Displaying items by tag: VICAT

The release of the half-year financial results from many of the larger multinational cement producers in Europe and North America gives us the usual opportunity to examine how well the year has gone so far. In summary, each of the companies highlighted here increased its sales and earnings on a like-for-like basis. However, in many cases, but not all, sales volumes of cement fell. Notably, both Holcim and Heidelberg Materials did not appear to release these figures. Heidelberg Materials did say though that its sales volumes declined in all business lines as “a result of the global economic down-turn.” In Holcim’s case, on top of whatever else has been going on over the last six months, the group has continued to divest cement assets as it realigns its portfolio. One more interesting point to note is that, instead, Holcim and Heidelberg Materials highlighted their reductions in CO₂ emissions at the start of their half-year reports.

Graph 1: Sales revenue for selected multinational cement producers in the first half of 2023. Source: Company financial reports.

Holcim continued to expand its light building materials business segment in North America as well as picking up some aggregate and ready-mix concrete assets in North America and Europe. Its sales grew fastest in North America, although Europe generated more sales overall. Elsewhere the other geographic business areas all held up. The group’s Solutions & Products division, the one responsible for the light building materials, lost sales and earnings year-on-year. This was blamed on the “normalisation of buying patterns” in the roofing market in North America in late 2022 and carrying into 2023, leading to destocking in various distribution channels. How this might effect the group’s ongoing diversification strategy remains to be seen.

Heidelberg Materials was more upfront about the specifics of its cement business in the first half of 2023. Sales volumes fell in all business lines. For cement, the largest falls were reported in the Western and Southern Europe Group area due to a ‘significant’ decline in residential construction followed by the Africa-Eastern Mediterranean Basin area although a slight increase was recorded in deliveries in Asia-Pacific. That last region benefited from the local subsidiary increasing its cement and clinker deliveries in Indonesia. This was reportedly due to the company leasing the Maros cement plant in September 2022. The plant serves markets in the east of the country. Overall, despite the falls in revenue in many regions, the group pushed up its prices sufficiently to keep net sales revenue and earnings growing well.

Cemex, meanwhile, was keen to shout about its improved earnings in all of its regions. It attributed this to its price strategy, lowering input cost inflation and the growing effects of its investments portfolio and its Urbanisation Solutions business. Each of the group’s main regions – Mexico, the US and Europe – performed well, with Mexico growing sales the fastest, the US driving up earnings the most and Europe, Middle East, Africa and Asia holding growth steady despite demand issues. Pricing was cited as a main issue for the success of each region.

Vicat’s sales and earnings rose due to increased sales volumes of cement and higher prices. At home in France, the company successfully fought off falling cement sales volumes with price rises, particularly due to energy price inflation. North America, the group’s other big market, grew strongly, boosted by the ramp-up of production and sales from the new kiln at the Ragland plant in Alabama. Finally, Titan experienced a similar situation to the other companies featured here, with increasing demand driving sales and further helped by prices. Earnings then grew in turn. Unlike the other companies, the US contributed a much larger share of sales for Titan than Europe or elsewhere. Back home in Greece the company’s sales and earnings benefited from increased sales volumes across all business lines. Both Vicat and Titan had mixed experiences in Egypt and Türkiye, with negative currency exchange effects causing problems in both countries, despite demand mounting in the latter.

On the basis of these financial results, it has been a positive first half for the larger cement companies based in Europe and North America. Cement sales volume growth has been mixed, where known, but price rises have compensated for this, leading to higher earnings. Whether these companies can continue to pull off this trick as or if global inflation starts to slow down is very much an ongoing question. As mentioned at the start, some of the companies also led their half-year reports with emission figures and many of them prominently highlighted forthcoming sustainability projects. These companies may be making most of their money in Europe and North America but there is clearly an awareness that these regions are also leading globally in implementing CO₂ emission legislation.

France: Vicat's consolidated sales were Euro1.91bn in the first half of 2023, up by 9% year-on-year from Euro1.76bn in the first half of 2022. The group's earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 17% to Euro314m from Euro269m. Vicat said that it recorded generally 'resilient' sales volumes and price rises across most of its markets. Volumes dropped in France and Switzerland. During the half, Vicat's specific CO₂ emissions per tonne of cement fell by 3.6% year-on-year to 571kg/t from 591kg/t.

