Displaying items by tag: Results
Update on South Africa, June 2023
21 June 2023Mining and materials company Afrimat said it was buying Lafarge South Africa this week. The assets it is acquiring include aggregate quarries, ready mix concrete (RMX) batching plants, one integrated cement plant, two cement grinding plants, cement terminals and fly-ash sources. The means of purchase is somewhat unusual, as Afrimat is paying around US$6m but it also appears to be taking responsibility for around US$50m of outstanding debt that Lafarge South Africa owes its parent company, Holcim. In a statement Afrimat’s chief executive officer (CEO) Andries van Heerden talked up the benefits for his company in terms of the boost to its aggregates and concrete businesses.
This is quite the change from 2012 when India-based Aditya Birla Group was reportedly looking into buying Lafarge South Africa. At this time the value for the business for a similar mix of assets, including 55 RMX plants and 20 quarries, was said to be to US$900m. Prior to this, Lafarge South Africa spent around US$170m in the late 2000s on increasing the production capacity at its integrated Lichtenburg plant and building its Randfontein grinding plant. Then in 2014, when the merger between Lafarge and Holcim was announced, Lafarge consolidated its Nigeria-based and South Africa-based operations as Lafarge Africa. It later decided to move the South African business to another Holcim subsidiary, Caricement, in 2019 to keep the business in Nigeria more profitable by reducing its debts. This transaction was valued at US$317m. At the time chair Mobolaji Balogun said that Lafarge South Africa’s operations had faced a challenging market in South Africa, with shrinking demand in an aggressively competitive sector. Afrimat is now buying Lafarge South Africa and its subsidiaries from Caricement.
Holcim isn’t alone in making an effort to sell up in South Africa. In April 2023 the Valor Econômico newspaper reported that Brazil-based InterCement was receiving offers for its remaining African-based assets in Mozambique and South Africa with a potential deal valued at around US$300m. InterCement runs Natal Portland Cement in South Africa, which operates one integrated plant and two grinding units. This follows the sale of its Egypt-based assets in January 2023 to an unnamed buyer.
PPC, the country’s largest cement producer, is staying put. However, it issued a mixed trading update this week ahead of the formal release of its annual results to 31 March 2023. Trading conditions in the interior of South Africa and Botswana were described as being ‘difficult,’ with cement sales volumes down by nearly 6% year-on-year and earnings before interest, taxation, depreciation and amortisation (EBITDA) down by 26%. Yet the group says it was able to grow its revenue. PPC’s CEO Roland van Wijnen added, “We therefore remain hopeful that the South African government will roll out its infrastructure development plans and protect the local cement market through the introduction of import tariffs to create a level playing field for domestic producers.” Dangote Cement subsidiary Sephaku Cement was more circumspect in its recent trading update but it too warned that, “deteriorating economic conditions and persistent challenges in the cement industry impacted Sephaku Cement’s financial performance to break-even levels.”
Much of the above makes for gloomy reading. As the local trade association Cement and Concrete South Africa (CCSA) has laid out to local media, the market faces the problem of having 20Mt/yr of production capacity, 12Mt/yr of demand and over 1Mt/yr of imports compounding the problem. Lobbying by local producers against imports has been a feature of the market since the early 2010s and this work continues through the efforts of the CCSA and others. However, the plea by PPC for government infrastructure spending suggests that the market faces more systemic problems. As a consequence some cement producers are trying to leave the market, while others are attempting to tough it out.
PPC publishes 2023 financial year trading update
16 June 2023South Africa: PPC has advised investors that its full-year 2023 results will show a more-than-doubling of its headline loss per share from continuing operations. The group said that its cement sales volumes in South Africa and Botswana fell by 5.8% year-on-year, while volumes in Zimbabwe dropped by 16%. Its subsidiary Cimerwa increased its cement sales volumes during the year by 1%. Despite the local decline in volumes, PPC increased its revenues in South Africa and Botswana by 1.7%. South Africa and Botswana cement sales constituted 46% of group revenues, Zimbabwe cement sales 17% and Rwanda cement sales 15%.
