Global Cement News

Philippines: Holcim Philippines plans to construct a 2.5Mt/yr cement plant in Bulacan costing US$550m. Holcim Philippines chief executive Ed Sahagun said in a news briefing that the company had obtained first phase approval from its parent company Holcim.

The approval will allow the cement producer to obtain quotations, organise a project team and proceed with securing permit requirements. Final approval will be discussed in September 2013. Holcim Philippines plans to have the new plant on stream by 2016. Sahagun said that he expected demand for cement to further improve, once the public-private partnership projects were implemented.

Holcim Philippines' net income in the first quarter of 2013 grew by 77.2% to US$35.1m from US$19.8m in the same period in 2012, due to increased demand and higher cement prices.

Once again the winter weather was bad in Europe. Once again the major European cement producers reported a fall in sales. So what has changed between the first quarters of 2012 and 2013?

Lafarge's cement sales volumes in Western Europe for the first quarter of 2013 fell by 24% year-on-year, compared to an 11% drop in 2012. Holcim's decline in volumes stabilised, compared to a 13.2% drop in 2012. HeidelbergCement's volume decline increased slightly, from a drop of 8% in 2012 to one of 10% in 2013. Cemex didn't release sales volumes figures for cement but overall net sales in its Northern Europe region fell by 13% in 2013 compared to 11% in 2012. Italcementi's cement sales volumes maintained a steady decline in both the first quarters of 2012 and 2013 at about 19%.

Even with the reduced number of working days for the quarter in 2013 taken into account, things are not looking good. Generally the results fit the prediction made by the UK Mineral Products Association (in the UK at least) that construction activity remains subdued in 2013 so far.

Profitability measures for the European divisions of the big producers, such as earnings before interest, taxes, depreciation and amortisation (EBITDA), reinforce the gloomy outlook, suggesting that most of the cost cutting exercises aren't having much effect on investor balance sheets quite yet. Lafarge's EBITDA in Western Europe fell by 94% to Euro5m. HeidelbergCement's loss before interest and taxes (EBIT) increased to Euro91m. Cemex's operating EBITDA fell from US$55m in 2012 to a loss of US$17m in 2013. Italcementi's EBITDA decreased to Euro12.8m.

Only Holcim reversed this trend, growing its EBITDA by 43% to Euro23.5m. The Holcim Leadership Journey appears to be working. Although the sale of a 25% stake in Cement Australia certainly helped.

Elsewhere, we have an additional story at add to last week's focus on Iraq, with the announcement that Mondi has opened an industrial bags plant in Iraq. It's based in Sulaimaniyah in northern Iraq near to the new Sinoma-Lafarge project that we reported on.

Finally, the news that the Competition Commission of India has been asked to investigate a complaint against a Chinese waste heat recovery vendor raises tensions between the world's largest two cement producers. The story echoes similar trends in the gypsum wallboard business in April 2013 where a selective anti-dumping duty was imposed on imports from China, Indonesia, Thailand and the UAE. Watch this space.

Ukraine: The supervisory board of Eurocement Ukraine has relieved acting director-general Vitalii Horholiuk and appointed Oleg Lopatin director-general, according to a company statement. The decision to dismiss Horholiuk was due to Lopatin obtaining a work permit for Ukraine. Previously, Lopatin managed the Voronezh branch of Eurocement Group, based in Moscow, Russia.

Switzerland: Despite net sales falling Holcim has reported a net income of Euro240m for the first quarter of 2013, compared to Euro91m in the same period in 2012. The gain was principally made through the sale of Holcim's 25% stake in Cement Australia. Elsewhere, market and weather induced decreases in sales volumes in all segments and higher variable costs impacted operating results.

The building materials producer reported that net sales fell by 7.2% to Euro3.52bn in the first quarter of 2013 from Euro3.84bn in the same period of 2012. Earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 10.3% to Euro681m from Euro617m. Sales of cement fell by 5% to 32.1Mt from 33.7Mt.

By region sales of cement fell in Asia Pacific by 3.8% to 18.6Mt from 19.4Mt. In Latin America sales of cement remained stable at 5.9%. In Europe sales of cement fell by 2.5% to 4.4Mt from 4.5Mt. Weaker construction activities were noted in India, Morocco and France.

In its outlook Holcim expected an increase in sales of cement in 2013 led by its Asia Pacific, North America and Latin America regions.

Germany: HeidelbergCement has reported stable revenues for the first quarter of 2013 at Euro2.76bn compared to Euro2.80bn in the same period of 2012. The German cement producer commented that weak sales volumes in Europe and North America, caused by bad weather and reducing working days, were mostly offset by growth in cement sales volumes in North America, Asia and Africa.

Group share of loss grew to Euro235m in the first quarter of 2013 from Euro208m in the same period in 2012. This follows the announcement by HeidelbergCement in April 2013 that its profits would be hit by a Euro30m fine in the second quarter of 2013 due to previous cartel infringements.

Sales volumes of cement and clinker remained stable at 18.1Mt. By business line, revenues for cement in Western and Northern Europe fell by 9.8% to Euro321m from Euro356m. In the Eastern Europe and Central Asia region revenues fell by 7% to Euro147m from Euro158m. In North America revenues rose by 8% to Euro222m from Euro205m. In the Asia Pacific region revenues rose by 8% to Euro507m from Euro468m. In the Africa-Mediterranean Basin region revenues rose by 5% to Euro201m from Euro191m.

For its outlook for the remainder of 2013, HeidelbergCement expects continued demand for building materials in North America, Asia and Africa. In Europe and Central Asia, the group anticipates stability in Germany, Northern Europe, Russia and Central Asia and weak development elsewhere.