at LafargeHolcim
01 November 2017Lots to mull over in LafargeHolcim’s third quarter results this week. Not least that the new guy is now in charge. Former Sika boss Jan Jenisch took over officially in September 2017. In his first financial statement, he said that the results did not represent the company’s ‘full potential.’ He then said that he had hit the reboot button to reset the group’s expectations to reflect the current market.
The group’s forecast for cement demand globally remains at an increase by 1 – 3% on average for 2017. This is no change from LafargeHolcim’s forecast in mid-2017. What has changed though is the anticipated growth in operating earnings in 2017 revised down to 5 – 7% year-on-year from 10% or higher. Expected measures of earnings per share and leverage have also been reduced. Underpinning this is a change to some of the volume and pricing assumptions for 2018. The group also said it was conducting a business review, including country strategies and a focus on simplification, cost discipline and performance management.
As any IT manager will tell you, when you have a problem with a computer you reboot the machine in the first instance as an easy fix. Jenisch’s version of this strategy will hopefully buy him some time to try and take charge of the company.
Previous chief executive officer (CEO) Eric Olsen was doing similar things since the formation of LafargeHolcim in 2015 to downsize the company into profitability whilst coping with too much cement production capacity worldwide. However, the on going Syria legal investigation forced the company to publicly accept some level of wrongdoing and it cost Olsen his job despite him having zero involvement or even knowledge of the affair. Meanwhile, rumours of continued boardroom clashes between major shareholders that have existed since even before the formation of the company resurfaced with the announcement in mid-October 2017 that chief financial officer (CFO) Ron Wirahadiraksa was leaving after less than two years in the role. As this column noted in May 2017 Jenisch might be exactly the right man for this particular job given his battles at Sika with that company’s controlling family’s wish to sell its stake and majority voting rights to Saint-Gobain.
Moving on, the group’s cement market outlook makes for sobering reading with growth above 2% only expected for Latin America and Asia Pacific regions in 2017. Even North America, the great white hope of cement industry growth in recent years, only has a forecast of 0 - 2%. Actual cement sales volumes in this region fell by 1.6% to 5.9Mt on a like-for-like basis so far in 2017 due to hurricanes and other bad weather events, with ‘cautious’ private and public investment giving an effect too. Incidentally, the Portland Cement Association (PCA) downgraded its assessment of US growth this week too in its latest forecast. Worse still the Middle East Africa region is expected to drop by 2 – 4% due to poor economies in various local markets, notably in Algeria and Egypt. All of this pretty much fits the like-for-like growth of cement sales of 1.8% to 156Mt in the first nine months of 2017 that LafargeHolcim has reported. The surprise though is that Latin America is growing despite on-going problems in Brazil.
This then leaves the surprise message on the same day as the third quarter results release that LafargeHolcim is in talks with the board of South Africa’s PPC. Buying a major African cement producer like PPC doesn’t quite sit with the image of a company whittling itself down into profitability. Instead, it gives the impression that LafargeHolcim wants to dominate the African market ahead of the anticipated demographic cement consumption wave. PPC for its part, after flirtations with other bidders such as Dangote Cement, may simply be trying to raise its price in a bidding war.
Boardroom battles, sluggish global cement consumption, the Syrian legal probe, potential expansion plans in Sub-Saharan Africa and efficiency drives. And these are just the issues we know about! Jan Jenisch has a lot on his plate whatever happens next. Let’s just hope that when the reboot process finishes he doesn’t find himself looking at the construction company version of the ‘blue screen of death.’
Switzerland: LafargeHolcim has grown its sales and earnings on a like-for-like basis so far in 2017. Its net sales rose by 4.3% on a like-for-like basis to Euro16.7bn in the first nine months of 2017 from Euro17.5bn in the same period in 2016. Its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) adjusted rose by 9.2% to Euro3.69bn. Cement sales volumes fell to 156Mt from 177Mt although this was reported as a rise of 1.8% on a like-for-like basis.
The cement producer attributed its gains to positive contributions from markets in Latin America, North America and Europe. However, market conditions were reported to be challenging in Asia Pacific and Middle East Africa where it said that actions are being taken to address weakness in key countries.
“While the company delivered solid quarterly results, they do not reflect our full potential. As the market leader, we will hold ourselves to a higher standard than anyone else in our sector,” said Jan Jenisch, group chief executive officer (CEO) of LafargeHolcim. “Today we have reset expectations for the group’s outlook to a level that reflects the current business dynamics. While I am reviewing the business, I have an immediate focus on simplification, cost discipline and performance management.”
Cemex grows profit in third quarter of 2017
26 October 2017Mexico: Cemex has increased its profit in the third quarter of 2017 due to growing sales and low costs. Its net profit rose by 1% year-on-year to US$289m in the third quarter of 2017 from US$286m in the same period in 2016, according to Dow Jones. Sales increased by 2% to U$3.5bn due to higher cement sales volumes in several markets and higher prices in Mexico and the US.
