Saudi Arabia: Yamama Cement’s sales fell by 30% year-on-year to US$139m in 2018 from US$199m in 2017. Its profit decreased by 82% to US$9m from US$51m. The cement producer blamed its performance on falling demand for cement and ‘fierce’ competition.

Paraguay: Union representatives at Industria Nacional del Cemento (INC) have warned of shortages in mid-February 2019. They have cited a shortage of bags at its Villeta plant and problems with the kiln at the Vallemi plant, according to the ABC Color newspaper. The president of INC has denied the claims. Local cement sales are expected to rise by 7.7% year-on-year to 1.4Mt in 2019 from 1.3Mt in 2018.

US/Mexico: Growing cement sales volumes and higher prices in the US and Mexico drove Grupo Cementos de Chihuahua’s (GCC) sales in 2018. Its net sales rose by 7.2% year-on-year to US$883m in 2018 from US$824m in 2017. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 6.7% to US$256m from US$240m. However, its net income fell by 24.2% to US$63.5m from US$83.7m. US sales rose by 7.1% to US$883m and Mexican sales rose by 7.2% to US$237m.

“We completed a purchase-sale transaction exchanging GCC’s ready-mix plants in Oklahoma and Northwest Arkansas, which were not integrated into our cement distribution network, for a cement plant in Montana representing a strategic addition to our system that will also improve our profitability. This plant, along with the completion of capacity expansion at our South Dakota cement plant in Rapid City, will enable us to continue to benefit from the robust pace of growth in the US economy,” said Enrique Escalante, GCC’s chief executive officer.

US: Martin Marietta's sales rose by 7% year-on-year to US$4.24bn in 2018 from US$3.97bn in 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) remained stable at US$1.1bn. Revenue from its cement business grew by 4.5% to US$388m from US$371m.Cement shipments increased slightly to 3.5Mt. The building materials company said that its cement shipments had been negatively affected by bad weather in the fourth quarter. The bulk of the company's revenue comes from it aggregate business followed by ready-mix concrete.

Italy: W&P Cementi and Friulana Calcestruzzi’s turnover grew by 12% year-on-year to Euro35m in 2018. W&P Cementi produced around 0.35Mt of cement and binders, according to the Il Friuli newspaper. Friulana Calcestruzzi produced around 0.12Mm³ of ready-mix concrete. The companies are part of Austria’s Alpacem brand bringing together cement and concrete subsidiaries of Wietersdorfer Group in Austria, Slovenia and Italy. The group has a cement production capacity of 2Mt/yr and a concrete production capacity of 0.3Mm³ across 19 sites with over 640 staff.

Pakistan: Cherat Cement’s turnover fell by 7% year-on-year to US$50.3m in the six months to 31 December 2018 from US$54.2m in the same period in 2017. Its operating profit dropped by 38% to US$6.8m from US$10.9m.

Bangladesh: Bashundhara Industrial Complex plans to spend US$53m towards upgrading its Mongola grinding plant to 3Mt/yr from 2.1Mt/yr at present. The upgrade is scheduled to be commissioned in 2020, according to the Daily Star newspaper. Bashundhara Group holds the second largest cement market share at 8.48% through its two brands, Bashundhara Cement and Meghna Cement. Once the upgrade at Mongola is completed is will have a total production capacity of 7.56Mt/yr.

China: Anhui Conch has chosen Conch New Materials, a fellow subsidiary of Conch Holdings, as one of its grinding aids suppliers for 2019 following an open tender process. The value of the deal is estimated to be worth no more than around US$125m for no more than 0.15Mt of cement grinding aids. Conch New Materials develops, produces and sells cement additives, concrete admixtures, related chemical products and technical services. The other supplier has not been named.

Germany: ThyssenKrupp has announced the leadership structure of its two future companies: ThyssenKrupp Industrials and ThyssenKrupp Materials. At each company the number of board directorates will be reduced to three and central functions will be combined.

