Displaying items by tag: Turkey

Last week’s financial results from Çimsa contained a glimmer of hope for the Turkish cement market. Its net sales grew by 27% year-on-year to Euro175m in the first nine months of 2020 and operating profit more than doubled. Crucially, the balance between domestic and export sales tilted back a little toward the local market at a 55/45 ratio rather than 40/60 for the same period in 2019. Oyak Cement, another of the larger local producers, reported a similar rise in sales also. Akçansa Çimento, the joint venture between Sabancı Holding and HeidelbergCement, saw its sales fall slightly so far in 2020 but its profit grew. These financial results are all surprising given the currency and debt crisis the country faced in 2018 and now coronavirus in 2020.

Graph 1: Domestic and export cement sales in Turkey, January – July 2017 – 2020. Source: Turkish Cement Manufacturers’ Association (TÇMB)

Graph 1 above shows the general picture of the Turkish cement industry for the first seven months of each year to put the data so far in 2020 into context. The general Turkish economy faced problems in the middle of the year when the value of the Turkish Lira dropped sharply in mid-2018 and interest rates rose sharply. Subsequently, annual cement sales fell by over 20% year-on-year to 56.5Mt in 2019. A couple of weeks ago the Turkish Cement Manufacturers’ Association (TÇMB) said that the sector started 2020 optimistically with a recovery in January 2020. Coronavirus then hit, causing a contraction in the domestic market for the next four months. However, the construction market picked up again in June 2020 and this is expected to have continued into August 2020.

The cement sector previously pivoted to exports strongly with nearly a 50% bump up in exports to 11Mt in 2019. 2020 has been similar so far for the export market with a 40% rise year-on-year from January to July 2020 to around 9Mt. Much of these exports have gone to the US with local media and the Turkish Statistical Institute (TurkStat) reporting that the North American country took 18% of Turkey’s Euro840m cement exports from January to September 2020. Focusing on international trade has not come without a price though. In September 2020 the Ukrainian government started an investigation into alleged dumping of cement by Turkish producers. Following a complaint by local producers, the Interdepartmental Commission for International Trade (ICIT) determined that: “imports were made to an extent and under conditions such that they may cause material injury to the domestic producer.” The results of the investigation remain to be seen, but Ukraine had no qualms in 2019 about slapping tariffs onto cement imports from Russia, Belarus and Moldova.

All of this leaves the Turkish cement producers relying, much as previously, on the export market to hold up sales while the domestic market recovers to 2018 levels. This is becoming riskier, given the growing number of rivals exporting cement around the world, particularly from around the Mediterranean, and with more countries like Egypt hoping to do likewise. Yet as long as favourite destinations like the US and Israel keep buying, Turkey should be okay. At home, the question remains whether the growth seen post-coronavirus measures in the spring is a sign of economic recovery or merely pent up demand. The country’s initial coronavirus response was praised internationally but signs of a second wave are present. Meanwhile the International Monetary Fund (IMF) confirmed in October 2020 its earlier forecast of a 5% drop in gross domestic product (GDP) for Turkey in 2020. Much of the rest of the world is facing similar contractions in output or worse in 2020 but starting the year from a poor economic position is not enviable.

Italy: Caltagirone Group company Cementir Holding sold 7.7Mt of grey cement, white cement and clinker in the first nine months of 2020, up by 11% year-on-year from 6.9Mt in the first nine months of 2019. Earnings before interest, taxation, depreciation and amortisation (EBITDA) declined by 2% over the period, to Euro178m from Euro182m, while sales also declined, by 1% to Euro897m from Euro906m.

One notable region where the trend was reversed was Egypt, where, in spite of a 2.5% fall in cement and clinker volumes, EBITDA rose by 40% to Euro6.81m from Euro4.86m and sales rose by 16% to Euro31.3m from Euro27.1m. EBITDA also rose in the Nordic and Baltic, Turkey, China and Asia-Pacific regions.