Chair and chief executive officer Guy Sidos said "The group has not yet returned to its pre-crisis margins rates. I’d like to thank all our teams for their unwavering commitment enabling us to reach our industrial, financial and climate targets." He added that Vicat is on track to achieve its CO₂ emission target of 497kg/t of cement by 2030.

Regarding its outlook for the current 2023 full year, Vicat said "The group is targeting further significant sales growth, with its markets overall expected to display resilience and reflect the full benefit of the price hikes in selling prices implemented in 2022 and the fresh increases introduced in 2023." It added "The performance in 2023 will reap the benefit of the full impact of the new kiln at the Ragland plant in the US, the elimination of the non-recurring costs incurred in 2022 and the stabilisation in energy costs."

France: Vicat and Materrup plan to build their first reduced-CO₂ MCC1 raw clay cement plant at Carbonne in Occitanie. The plant will have a capacity of 60,000t/yr. Vicat and Materrup plan for their joint venture to subsequently build three further units across France.

Vicat's chair and chief executive officer Guy Sidos said "This new structure will enable Vicat to provide complementary very low-carbon solutions and meet the different needs of players in the construction sector. Development prospects are promising."

France: Vicat says that it will commission its planned 100% carbon capture system at its Montalieu-Vercieu cement plant ‘before 2030,’ and possibly as soon as 2027. The Les Echos newspaper has reported that the system will have a capture capacity of 1Mt/yr of CO₂, although the plant’s emissions are currently 800,000t/yr. Captured CO₂ may then be transported by barge, train or pipeline to the port of Fos-sur-Mer.

When commissioned, the upcoming carbon capture system will reduce the CO₂ emissions of cement produced at the Montalieu-Vercieu plant by 94% to 40kg/t.

UK: Carbon8 has appointed Paul Drennan-Durose as its chief executive officer (CEO). He succeeds John Pilkington, who becomes the non-executive chair.
Drennan-Durose holds experience in the sustainable energy sector with both public and private companies, including private equity and venture capital. He previously worked as the CEO of Ineo Partners, Powerhouse Energy Group and Heliex Power. Before this he was the managing director of Poole Process Equipment for seven years in the 2010s. Other roles of note include that of Group Commercial Director - Europe, Africa, Middle East and Asia Pacific for SMP Europe and the managing director of PLW and Fiamm Energy Technology.

Carbon8 is a UK-based company that supplies carbon capture, utilisation and storage (CCUS) equipment. Its main investors include EDF Pulse Ventures and Vicat. Notable corporate achievements include deploying its technology at Vicat’s Montalieu-Vercieu cement plant in France, at an EFW plant in the Netherlands and establishing business partnerships with FLSmidth and Return Carbon.

Eagle Materials announced this week that it had completed the acquisition of Martin Marietta’s cement import business in the north of California. A key part of the deal includes the sale of a cement terminal at Stockton. No value for the transaction has been disclosed.

The agreement prompts discussion for two immediate reasons. Firstly, it continues the enlargement of Eagle Materials’ cement business with its second terminal in California. The company operates its cement business in a band running almost right across the US. It runs seven cement plants in seven different states and jointly operates, with Heidelberg Materials, a plant in Texas too. It also runs a network of 25 cement terminals, including the new acquisition, stretching from California in the west to Pennsylvania in the east.

Eagle Materials’ focus on the cement sector also harks back to its previous plans to separate its various businesses. In 2019 it approved a plan to split its heavy materials and light materials businesses into two publicly-traded entities. The decision was made in response to pressure by shareholder Sachem Head Capital Management to make the company, in its view, more valuable. A strategic portfolio review followed but the planned separation was subsequently delayed due to the Covid-19 pandemic and poor market conditions, amongst other reasons. The board of the company then cancelled the proposed separation in 2021 citing the financial benefits of a diversified business, opportunities for strategic growth and the divestment of its oil and gas proppants business.

