Displaying items by tag: VICAT

Egypt: The Egyptian Exchange has published a filing regarding the acquisition of US$5.66m-worth of Sinai Cement shares by an investor on 7 December 2022.

France-based Vicat holds the majority stake in Sinai Cement, while investor Asmaa Amer Gharib acquired a 7.5% stake in the producer in March 2022 for US$4.05m.

France: Ecocem has appointed Christian Clergue as its European Standardisation Manager. He started his career in the late 1980s working for Vicat, according to AC Presse. During his time with the group he led its SigmaBeton engineering subsidiary and worked as a project manager in fibre concrete and high performance materials. He later worked as a research and development director for Serge Ferrari and then as a department director for Eiffage Genie Civil.

Germany: The Catch4Climate project says it is ready to build an oxyfuel pilot unit at Schwenk Zement’s Mergelstetten plant following approval by the Stuttgart Regional Council. The project comprises Dyckerhoff, Heidelberg Materials, Schwenk Zement and Vicat, and It has set up a research company called CI4C to run it. Over Euro120m will be invested towards building a dedicated 450t/day production line to test the oxyfuel process. Jürgen Thormann, the Technical Managing Director of CI4C, said that this is the first time a so-called ‘pure’ oxyfuel process will be used for CO₂ capture. At a later stage in the project the consortium plans to use the captured CO₂ to produce so-called ‘reFuels’, climate-neutral synthetic fuels such as kerosene for aircraft, with the help of renewable electrical energy. Commissioning of the unit is scheduled for mid-2024.

France: Vicat’s revenue in the first nine months of 2022 came to Euro2.70bn, a 15% rise year-on-year compared to Euro2.35bn in the same period in 2021. Its revenues in France rose by 8% to Euro889m from Euro824m. Its revenue in the rest of Europe fell by 4.5% to Euro288m from Euro301m. In the Americas, Vicat’s revenues increased by 27% to Euro637m from Euro500m, while they rose even more dramatically across the Mediterranean rim, up by 57% from Euro166m to Euro260m. In Africa revenues came to Euro245m, broadly unchanged on the year. In its Asia region, including Kazakhstan and India, its revenues rose by 18% to Euro376m from Euro320m.

The group’s sales volumes of cement fell by 5% to 20.3Mt from 21.3Mt. However, price rises enabled it to increase its operational revenue by 18% to Euro1.69bn from Euro1.43bn. Similarly, concrete sales volumes fell by 4.8% to 7.48Mm3 but operational sales rose by 16% to Euro1.04bn.

Guy Sidos, the group's chair and chief executive officer said "Vicat's nine-month sales performance reflects the resilience of its markets despite a high basis of comparison in 2021. Against a backdrop of very high inflation, the group's sales posted a solid increase compared with the same period of 2021, supported by strong growth in selling prices across all its regions. In a global environment that provides little short-term visibility, especially regarding energy costs, we are executing our strategy to improve our industrial performance, make greater use of secondary fuels, reduce our carbon footprint and implement a pricing policy tailored to these new conditions."

Vicat announced that it expects its overall earnings before interest, tax, depreciation and amortisation (EBITDA) to be lower in 2022 as a whole than in 2021 but comparable to 2020.

India: Vicat Cement subsidiary Bharathi Cement has inaugurated its 750,000t/yr Coimbatore cement terminal in Tamil Nadu. The Deccan Chronicle newspaper has reported that the terminal will serve Tamil Nadu and Kerala. The facility has dedicated container wagons and a 24-hour loading facility with end-to-end logistical automation.

Vicat India chief executive officer Anoop Kumar Saxena said "With its rapid infrastructure development and urbanisation, India proves to be a key market for our business. By investing in the new terminal we align with our commitment towards India's progress and growth. The Coimbatore terminal is Vicat India's second terminal after the Mumbai terminal, which was set up in 2018.

France: Vicat has revised its full-year 2022 earnings forecast. The group now expects to record a drop in its earnings before interest, taxation, depreciation and amortisation (EBITDA). In France and Switzerland, rapidly rising energy costs have outstripped the producer's sales growth so far in 2022, while, in the US, its upgraded Ragland, Alabama, cement plant only entered production following a 'very gradual start-up' in mid-late 2022. Vicat also carried out debottlenecking work on its Kalburgi, India, cement plant during the year to date.

