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PPC results could fuel more acquisition interest 24 November 2017
South Africa: PPC has seen its net profit rise significantly in the six months to September 2017. It nearly tripled its profit year-on-year to US$21.1m from US$7.3m.
The company benefited particularly from a strong performance from its assets outside of South Africa. Its earnings before interest, tax, depreciation and amortisation (EBITDA) from its non-domestic assets rose by 25%, while group EBITDA grew by 4% to US$86m. The results bode well for a potential bidding war that now favours PPC shareholders.
Earlier in the week, PPC effectively rejected a conditional partial offer from AfriSam and Canada’s Fairfax Group for the company, stating that it undervalued the company. This latest set of results brings this assessment into sharper focus and may give cause for CRH and LafargeHolcim to think again about the values of their own non-binding offers, should PPC also be of the view that these also undervalue the company.
Eagle starts construction of Cebu plant 24 November 2017
Philippines: Eagle Cement has started construction of a US$246m cement plant in Malabuyoc, Cebu, as part of a wider expansion drive. The 2Mt/yr plant will have dedicated terminals for domestic transit of cement and export. It will take Eagle Cement’s capacity to 9.1Mt/yr once it and an expansion at the company’s Bulacan plant are completed. Cebu will come online in 2020, with the Bulacan expansion completed in 2018.
"We are expanding more to new markets such as Southern Luzon, Visayas and Mindanao,” said Eagle’s President and CEO Paul Ang. “By 2018, our third line in Bulacan will be fully functional to serve those areas, with the most efficient and energy saving manufacturing technology.”
Pakistan’s exports down amid stronger domestic consumption 24 November 2017
Pakistan: According to the All Pakistan Cement Manufacturers Association (APCMA) Pakistan’s cement exports continued to decline in October 2017. Exports fell by 14.6% month-on-month to 443,000t, due in part to higher domestic cement consumption. However the APCMA stated that falling exports were a concern while some Pakistani cement capacity remains idle.
The largest fall in exports was via sea, rather than overland exports to immediate neighbours. This was despite the northern part of the country, closest to India and Afghanistan, consuming 3.14Mt of cement. This is the first time that the region has consumed more than 3Mt in a single month. In October 2016 the north of Pakistan consumed 2.5Mt of cement. In the south, demand also increased from 0.52Mt in October 2016 to 0.63Mt in October 2017.
Report claims Lafarge Syria paid US$5.6m to groups in Syria 24 November 2017
Syria: A report into the alleged activities of Lafarge Syria, now part of LafargeHolcim, claims that the company paid a total of US$5.6m to a number of local factions in Syria, including to the Islamic State group, between July 2012 and September 2014. The report by the US consultant Baker McKenzie in collaboration with PricewaterhouseCoopers was first reported upon by the French satirical weekly Le Canard enchaîne (The Chained Duck).
According to Le Canard enchaîne, a large portion of the payments were paid to ensure the safety of local staff and the free movement of Lafarge trucks, often blocked by fighters at checkpoints. Groups were also reportedly paid as suppliers, as they controlled access to heavy fuel oil or certain raw materials in part of the region. The document prepared by Baker McKenzie states that the Islamic State group could have collected at least US$500,000. The French Ministry of the Economy took legal action in 2016 on possible offenses committed by the cement group Lafarge by operating a plant in Syria, despite EU bans.
LafargeHolcim has maintained its stance that it ‘deeply regrets and condemns the unacceptable mistakes made in Syria’ and states that it called a central investigation as soon as it became aware of the irregularities. On 14 November 2017, police raided LafargeHolcim's offices in Paris and those of its 9.4% shareholder Groupe Bruxelles Lambert (GBL) in Brussels, Belgium. An investigation into the activities continues.
New Korean-backed plant for Uzbekistan 23 November 2017
Uzbekistan: The South Korean company Evergreen Holdings has announced plans to build a cement plant in Karakalpakstan, Uzbekistan. An agreement was signed in Seoul between the representatives of Uzkurilishmaterialary and Evergreen on 22 November 2017.
The total cost of the project exceeds US$300m. Evergreen Holdings intends to implement the investment in several stages based on the demand in Uzbekistan and neighbouring countries. The first stage will involve an investment of at least US$60m.
Uzbekistan currently has five large cement plants: Kyzylkumcement, Akhangarancement, Kuvasaycement, Bekabadcement and Djizzakh Cement plant, as well as a number of small enterprises. Their total capacity exceeds 8.5Mt/yr but
Uzbekistan wants to increase production to over 17Mt/yr in the period to 2022.