The other talking point is that the Eagle Materials transaction follows a positive response by the Federal Trade Commission (FTC) in response to the abandonment of CalPortland’s attempt to buy the Tehachapi cement plant in southern California and two related terminals from Martin Marietta. CalPortland’s parent company Taiheiyo Cement said in late April 2023 that it had terminated the acquisition agreement originally announced in mid-2022 due to its inability to obtain approval from the FTC in a timely manner. Whilst the FTC did not say if it had directly tried to block the proposed deal it did say, “The abandonment is a victory for consumers and preserves competition for a key component of Southern California’s construction and infrastructure industries.”

The FTC argued that the transaction would have reduced the number of cement suppliers in Southern California from five to four, further concentrating an already concentrated market, and was “presumptively illegal.” It noted that the Tehachapi plant was only about 20km away from CalPortland’s Mojave cement plant. It went on to say that, if the deal had gone ahead, CalPortland was poised to own half of the cement plants serving the Southern California market. It added that it would have been well-placed to raise its prices and that, “the transaction would have also increased the likelihood for coordinated action between the remaining competitors in this concentrated market.”

The de-facto block by the FTC of the Tehachapi sale now opens up the question of who Martin Marietta might try to sell it to next. Cemex, Mitsubishi Cement and National Cement (Vicat) are the obvious contenders given that they each also run integrated plants in the state. Of course another company, especially one with some form of existing distribution network, may express interest. Given its enlarged presence in Northern California, Eagle Materials springs to mind. Other potential buyers are, of course, available.

France: Vicat's first-quarter sales were Euro899m in 2023, up by 14% year-on-year from US$789m during the first quarter of 2022. In France sales rose by 9.6% to Euro297m. In the Americas sales rose by 9% to Euro198m. In the Mediterranean region sales rose by 94% to Euro104m and in Africa sales rose by 21% to Euro108m. Meanwhile, sales remained roughly level year-on-year in Asia and Europe (excluding France), at Euro112m and Euro81m respectively.

Chair and CEO Guy Sidos said “Vicat’s first-quarter performance demonstrates the strong resilience of demand in its main markets, which translated into a sharp increase in its consolidated sales when compared to very good first-quarter 2022 figures. Amid changeable winter weather conditions, especially in California, the group has pushed ahead with the ramp-up in its new installation in Alabama and accelerated its strategy of improving its manufacturing performance and shifting away from fossil fuels to achieve its operational, environmental and social objectives.”

India: Adani Cement has appointed Praveen Garg appointed as its Chief Logistics Officer. He previously worked for Vicat for over a decade in a variety of logistics roles. Before this he worked for ACC in logistics and shipping positions. Garg is a graduate of the Indian Institute of Management in Calcutta and the Indian Institute of Technology in Kharagpur.

France: Vicat and Materrup have formed a joint venture to industrialise production and accelerate marketing of Materrup's Clay Cement 1 (MCC1) raw clay cement. The Le Moniteur newspaper has reported that the technology is based on a precursor and activator mixture which removes the need for calcination of the clay. Materrup said that this halves MCC1 cement's CO₂ emissions compared with ordinary Portland cement (OPC).

The partners say that clay has better long-term feasibility than other alternative raw materials for cement production, because global reserves are currently 2Tnt.

Senegal: The International Finance Corporation (ICF) has arranged a Euro242m finance package for SOCOCIM Industries to build a new production line at its Rufisque cement plant in Dakar Region. Euro214m of the loans will be used to decarbonise cement production at the site, including a contribution towards a larger Euro260m upgrade project. The new planned production line will have an alternative fuels substitution rate of 70%, increased energy efficiency and will reduce the plant’s CO₂ emissions.

The finance package organised by the IFC comprises a Euro120m loan from the IFC's own account and Euro122m equivalent in local currency parallel loans from Société Générale Sénégal, CBAO Groupe Attijariwafa Bank, Banque Internationale Pour Le Commerce et l'Industrie du Sénégal, and Ecobank Sénégal. Société Générale Sénégal has been appointed as the administrative agent to manage the local currency financing with the other lenders.

SOCOCIM is a subsidiary of France-based Vicat. Fives revealed in early 2022 that it would supply a 6500t/day kiln line for the Rufisque plant.