Vicat said that all other markets in which it operates are developing in line with the expectations detailed at the time of the publication of its first-half 2022 results in August 2022.

Senegal: SOCOCIM Industries, a subsidiary of France-based Vicat, has reportedly stopped producing cement at its integrated plant at Rufisque. The move has been blamed on the high price of coal and other raw materials, according to local media. In August 2022 Dangote Cement placed all of the staff from its integrated plant at Thiés on leave for the month. The government previously set a so-called ceiling price of cement in 2019 in responses to high prices.

Second quarter results have been released for many of the European-based cement producers, so we’ll take a look at how they are doing so far in 2022. The general trend for the companies sampled here is that revenue is up, cement sales volumes are down and earnings are varied. Added to this, ready-mixed concrete (RMC) and aggregate sales volumes have risen for most of these organisations. Each producer did well in the US, less well in Europe and differently elsewhere. Concurrently, input costs for raw materials, energy and logistics have been rising and this has been passed on to consumers fairly consistently as price rises.

Graph 1: Sales revenue for selected European-based multinational cement producers in the first half of 2022. Source: Company financial reports.

Graph 2: Cement sales volumes for selected European-based multinational cement producers in the first half of 2022. Source: Company financial reports.

Graph 3: Ready-mixed concrete sales volumes for selected European-based multinational cement producers in the first half of 2022. Source: Company financial reports.

Holcim is currently in a state of transition with responses from regulators on big divestments in India and Brazil expected in the second half of 2022 alongside its diversification into light building materials. Both North America and Europe did well for the group in the first half of 2022, particularly the former, where cement sales volumes rose, unlike the other regions. Asia Pacific was more problematic with inflation and pricing issues reported. Cement demand was also said to be ‘softer’ in China and the Philippines compared to the first half of 2021. The region’s recurring earnings before interest and taxation (EBIT) also fell.

HeidelbergCement’s half-year results were less upbeat with cement sales volumes down by 2.6% on a like-for-like basis, RMC sales volumes stable and aggregates sales volumes up by 1.7%. One point to note here is that HeidelbergCement divested its business in the western US in late 2021 and the graphs above do not show like-for-like changes. However, one reason for the dour tone was that higher input costs had led to a 11.4% drop in the group’s result from current operations before depreciation and amortisation (RCOBD) to Euro€1.53bn. It blamed this on its inability to raise prices sufficiently to counter ‘significantly’ higher costs of energy and transport.

Cemex benefitted from its strong presence in the Americas but even this wasn’t enough to shield it from the negative effect upon earnings of higher energy costs and supply chain disruptions. So, net sales increased in Mexico and the US but operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell. In Mexico this was blamed on a higher base for comparison in 2021. In the US a declining EBITDA margin was attributed to higher energy costs and supply chain headwinds from maintenance, imports and logistics. Interestingly though, Cemex managed to raise both sales and earnings in its Europe, Middle East, Africa and Asia despite cement sales volumes slipping. It said it was able to do this due to well executed price rises.

Buzzi Unicem reported growth in sales revenue and earnings despite falling cement sales volumes. It attributed this to a ‘strong’ increase in prices. However, it noted that the mounting energy costs had contributed to a decline in its EBITDA margin. Deliveries for the half-year grew in the US, Central Europe, Poland and the Czech Republic. They fell in Italy and, unsurprisingly, Ukraine. Also, despite the growth in deliveries in Poland and the Czech Republic in the reporting period, Buzzi Unicem said that a slowdown in Europe had become evident in the second quarter of 2022 and was particularly evident in Italy, Poland and the Czech Republic. In Ukraine the group reported that activity had resumed at its Volyn plant in the north-west of the country following the Russian invasion in February 2022. The Nikolayev plant, in the south, though continued to remain idle. Sales volumes halved in the country year-on-year. Given the circumstances it seems amazing that they didn’t fall by more frankly.

Finally, Vicat had a tougher time of it than some of the other companies featured here. Its sales revenue grew significantly, as a result of higher prices, but earnings tumbled. The latter was blamed on a high base for comparison in the first half of 2021 and the energy situation. A few non-recurring capital intensive projects at various plants, including the start-up of the Ragland plant’s new kiln in the US, didn’t help either.

