Displaying items by tag: Suez Cement Group
Egypt: Metallurgical Industries Holding has sold its 18% stake in Egyptian Tourah Portland Cement for just under US$3m. Mubasher has reported that Arab African International Securities (AAIS) acted as broker for the transaction.
In October 2019, the Financial Regulatory Authority (FRA) approved HeidelbergCement subsidiary Suez Cement’s mandatory tender offer (MTO) for 100% acquisition of Egyptian Tourah Portland Cement for around US$33m.
Egyptian Financial Regulatory Authority approves Suez Cement’s Tourah Portland Cement acquisition
19 October 2020Egypt: The Financial Regulatory Authority (FRA) has approved HeidelbergCement and Simon France subsidiary Suez Cement’s mandatory tender offer (MTO) for acquisition of a 100% stake in Egyptian Tourah Portland Cement for US$32.7m. Daily News Egypt has reported that the FRA also approved a change to Suez Cement’s ownership, with HeidelbergCement France acquiring a 33% stake in the company.
Suez Cement appoints Grant Thornton Financial Consulting as financial advisor ahead of share evaluation
07 October 2020Egypt: Suez Cement has approved the appointment of Grant Thornton Financial Consulting as a financial advisor as it prepares for a fair value study of its shares. This follows a desire expressed by Heidelberg Cement France, the parent company of Simon France. which directly and indirectly owns 55% of Suez Cement shares, for the submission of a bid to fully buy the company’s shares, according to the Daily News Egypt newspaper. In late September 2020 Suez Cement approved the launch of a tender offer to acquire a 100% stake in its subsidiary, Egyptian Tourah Portland Cement.
Update on Egypt: September 2020
30 September 2020The one thing that the Egyptian cement industry really didn’t need this year was any more jolts. Since the gargantuan 13Mt/yr government/army-run El-Arish Cement plant at Beni Suef opened in 2018, the sector has been stuck in production overcapacity and struggling to catch up. Yet, like the rest of us, they got one nasty surprise in the shape of the coronavirus pandemic. This has added stress to the whole situation and we can see some of this in various news stories that Global Cement has covered recently.
HeidelbergCement’s local subsidiary Suez Cement has been busy in recent days making changes to its corporate structure in the form of a tender offer to buy a 100% stake in Egyptian Tourah Portland Cement. Production stopped at Tourah Cement in June 2019 due to market conditions. This follows yet more lacklustre financial results earlier in September 2020 that show the pain that it and other cement producers have been enduring. Suez Cement’s loss nearly doubled year-on-year to Euro38m for the first half of 2020 and its sales fell by 18% to Euro145m. This was blamed on production overcapacity and a coronavirus-related lockdown. Other producers, both multinational and local, have experienced a similar situation.
Suez Cement also announced in mid-September 2020 that its Ready Mix Beton subsidiary had secured a contract for the supply of concrete for the construction of two new monorail lines connecting the country’s new city projects. Unfortunately, as Suez Cement’s chief executive officer (CEO) Jose Maria Magrina explained in an interview to Daily Egypt News in July 2020, “the New Administrative Capital (NAC) is a very big project, but in the end it has not offset the decrease in informal buildings that have been stopped.” Despite Suez Cement being a major supplier and the proximity of its plants to the site, overall sales have gone down.
Graph 1: Cement consumption in Egypt. Source: Cement Division of the Building Materials Chamber of the Federation of Egyptian Industries.
Magrina’s gloom is shared by other industry figures with a general assumption that perhaps up to a quarter of the country’s 20-something cement plants may have to close in the next year or so. Coronavirus has only deepened this view as the government’s response was to cease issuing construction licences for private buildings in Greater Cairo, governorate capitals and major cities from late May 2020 for six months. Solomon Baumgartner Aviles, the CEO of Lafarge Egypt, said in July 2020 that local cement demand fell by 6.5% year-on-year in the first half of 2020. He added that coronavirus had ‘strongly’ impacted the building materials sector with a big effect on the individual market, and with the licence halting exacerbating the situation further. As data from the Cement Division of the Building Materials Chamber of the Federation of Egyptian Industries shows above in Graph 1 demand peaked at 56.5Mt in 2016 and has since declined to a low of 48Mt in 2019. By month the sector recovered in January and February 2020 respectively with growing cement sales on a year-on-year basis but this has since declined with losses in most months subsequently. This is set against a production capacity of 81.2Mt/yr in 2018, giving an excess of 30Mt/yr and a utilisation rate of 59%.
One story that was mentioned in the local press this week is that Arabian Cement Company (ACC) had started negotiations with the European Bank for Reconstruction and Development and the Commercial International Bank – Egypt to secure new loans worth over US$20m. The ACC has denied this publicly in a statement to the Egyptian Exchange but it’s a sign of the trouble that is expected in the sector given the current circumstances.
