
Displaying items by tag: Titan Cement
PCA forecasts slower growth in the US
21 November 2018A couple of long-running news stories popped up this week, led by the Portland Cement Association’s (PCA) latest forecast for the US market. Chief economist Ed Sullivan and the Market Intelligence Group predict slowing cement consumption growth to 2020 as the recovery period ends following the financial crash in 2008. The background to this is an expected rise in interest rates dragging on the construction market, a limited boost from the Trump administration’s tax cuts and rising debt levels hitting federal infrastructure spending.
This marks an abrupt turnaround from the PCA’s April 2018 forecast in which potential federal infrastructure spending was anticipated to kick in towards the end of 2019 creating 4% growth in 2020. To give the PCA credit, it did say at the time that this was contingent on a couple of key steps, including passage of an infrastructure bill, federal and state paperwork, bid letting and review and finally, contract awards leading to construction. Following the US mid-term elections in early November 2018 the prospect of an infrastructure bills seems remoter than before given the political differences between the US House of Representatives and the Senate. This may have been the final straw for the PCA and it adapted its forecast accordingly.
Graph 1: Cement shipments in the US, January – August 2013 - January – August 2018. Source: Portland Cement Association (PCA).
It is also worth reflecting on the third quarter financial results of the multinational cement producers over the last few weeks. CRH may have been crowing this week about how its US performance was driving its business in the wake of its acquisition of Ash Grove Cement and other assets, but many of the other multinational cement producers weren’t. HeidelbergCement, Buzzi Unicem and Titan all blamed the weather in the US for dragging on their results. LafargeHolcim said it suffered less with a ‘soft’ first quarter in 2018 followed by recovery.
The other story this week with relevance to the US was the continued speculation in the Canadian press about the future of the McInnis Cement plant in Quebec. The latest update is that the plant’s shareholders have asked the provincial government if they can swap the debt the province holds in the venture for equity. This has been seen as a potential bid to keep the company operational while it continues to hunt for a buyer. Rumours of a sale have swirled around since the start of 2018, with the Global and Mail newspaper naming HeidelbergCement as being potentially interested. Three bids have been reportedly made by unnamed parties but they were rejected for being too low. A slowing US cement market is particularly bad news for McInnis Cement. The plant is situated on the Atlantic Coast of Canada and exports to the US have been seen as a major part of its business. To this end it officially opened its marine terminal in the Bronx, New York in October 2018.
The main US market needs to find an alternative to the ‘fabled’ infrastructure bill if it wants better growth. Yet, reduced US cement consumption growth won’t help McInnis’ shareholders recoup the money they have sunk in the project. Somebody seems certain to lose in this situation and, with a protectionist incumbent in the White House, it seems likely to be somebody north of the border.
Titan Group’s turnover and earnings down on US market
08 November 2018Greece: Titan Group’s turnover fell by 3.7% year-on-year to Euro1.10bn in the first nine months of 2018 from Euro1.14bn in the same period in 2017. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 8.2% to Euro196m from Euro215m. It attributed this to wet weather on the eastern seaboard of the US. It said that production ‘challenges’ at the group’s Florida operations forced it to increase imports to its terminal at Tampa to meet customer demand, although this lowered its margins.
Titan Cement to list shares in Brussels and Paris
19 October 2018Greece: Titan Group has submitted a share exchange offer to help list its shares at exchanges in Brussels and Paris. Following the completion of the process, Belgium-based Titan Cement International will become Titan's ultimate parent company managed from Cyprus, according to Reuters. The group intends to list its shares at Euronext Brussels with secondary listings on the Athens Exchange and Euronext Paris. Titan says it wants to broaden its funding sources by improving access to international finance.
Titan Group joins the Global Cement and Concrete Association
26 September 2018Greece/UK: Titan Group has joined the Global Cement and Concrete Association (GCCA), a global organisation dedicated to strengthening and promoting the sector’s contribution to sustainable construction. The cement producer said that its participation would build on its commitment to, “actively engage in collaborative initiatives aiming to address global sustainability challenges.”
Launched in January 2018, the GCCA intends to become a respected industry voice and trusted source of information on sustainable construction. It complements and supports the work done by cement associations at national and regional level. As of January 2019 GCCA will incorporate the activities of the Cement Sustainability Initiative (CSI) following a strategic partnership with the World Business Council for Sustainable Development (WBCSD).
GCCA expands to 16 members
04 September 2018UK: The Global Cement and Concrete Association (GCCA) reports that it continues to grow, with the addition of several new member companies from Europe, South America and Asia. In August 2018 there were six new members: Buzzi Unicem, Cementos Argos, Cementos Pacasmayo, Çimsa Çimento, SCG Cement and Titan Cement. The GCCA also welcomed the US Portland Cement Association (PCA) as an Affiliate.
Albert Manifold, GCCA President (and CEO of CRH) said, “We are delighted to welcome further cement and concrete companies and like-minded organisations to the GCCA. The GCCA was set up to provide the authoratitive global voice for this essential sector. With every new member, the voice becomes even stronger.”
The new members and affiliates join 10 existing member companies: Cemex, CNBM, CRH, Dangote Cement, Eurocement, HeidelbergCement, LafargeHolcim, Taiheiyo Cement, UltraTech Cement and Votorantim. Further applications for member and affiliate status have been received and are being processed.