From 17 corporate and service functions at present, there will be 14 at ThyssenKrupp Industrials and 10 at ThyssenKrupp Materials. The current matrix structure will be dissolved. In the future there will be no regional structure besides the business areas at headquarters level. The tasks in the regions will be performed by the operating units or central functions. The shared service units will also be allocated according to business requirements and focused more closely.

“With the separation we will create strategic clarity and enable the businesses to develop more dynamically. The new leadership structures are key to this. The new set-up is tailored to business requirements and reflects the different market requirements. Both ThyssenKrupps will become leaner, faster and better,” said Guido Kerkhoff, chief executive officer (CEO) of ThyssenKrupp.

ThyssenKrupp Industrials will comprise the elevator, automotive, and plant engineering businesses, including manufacturing equipment for the cement sector. ThyssenKrupp Materials will operate in the materials sector.

ThyssenKrupp will take a final vote on the separation plans in January 2020. The composition of the two management teams will be decided in spring 2019. Details of the financial structure, brand identity and strategy of the two new companies will be announced in May 2019. Both companies are to commence operations at the start of the company’s next financial year on 1 October 2019.

Cemex was the first of the big multinational cement producers to release its fourth quarter results this week. Revenue, sales volumes of cement and gross profit were all up in single digits. Earnings growth was less impressive, with operating earnings before interest, taxation, depreciation and amortisation (EBITDA) rising by 1% year-on-year on a like-for-like basis to US$2.56bn in 2018. This was a decrease of 1% in real terms. Cemex blamed this on rising energy costs and on lower earnings from its territories outside of Mexico and the US.

Figure 1: Breakdown of Cemex’s net sales in 2018 by region: Source: Cemex.

As Figure 1 shows, over three quarters of Cemex’s sales come from Mexico, the US and Europe. Elsewhere its presence is smaller but it does have plants in key countries like the Philippines and Egypt. The former, for example, saw its cement sales rise by 7% in 2018 bringing along the rest of the Asia, Middle East and Africa region into volume growth.

Some other non-financial results to consider lead with the good news that 2018 was the first year ever that Cemex has had without any employee fatalities. This probably doesn’t include contractors or third parties, we’ll have to wait for the next sustainability report to find out for sure, but this is undoubtedly a milestone. Another point of interest was the growth of Cemex Go, its online sales platform. In 2018 it was responsible for around 40% of the company’s sales volumes. Around 85% of its recurring clients use it and it has nearly 30,000 customers. The analytics alone from the system and the potential for further tailoring it towards both customer and company objectives sound promising. Lastly, Cemex was also keen to note its alternative fuels substitution rate of 27% in 2018.

In recent years the other metric that the analysts have been watching is Cemex’s debt. It dropped by 8% year-on-year to US$10.4bn in 2018 compared to a high of US$17.5bn in 2013. Its plan is to reach an ‘investment-grade’ balance sheet by 2020.

In this way Cemex has been ahead of the curve of the major European cement multinationals like LafargeHolcim and HeidelbergCement that have taken on ‘indigestible’ acquisitions more recently. Possibly behind all of these companies is CRH, which has steadily been growing in recent years through acquisitions. It made the headlines this week on the corporate side when Swedish so-called ‘activist investor’ Cevian bought what is thought to be around a 3% stake in the Irish company. The financial press thinks it’s after a seat on the board to try and influence CRH to focus on margins rather than its acquisition strategy. CRH’s EBITDA margin was 12% in 2017 compared to 23%, 19% and 19% for LafargeHolcim, HeidelbergCement and Cemex respectively. This is just one way of comparing these companies. CRH, for example, might be keen to promote how its other metrics like cash generation and return on capital employed perform compare favourably to its competitors.

The point though is that it has taken Cemex over a decade since its acquisition of Rinker to rebuild its finances. All being well, it stands ready to take advantage of whatever the cement market holds in the 2020s.