All of this leaves cement producers scrabbling to hold on until the market picks up again, takes action in other ways or the government intervenes. Some analysts expect the market to stabilise in the medium to longer term as work on large infrastructure projects like the NAC mounts. Suez Cement’s Jose Maria Magrina has said that, “the government must, within the law, dictate norms that will rationalise the market, while making sure that companies survive since current prices do not cover the costs of production.” Local press has since reported that the Ministry of Trade and Industry has started trying to help cement companies, including measures such as limiting production to balance supply and demand, and decrease the surplus in the market. Another option is a coordinated export subsidy programme in coordination with the government but nothing appears to have happened yet after several years of discussion. Unhelpfully for any export aspirations, Egypt finds itself in a very cement export-heavy part of the world, wedged as it is between North Africa, Turkey and Southern Europe.
Hope springs eternal though as, almost unbelievably, Egyptian Cement Group’s CEO Ahmed Abou Hashima surfaced last week to remind everyone that his company still plans to inaugurate its new integrated cement plant in 2021. The project to build a new 2Mt/yr unit in Sohag has been brewing since 2017 when it was announced with China-based Sinoma on board as the engineering partner. It was originally scheduled to open in the first half of 2020 but it was delayed by coronavirus. Let’s hope the picture looks better when it finally opens.
Suez Cement company to make bid for Egyptian Tourah Portland Cement
29 September 2020Egypt: The board of HeidelbergCement subsidiary Suez Cement has approved the launch of a tender offer for the company to acquire a 100% stake in Egyptian Tourah Portland Cement. Reuters News has reported the value of the deal as US$32.6m.
Egypt: Suez Cement subsidiary Ready Mix Beton says that it has secured a contract for the supply of concrete for the construction of two new monorail lines projects. Due to begin in late-2020, the contract covers the construction of a monorail line between Cairo and the New Administrative Capital and another between 6 October City and Giza. The company says that it will use Suez Cement’s CEM III/A ground granulated blast furnace slag (GGBFS) cement to produce concrete for the 96km monorail network.
Suez Cement said, “CEM III/A cement is highly recommended when building thick concrete supports and massive structures because its hydration temperature of less than 210kJ/kg reduces cracking compared with Ordinary Portland Cement (OPC) when the applied concrete is subjected to dual exposure to sulphates and chloride ions, as happens in coastal areas.”
Suez Cement publishes first half 2020 results
08 September 2020Egypt: HeidelbergCement subsidiary Suez Cement recorded a net loss of Euro38.0m in the first half of 2020, up by 99% year-on-year from 19.1m in the first half of 2019. The company made sales worth Euro145m over the period, down by 18% from Euro177m. The causes of the decline were market saturation and reduced demand in the short term due to the coronavirus lockdown from 19 March 2020 to 27 June 2020.
Mondi Paper Bags acquires cement bag plants and secures Helwan Cement and InterCement supply contracts.
29 July 2020Egypt: Austria-based Mondi Group subsidiary Mondi Paper Bags has announced its acquisition of two cement bag plants, the Helwan Cement bag plant and InterCement bag plant, with a combined capacity of 60m – 80m bags/yr. As a result, Mondi Paper Bags will now meet the bagging needs of both cement producers.
Chief executive officer (CEO) Claudio Fedalto said, “These collaborations will offer Helwan and InterCement access to our latest innovations, industry expertise and our strong plant network and customer service in the Middle East. Thanks to Mondi’s vertical integration, our partners will further benefit from our high quality kraft paper.”
Helwan Cement owner Suez Cement managing director Jose Maria Magrina said, “We are delighted to continue our relationship with a reputable and reliable global paper bags supplier like Mondi, while we can focus on our core operations, the production of grey cement and ready-mix.” InterCement subsidiary Amreyah Cement legal and administration director Paulo Dall’Aqua added, “Building sustainable partnerships is InterCement’s tagline, and it is exactly what this deal represents.”
Suez Cement records first quarter loss in 2020
02 July 2020Egypt: Suez Cement has recorded a loss of US$18.0m in the first three months of 2020, compared to a profit of US$11.0m in the first three months of 2019. Sales fell by 27% year-on-year to US$80.6m from US$110m in 2019. Domestic demand in relation to Egypt’s production overcapacity fell in March 2020 due to the coronavirus outbreak. Daily News Egypt has reported that the second quarter 2020 results will carry greater losses for Suez Cement due to coronavirus lockdown measures and seasonal factors such as Ramadan, with cement volumes down by 27% year-on-year in May 2020.
Suez Cement reduces management pay
30 April 2020Egypt: Suez Cement, a HeidelbergCement subsidiary has implemented of a 20% reduction in pay for members of the management committee and a 30% reduction in pay for the managing director in the second quarter of 2020. The cuts are intended as a ‘cost-saving measure’ in line with the company’s aim to reduce expenses. Suez Cement said, “During the last few years the Egyptian cement industry has been going through very challenging times caused by oversupply and a sustained decrease in the demand, and Suez Cement Group has posted negative results. The COVID-19 crisis has complicated market conditions, affecting demand and increasing our costs. Moreover, it has affected our main shareholder, HeidelbergCement. In many countries it has suffered complete shutdowns and it is currently enduring complications in most of the countries that is present.”
Suez Cement continues to employ all staff.