Titan to buy further stake in Adocim
28 August 2018Turkey: Greece’s Titan Group has reached an agreement to increase its share in its joint venture, Adocim Çimento Beton Sanayi ve Ticaret. At present the cement producer is a 50-50 joint-venture operated with Cem Sak Group since 2008. The arrangement will see it buy an additional 25% share in Adocim and dispose of its 50% share of a grinding plant. The transaction is conditional upon approvals by regulatory authorities and is expected to be concluded by the end of November 2018.
Adocim owns an integrated cement plant with a production capacity of 1.5Mt/yr, a grinding unit with a production capacity of 0.6Mt/yr and three ready-mix concrete units.
Greece: Titan Cement’s turnover fell during the first half of 2018 due to a stagnant US market and negative currency effects. Its turnover fell by 7.9% year-on-year to Euro713m in the first half of 2018 from Euro774m in the same period in 2017. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 14% to Euro122m from Euro142m. However, its net profit rose by 78% to Euro24.8m from Euro13.9m.
In the US the group reported that demand for cement continued to grow but that ‘exceptionally’ rainy weather in the eastern states held back sales and ‘production challenges’ in Florida had to be addressed through increased imports via its Tampa terminal. Turnover declined in Greece due to falling infrastructure projects and a poor house-building sector.
Markets in southeastern Europe reported mixed performance with overall turnover falling. In Egypt negative currency affects limited turnover although earnings rose in both local and Euro terms. In Turkey the net results of Adocim were close to the previous year’s levels. In Brazil a truck drivers’ strike in May 2018 dented a construction market that was showing ‘encouraging’ signs.
Titan’s turnover remains stable in 2017
28 March 2018Greece: Titan Group’s turnover fell slightly to Euro1.51bn in 2017. Bad weather, the devaluation of the Egyptian Pound and weakening of the US Dollar affected its operating results despite a buoyant US market. Its earnings before interest, taxation, depreciation and amortisation (EBTIDA) fell by 1.9% year-on-year to Euro273m in 2017 from Euro279m in 2016. Its net profit fell by 66.5% to Euro42.7m from Euro127m.
The cement producer’s turnover grew by 9.9% to Euro873m in the US despite Hurricane Irma in September 2017 and other poor weather effects. In Greece it reported that build activity weakened further in 2017. It said that although export volumes remained high, its profit margins were hit by the lowering value of the US Dollar and increased fuel prices. Overall, the turnover of its Greece and Western Europe region fell by 4.8% to Euro249m. In Southeastern Europe turnover rose by 10.5% to Euro226m due to increased demand for building materials. Turnover in the Eastern Mediterranean region fell by 36.5% to Euro158m due to negative currency effects in Egypt and a fall in cement demand.
Egypt: Titan Cement Egypt is planning to spend US$8m towards building a 8MW solar power plant next to its Beni Suef cement plant. Surplus energy from the unit will be sold to the national grid, according to the Al Borsa newspaper. The project is at the bidding stage with contractors but the cement producer is believed to be in ‘advanced talks’ KarmSolar.
After the storm
13 September 2017Weather always seems like an excuse in cement company financial reports. It seems that it can pop up when a producer has nothing else to blame for its poor performance. Except, of course, when there has actually been some bad weather. With this in mind the weather is likely to have a rather larger presence in the next set of results for companies in the Caribbean and Florida in the aftermath of Hurricane Irma. The storm tore across the region in a rough north-western bearing, reaching Category Five hurricane status on the Saffir–Simpson scale with sustained winds of over 252km/hr. It caused loss of life and mass destruction to property and infrastructure.
Bottom lines flutter in the wind as construction markets upend in the wake of the weather. Yet cement companies have a more direct relationship with extreme weather events. Cement plants themselves are large industrial sites with staff and equipment that are vulnerable to the elements. This is covered by a company’s resilience strategy but it can include things like reducing non-essential staff levels, shutting down production and securing a site. Cemex USA, for example, set up telephone lines to help employees in need of assistance for both Hurricane Harvey in Texas in late August 2017 and Irma this week. Titan America shut down its Florida operations over the weekend ahead of Irma and then started reopening them on 12 September 2017.
To look at one facet of preparing a cement plant shutting a clinker kiln down with adequate notice, like for a maintenance period, is one thing. Yet doing it in an emergency is an entirely different proposition as the kiln generally needs time to cool down. Global Cement discovered what happens when a kiln is simply stopped when it visited the Cemex South Ferriby plant in the UK. The plant suffered a complete electrical outage following a tidal surge at the site. A 22m-long section of one of the kiln shells had to be replaced because it had been distorted by the sudden cooling.
Secondly, the concrete that cement is used to make plays a key role in what the Portland Cement Association (PCA) and others call resilient construction. Typically concrete structures and buildings survive extreme weather events better than other weaker building materials. Although a wide range of other factors such as building design, foundations and roofing construction are also important. Notably, much of the footage that emerged during the storm in Florida was shot from concrete buildings. As Cary Cohrs, former chairman of the PCA put it: "The greenest building is the one still standing." At the time of this push 2013 Cohrs and the PCA were lobbying to strengthen US building codes and standards. It is likely that the association will renew its efforts in the wake of Irma.
With the winds slackening, the clean up operation starts. Cemex USA’s Houston Terminal said it had reopened for business after Harvey despite being two feet under water a week earlier. As reports start to emerge about the scale of the devastation in the region following Hurricane Irma the insured losses have been estimated at US$20 – 65bn by analysts quoted by the Financial Times. Two things are certain though. One, bad weather is likely to make an appearance in the third quarter financial reports and, two, the rebuilding is going to need lots of cement.