The group’s overall cement sales volumes remained unchanged at 17.5Mt. Sales by volume fell in Mexico due to earthquakes, bad weather and lower government spending on infrastructure. Cement sales volumes in the US rose on a like-for-like basis.
Eagle Materials’ sales revenue rises by 18% to US$742m in six months to September 2017
25 October 2017US: Eagle Materials’ sales revenue rose by 18% year-on-year to US$742m in the six months to September 2017 from US$630m in the same period of 2016. The revenue from its wholly owned cement business rose by 24% to US$311m. Overall cement sales volumes rose by 14% to 3.08Mt from 2.7Mt. The cement and gypsum wallboard producer benefitted from the acquisition of a cement plant in Fairborn, Ohio as well as increased net sales prices across most of its businesses.
"Eagle Materials' quarterly results reflect hurricane and other weather-related operational and demand interruptions. We were more fortunate than many, as our employees remained safe and our operations incurred no damage. Eagle is poised to serve our customers' additional needs as they meet the challenges of rebuilding over the coming quarters," said Dave Powers, president and chief executive officer (CEO) of Eagle Materials.
Mexico: Grupo Cementos de Chihuahua’s (GCC) sales revenue and earnings have benefitted from the integration of operations that it acquired in Texas and New Mexico in late 2016, favorable pricing environments in both the US and Mexico and the company’s growth strategy. Its net sales rose by 24.3% year-on-year to US$666m in the first nine months of 2017, from US$536m in the same period of 2016. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 25.1% to US$172m from US$137m.
"We continue to be on track in terms of executing our business strategy. Our EBITDA margin in Mexico reached 40.8%, the highest in the last decade, and our US margins reached 25.3%, the second highest since the Great Recession. We have completed the initial integration of the Odessa, Texas plant and other operations in Texas and New Mexico acquired last November. In addition, the expansion of the South Dakota plant is proceeding on schedule and GCC is continuing to make improvements in all our operations," said Enrique Escalante, the chief executive officer (CEO) of GCC.
Saudi Cement profit slumps 51.5% in first nine months of 2017
24 October 2017Saudi Arabia: Saudi Cement Company has seen its profit drop by 56.9% year-on-year in the third quarter of 2017. Its net profit fell to US$23.2m from US$53.7m in the third quarter of 2017. The profit was 7.5% lower than the second quarter of 2017. Saudi Cement Company attributed the decrease to falling sales, the decline of the firm’s stake in net financial results of associate companies and a fall in other revenues.
During the first nine months of 2017 the company’s net profit was 51.5% down year-on-year, falling to US$92.3m compared to US$190.4m in the first nine months of 2016.
China National Building Materials’ sales revenue rises by 26% to US$13.3bn so far in 2017
23 October 2017China: China National Building Materials’ (CNDM) operating revenue rose by 26% year-on-year to US$13.3bn for the first nine months of 2017 from US$10.6bn in the same period in 2016. Its net profit more than doubled to US$588m from US$175m. CNBM and China National Materials Company (Sinoma) formerly entered into a merger agreement in September 2017.
China: China Resources Cement has more than doubled its profit so far in 2017 by increasing its prices. Its turnover rose by 16.4% year-on-year to US$2.61bn in the first nine months of 2017 from US$2.24bn in the same period in 2016. Its profit tripled to US$337m from US$102m. At the same time its average selling price for cement rose by 21.5%.
Cement sales volumes fell by 9% to 52.2Mt from 57Mt but clinker volumes rose to 6.16Mt from 2.94Mt. By region cement sales volumes fell in most areas, with the exception of Hainan.
Nigeria: Dangote Cement’s domestic cement sales volumes fell by 11.8% year-on-year to 2.8Mt in the third quarter of 2017 compared to 3.1Mt in the same period in 2016. The company has blamed the fall on the country’s economic recession that ended in the second quarter of 2017.
Overall the group’s sales dropped by 10.1% to 16.5Mt in the first nine months of the year for all regions, despite strong growth outside of Nigeria. Despite this, its revenue rose by 36.5% to US$1.67bn from US$1.23bn in both Nigeria and the rest of Africa for the first three months of 2017. Earnings before interest, taxation, depreciation and amortisation (EBITDA) rose similarly.
“Dangote Cement has continued to perform strongly in 2017 with revenues up nearly 37%, despite a fall in volumes. In our key operations in Nigeria we have significantly improved our fuel mix and this has helped increase margins across the group. It is especially good for Nigeria because most of the coal we are using is mined in our own country,” said chief executive officer Onne van der Weijde. He added that the cement producer’s other African operations were performing ‘strongly’ with sales growth in Cameroon, Ethiopia and Senegal. It started operations at its 1.5Mt/yr Mfila cement plant in Republic of Congo in late September 2017.