Lithuania: Akmenes Cementas has benefitted from a European Union (EU) ban on cement exports from Belarus in response to the Russian-led invasion of Ukraine in 2022. The subsidiary of Germany-based Schwenk Zement reported a profit of Euro16m in 2022, according to the Baltic News Service. This is its first recorded profit since 2013. Artūras Zaremba, the head of Akmenes Cementas, added that higher cement prices, further borrowing from its parent company and fixed electricity prices also helped it make a profit.
The company’s income grew by 53% year-on-year to Euro134m in 2022 from Euro87.5m in 2021. Its cement sales volumes increased by 6% to 1.5Mt and cement production rose by 8% to 1.1Mt. Around 1.1Mt of cement was sold domestically with the remainder exported to other countries within the EU. Cement sales are expected to fall in 2023 due to changes in the local market.
JK Cement's income rises in 2023 financial year
30 May 2023India: JK Cement's consolidated income rose by 21% year-on-year to US$1.19bn in the 2023 financial year, from US$983m in the 2022 financial year, Accord Fintech News has reported. High costs caused the group's net profit to fall by 38% to US$50.7m from US$82.1m.
India: Anjani Portland Cement recorded sales of US$80m in the 2023 financial year. This corresponds to a 17% year-on-year drop from US$97m in the previous financial year. India InfoLine News has reported that the producer's total expenditure also dropped, by 2.6% to US$77.4m from US$79.5m. It reported a net loss after minority interests of US$7.03m, compared to a net profit of US$5.01m in the 2022 financial year.
India: The India Cements recorded full-year consolidated sales of US$678m during the 2023 financial year, up by 15% year-on-year from 2022 financial year levels. The Economic Times newspaper has reported that the company increased its cement sales volumes by 9%, in line with overall volumes growth in the cement industry in India. It reported a net loss of US$205m, compared with a US$7.97m net profit in the previous financial year.
The India Cements said "The performance of the company during the year under review was adversely impacted by the record increase in the cost of fuel and power, which could not be compensated in the market due to supply overhang."
India: Shree Cement's consolidated sales were US$2.16bn in the 2023 financial year, up by 19% year-on-year from US$1.81bn during the preceding financial year. The company's total expenses rose by 33% to US$2.03bn from US$1.53bn. This led to a drop in profit of 46%, to US$153m from US$282m.
India: JK Lakshmi Cement increased its full-year sales during the 2023 financial year to US$786m, up by 19% year-on-year from US$662m during the 2022 financial year. Over the same period, the producer's net profit dropped by 23% year-on-year to US$44.6m from US$57.7m. This was primarily due to a 24% rise in its total costs to US$722m from US$584m.
MoneyControl News has reported that JK Lakshmi Cement's vice chair and managing director Vinita Singhania said "Despite an unabated increase in the price of fuel, the company has been able to record satisfactory performance by increasing its efficiency parameters, optimising its product mix and geographies and focusing on several green initiatives."
US: Eagle Materials reported sales of US$2.1bn in 2022, up by 15% year-on-year from 2021 levels. The producer's earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 19% to US$782m. Its cement sales rose by 7% to US$1.1bn due to increased prices, despite a drop in volumes. Throughout the year, the company increased its production of Portland limestone cement (PLC).
President and CEO Michael Haack said "Looking ahead, we anticipate continued attractive fundamentals in our markets, despite headwinds relating to higher interest rates and affordability constraints in single-family residential construction. Among the favourable demand factors we expect will affect our results in future periods are projected funding increases for infrastructure projects and healthy demand for heavy industrial projects and multi-family residential construction. We remain well-positioned to capitalise on these conditions, given our geographical footprint across the (Central) US Heartland and fast-growing Sun Belt (Southern US) and our financial strength and flexibility."
Ramco Cements' sales rise in 2023 financial year
19 May 2023India: Ramco Cements' sales were US$987m during the 2023 financial year, up by 36% year-on-year from US$726m during the 2022 financial year. The producer sold 15Mt of cement and dry mortar products, up by 36%. The Times of India newspaper has reported that the producer's profit after tax declined by 62% to US$41.5m from US$108m.
The producer expects that anticipated infrastructure investments and a 'normal' monsoon will maintain strong cement demand in India in the full-year 2023 financial year. It forecast growth in its profit margins from the second quarter of the 2024 financial year (July - September 2023) onward.