Much of the above leaves an uncertain outlook for the second half of 2022. All of the cement producers here expect to increase their sales revenue and raise their prices. Most of them though are rather more circumspect or downright pessimistic about what the state of their earnings will be. The companies covered here are multinational but with a focus on Europe and the US. We have omitted plenty of regional producers elsewhere around the world in this roundup that have already published their results, such as India-based UltraTech Cement or Nigeria-based Dangote Cement. The other big market that is missing is China, where the producers are mostly yet to publish their half-year results. We will return to cover these topics in future weeks.

France: Despite a 12% year-on-year increase in consolidated sales to Euro1.75bn from Euro1.56bn, Vicat recorded a net income drop of 17% to Euro77.8m from Euro93.5m in the first half of 2022. The group attributed the decline to increased global energy costs and to non-recurring industrial costs in France, India and the US. These costs included investments in exceptional maintenance at its Montalieu cement plant in France and a debottlenecking capacity expansion at its Kalburgi, India, cement plant. Geopolitical events also impacted the profitability of the producer’s business in Mali. Group cement sales rose by 17% year-on-year to Euro1.1bn.

Chair and chief executive officer Guy Sidos said “The basis for comparison in the first six months of 2022 was unfavourably high given the sales and profitability levels achieved in the same period of the previous year.”

Congratulations are due to the National Cement Company of Alabama and Vicat for the inauguration of the new production line at the Ragland cement plant in Alabama. The event took place on 21 July 2022.

The US$300m project was originally announced in late 2019. It then took two years to build with construction starting in January 2020. Key features include a raw vertical grinding mill, a new roller mill, a five stage preheater tower, an automatic clay storage system, a 78m tall homogenisation silo, an alternative fuels storage area for tyre-derived fuel, sawdust and wood chips, a laboratory and a new control room. The new kiln was previously reported to have a clinker production capacity of 5000t/day and it will add up to 2Mt/yr of cement production capacity to the plant. ThyssenKrupp signed up as the principal equipment supplier in 2019 and H&M was the main contractor. The production line is expected to reduce energy consumption by one third. Further change is scheduled with a switch to production of Portland limestone cement (PLC) from Ordinary Portland cement (OPC) by the start of 2023.

Vicat has repeatedly noted its affection for the plant as it was the first cement plant the group purchased outside of France, back in 1974. Indeed, Vicat’s group chair and chief executive officer Guy Sidos personally managed the Ragland plant in 2001. However, rather more prosaic reasons may also have been behind the decision to expand Ragland. According to United States Geological Survey (USGS) data, Alabama, Kentucky and Tennessee’s cement shipments grew by nearly 5% year-on-year to 7.1Mt in 2019 from 6.8Mt in 2018. Shipments are up by 3% year-on-year to 2.5Mt in the first four months of 2022 and the three states were the fifth largest region in the US for cement shipments in April 2022. A shortage of cement was also reported in Alabama in April 2022.

The other big US-based cement plant expansion is Lehigh Hanson’s US$600m upgrade to its Mitchell plant in Indiana. It also celebrated a milestone this week with a ‘topping out’ ceremony to mark the placement of the final section of steel for the stack. Another recent achievement here was the completion of a 169,000t storage dome supplied by Dome Technologies. The supplier says that the 67m diameter and 48m tall dome is the second largest clinker storage facility in Europe and North America, after one it previous built in Romania in 2008.

The Mitchell K4 project was announced in mid-2018 and then ground breaking began in late 2019. However, the start of the coronavirus pandemic delayed construction in early 2020 before it restarted in September 2020. The revised commissioning date was then moved back about half a year to early 2023. The key part of this project is that it will replace the plant’s three current kilns with just one. The new production line will increase the site’s production capacity, reduce energy usage and decrease CO₂ emissions per tonne of cement. It was reported by local press back in 2018 that the project would increase the plant’s cement production capacity to 2.8Mt/yr. The project has been linked to supplier KHD with CCC Group as the contractor.

It’s fascinating to see two major new upgrades to cement plants emerging in a mature market like the US and during an unprecedented event like the emergence of coronavirus. No doubt compelling tales will emerge of how both teams coped with managing nine-figure capital expansion projects as a global public health emergency unfolded. The US market has been on a roll in recent years, despite all the uncertainty in the world, and so far it doesn’t seem to be slowing down. With luck both of the projects feature above have timed their opening right.