Chief executive officer (CEO) and chair Francesco Caltagirone said, “Results significantly improved in the third quarter, with cement up by 19% and EBITDA up by 12% compared to the third quarter of 2019.”

Greece: Titan Cement recorded earnings before interest, taxation, depreciation and amortisation (EBITDA) of Euro229m in the first nine months of 2020, up by 10% year-on-year from Euro208m in the first nine months of 2019. Its sales fell slightly to Euro1.20bn from Euro1.21bn. The group noted “resilient sales volumes across most of our markets, ” including “strong domestic and export growth in Turkey and improving demand in Brazil.”

Dimitri Papalexopoulos, chair of the group executive committee said, “We are successfully addressing several challenges at the same time: taking care of our people and those around us, delivering improved operating results and accelerating progress against our sustainability ambitions. Despite the uncertain context, we remain confident in the solidity of our business model, based on the nature of construction activity, our track record in facing the pandemic and the resilience and dedication of our people.’’

Turkey: Çimsa’s net sales grew by 27% year-on-year to Euro175m in the first nine months of 2020. Its operating profit more than doubled to Euro37.1m. Local sales grew faster than export sales in the reporting period but export revenue remains greater than domestic revenue. Chief executive officer (CEO) Umut Zenar reflected this when he praised the company’s strong export performance despite the challenges posed by coronavirus.

Uzbekistan: Cement companies produced 7.8Mt of cement in the first nine months of 2020, a rise of 2.6% year-on-year from the same period in 2019. The Trend News Agency reports that the country exported US$24.2m-worth of cement in the period, to Afghanistan, Singapore, Russia, China and Turkey. The value of its cement imports – from Kazakhstan, Tajikistan, the Kyrgyz Republic, Iran and Russia – exceeded this by more than double at US$870m.

Turkey: ThyssenKrupp Industrial Solutions Turkey has launched a new 14,000m² manufacturing and service centre including four workshop halls and offices in Ankara. The company said that the site will employ 30 people to begin with and produce and assemble steel structures, machines, components and spare and ware parts, including for the cement industry.

Managing director Can Yapan said, “This new manufacturing and service centre enables us to even better meet our customers’ increasing demand for services throughout the entire life cycle of their plants and machines.” He added, “We already started contributing Turkey’s economy with the completion and export of our first manufacturing order in October 2020.”

Plant manager Serhan Usman said, “We want to offer the best possible services to our customers. Our maintenance assistance system and performance and quality monitoring make it easier to plan and forecast plant operation. Drone inspections and 3D plant scanning, or remote inspections and remote condition monitoring are just a few more solutions of our digital service portfolio.”

Turkey: The Turkish Cement Manufacturers’ Association (TÇMB) has appointed Volkan Bozay as its chief executive officer (CEO). Outgoing CEO Ismail Bulut will continue his activities as an advisor to the chairman of the board of directors.

Bozay has held a mixture of public and private sector jobs during his career including a role at the R&D Unit of Undersecretariat of Treasury and Foreign Trade, head of the Finance Department of the Housing Development Administration of Turkey (TOKI) and as a board member of the Emlak Konut Real Estate Investment Company. He also worked as the Assistant General Manager at the General Directorate of Promotions of the Ministry of Culture and Tourism and has worked as a Corporate Relations Manager at British American Tobacco, Turkey.

Bozay holds a Master of Business Administration (MBA) on finance and strategy from the Peter F Drucker School of Management at Claremont Graduate University, US and has a BA degree in Business Administration from the Middle East Technical University (METU) in Ankara. He has also served as a board member for the Turkish Exporters’ Assembly and the National Association of Tobacco Products Manufacturers at Aegean Exporters' Association (EIB).

