Global Cement News

Kenya: It was reported on 25 January 2012 that operations at the East African Portland Cement Company (EAPCC) were likely to resume on 26 January 2012 after the parties involved in the dispute 'ironed out their differences.' Some local reports are suggesting that many workers will stay away from the plant if it opens over an ongoing dispute with the management. EAPCC Chairman Mark ole Karbolo said, "A solution has been found," and that the board was meeting all stakeholders to agree on a return-to-work formula.

"It is the intention of the board that the company resumes operations immediately," said Karbolo. "The underlying issues that were raised will be addressed following the right procedure and also using the board processes."

The cement plant was shut down on 16 January 2012 when its staff blocked Managing Director Kephar Tande and board members who had just been reinstated by the court at the premises. The workers were demanding that a new board be constituted before they can agree to go back to work. They cited their lack of confidence in the board. One man was shot in the dispute.

The closure has prevented the normal production of around 30,000t of cement and an associated loss of about US$3.5m has been incurred. Despite the millions of dollars in losses, Karbolo is confident that the firm would be able to recoup its losses in coming days."It is possible. We will maximise our operations and our efficiencies and we should be able to recover," he emphasised.

Even if it is possible to safely return to normal operation in the coming days the concerns that have been brought to the fore by the infighting surrounding the shareholding structure will have to be addressed.

It remains unclear whether the 27% stake held by the National Social Security Fund (NSSF) should be treated as belonging to the government or if it should be considered as a separate entity. While the board members have maintained that the two main owners, namely the government and the NSSF, should be looked at as different shareholders, Industrialisation Permanent Secretary Karanja Kibicho, maintained that the government and the NSSF are one entity.

"As far as the government is concerned, its shareholding at EAPCC remains just like it was 10 years ago. Our shareholding in that firm is 52.3%," Kibicho maintained. Lafarge owns 41.7% and the public owns 6% of EAPCC.

Saudi Arabia: Al Jouf Cement has announced that it has awarded a U$236m contract to China's Chengdu Design & Research Institute of Building Materials Industry Ltd, for the construction of a second production line at its plant. It was reported that the new line will have a capacity of 5000t/day.

Al Jouf said that the project would be financed by a combination of its own funds and debt and would be completed by February 2014. When complete, the new line will double the company's cement capacity to 3.5Mt/yr.

India: After UltraTech Cement announced a 93% improvement in its net profit for the quarter ending 31 December 2011, Hyderabad Industries has also reported an improvement. The company posted a near 60% surge in its net profit to US$2.03m for the same quarter. Its total income has increased by 15% year-on-year from US$33.8m to US$38.7m in the quarter under review.

Shree Cement has also reported results for the quarter, which show a massive 115% surge in its net profit to US$11.8m compared to US$5.5m for the same quarter of 2010. Shree's total income increased by 61% year-on-year from US$156m to US$252m in the quarter under review.

Meanwhile, data from the Indian Cement Manufacturers' Association (CMA) has shown that cement sales grew by 5.3% percent to 159.7Mt during the period 1 April 2011 to 31 December 2011, up from 151.6Mt in the same period of 2010. The same CMA data showed that in December 2011, cement sales grew by 14% to 19.8Mt from 17.4Mt in December 2010.

Peru: Cementos Lima, the largest cement producer in Peru, has posted earnings of US$16m for the fourth quarter of 2011, ending on 31 December 2011. This represents a drop of 9% compared to US$18m for the same period in 2010.

For the full year Cementos Lima said it had earnings of US$79m in 2011 compared with US$75m in 2010. Total fourth quarter revenue remained static with US$104m in 2011 compared to US$104m in 2010.

The company said that cement production in the fourth quarter of 2011 was 0.84Mt down by 2.6% compared to the same quarter in 2010. The company said that the decline was due to lower demand in domestic and international markets.

India: Ultratech has posted a 93% rise in net profit for the fiscal quarter that ended on 31 December 2011 compared to the same period in 2010. India's largest cement producer by sales has attributed this rise to a low base of profit and revenue, improved demand and higher product prices.

Ultratech said that its cement sales rose by 6% to 9.72Mt in the third quarter. The company said that prices improved in the quarter but it didn't give exact figures. Net profit for the three months rose to US$120m from US$64m in 2010. Sales climbed to US$910m from US$740m.

The company said its variable costs increased by 16% in the quarter, largely due to higher prices of both domestic and imported coal. It added that India's monopoly coal producer raised its prices further in January 2012, which could hit its profit margin in the January-March 2012 quarter.

Looking ahead, Ultratech said that while India's cement demand is expected to grow at 8%/yr over the next few years, overcapacity in the cement industry and rise in cost of fuel and other raw materials could put pressure on margins. Ultratech reiterated that it will continue with its US$2.2bn expansion programme to increase its production capacity to 59Mt/yr by 30 June 2013. The company's current capacity is 50Mt/yr.

Most Indian cement companies are expected to post robust financial performance for the October-December 2011 quarter, as demand returned sharply after the seasonal monsoon rains ended in September, spurring construction activity. Cement prices have improved as a result of higher demand as well as rising costs.