Çimsa and its parent company Sabancı Holding renewed their ambition to become a global leader in the global white cement market this week with the formation of Cimsa Sabanci Cement. The new subsidiary brings together most of Çimsa’s international white cement companies including Cimsa Americas Cement Manufacturing and Sales Corporation in the US, Cimsa Cement Sales North in Germany, Cimsa Cementos Espana in Spain and Cimsa Adriatico in Italy. Notably, the new entity does not include businesses in Romania and Russia or at home in Turkey. The move coincides with regulatory approval from the Comisión Nacional de los Mercados y la Competencia (CNMC) for Çimsa’s purchase of Cemex’s white cement business in Spain, including its integrated Buñol white cement plant, for around US$180m, which was first announced in March 2019.

The acquisition in Spain came with conditions though since Çimsa has now become the market leader in both bagged and bulk white cement locally, with a combined share of over 50% in the case of bulk white cement. Firstly, Çimsa has agreed to give Cementos Molins the rights to use its silo in Alicante along with a customer list over the last three years. Secondly, it has agreed to supply all its customers previously supplied from a silo in Seville from one in Motril instead for two years. The Motril terminal was purchased from Cemex. The idea here is to give Cementos Molins time to establish itself in the new market and for customers in the south of Spain to find alternative white cement suppliers if they want to. The latter condition was enough for the CNMC to approve the Cemex purchase in Spain. It was proposed on 24 September 2020 and then approved by the end of the month.

The wider picture is that Çimsa has been playing up its ambitions in white cement for a while now. At the time that the acquisition in Spain was announced, Tamer Saka, the president of Sabancı Holding Cement Group and chairman of Çimsa said, “With the integration of the Buñol white cement plant to our production and distribution networks, we will increase our white cement production capacity by 40%, translating into Çimsa becoming the world's largest white cement company.” This compares to Cementir’s self-declared world share of around 27% white cement production capacity, through its Aalborg White brand and others. Other recent developments at Çimsa include the commissioning of a 0.35Mt/yr white cement grinding plant in Houston, Texas by Cimsa Americas Cement Manufacturing and Sales Corporation in July 2019 with commercial sales starting later that year.

Back home in Turkey the domestic grey cement industry has faced difficulties in the last few years as the economy suffered, the capacity utilisation rate fell, competition increased in export markets and then coronavirus-related lockdowns caused further stress this year. By contrast the world white cement market has remained quite buoyant over the last decade, rising by around 7% year-on-year to 21Mt in 2018 and then remaining at a similar level in 2019.

HeidelbergCement memorably described white cement as a “niche product” when it left the scene in 2018 by selling its remaining shares in Lehigh White Cement in the US to Cementir. It has faced problems of its own this week with the decision by the European General Court (EGC) to uphold the European Commission’s (EC) previous ruling in 2017 to block a proposed takeover of Cemex Croatia by HeidelbergCement and Schwenk Zement. Funnily enough, that acquisition also revolved around a cement terminal. In this case the EC didn’t think that the offer by the potential buyers to grant access to a cement terminal in Metković in southern Croatia would be enough to assuage concerns about reduced competition following the transaction. Some you win, some you lose.

Netherlands: Turkey-based Sabanci Holding and subsidiary Çimsa have announced the launch of Cimsa Sabanci Cement, a 60:40 subsidiary of both companies, based in the Netherlands. Reuters News has reported that Sabanci Holding plans to use the new company “to reach its goal of becoming a leading player in the global white cement trade.”

Cimsa Sabanci Cement will buy 70% of shares in Cimsa Adriatico Cement, Cimsa Americas Cement, Cimsa Cementos España and Cimsa Cement Sales North. Other assets will be sold off, including its 1.5Mt/yr Alicante integrated grey cement plant to Cementos Molins, according to Alimarket-Construcción News.

Turkey: Exports of cement to Iran have fallen by 34% year-on-year in value in the first eight months of 2020 to US$9.30m from US$14.1m. All Turkish cement exports over the period totalled US$2.30bn, down by 2.3% from US$2.35bn. Cement accounted for 2.6% of the country’s total exports (US$88.4bn).