Global Cement News

Switzerland: Holcim's net income has risen by 9% for the first six months of 2012. Despite this, the world's second-largest cement maker plans to cut costs and raise cement prices to meet its financial targets. These have been both hit by poor demand Europe and high-energy costs.

The company's net income attributable to shareholders rose to Euro324m in the January 2012 to June 2012 period from Euro267m in the same period of 2011. Net sales rose by 2%, to Euro8.62bn from Euro8.45bn. Operating earnings before interest, tax, depreciation and amortisation rose by 1.9%, to Euro1.61bn from Euro1.60bn. Sale volumes of cement rose by 4%, to 74Mt from 70.9Mt. Second quarter results for the April 2012 to June 2012 period supported these overall trends.

By region, Holcim's Asia Pacific and Latin America areas showed steady growth while Europe continued its decline. In Asia Pacific sales of cement rose by 8% for the half year, to 41.2Mt from 38.1Mt. In Latin America sales rose by 3.3%, to 12.1Mt from 11.7Mt. In Europe sales fell by 4.1%, to 12.3Mt from 12.8Mt, mainly due to poor performance in the first quarter of 2012. In North America sales rose by 8.6%, to 5.4Mt from 5Mt. In Africa and the Middle East sales rose by 2.7%, to 4.5Mt from 4.4Mt.

"While demand in North America should beat the previous outlook, Holcim now expects a decline in Europe," the Holcim said. The firm's construction industry customers, especially those in southern Europe at the heart of the debt crisis, are suffering as governments slash spending in an attempt to get budgets under control. Analysts at Bank Vontobel said that while Holcim's overall outlook was almost unchanged, the contribution of Europe compared with North America was three times bigger, making this effectively a 'reduction of the outlook'.

The Swiss cement maker said that its spending cuts were under way and would result in an additional operating income of at least Euro125m in 2012.

China: China Resources Cement Holdings (CRC) has reporting a sharp fall in earnings and profit margins for the first half of 2012, dragged down by weaker demand. Despite turnover rising by 9.8% to US$1.42bn for the six months ending 30 June 2012, the company's net profit slumped by 68.9% to US$81.9m over the same period due to sliding selling prices.

CRC has attributed its poor performance to a number of factors including sluggish demand caused by weakened economy and poor weather conditions in the southern part of China, which led to accumulation of inventory as well as a series of price cuts. CRC expects prices to pick up in the fourth quarter of 2012 due to several large infrastructure projects, including resumed construction of railway networks and on-going affordable home-building drives.

Nigeria: Dangote Cement has said that it is widening the distribution of its cement in Nigeria by opening more depots and signing on new distributors. It says it is doing this so that domestic consumers can reap the full benefit of the increased local production.

A statement from the company said that there have been growing concerns over the price of cement even with continuous efforts at increasing production. Dangote, which accounts for over 70% per cent of domestic production, has continued to invest in local production by expanding its production lines and establishing new plants. The statement added that the Dangote management believe that only a 'liberalised distribution system' can convert increased local production to cheaper cement.

Domestic production capacity in Nigeria is believed to have reached about 27Mt/yr , whilst demand hovers at between 17Mt/yr and 18Mt/yr.

Ireland: CRH expects the Eurozone's economic problems to deepen a slide in sales in the second half of 2012, preventing it from raising profits despite a recovery in the US construction market.

For its interim results for the six months ending on 30 June 2012 the Irish building materials group reported a 5% rise in sales revenue, to Euro8.59bn from Euro8.17bn in the same period in 2011. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 1% to Euro568m from Euro574m.

"The big question is whether Germany and some of the economies that are performing well can compensate and continue to deliver growth for the Eurozone overall," said chief executive Myles Lee.

"We just don't see how the Eurozone can get their act together in time to have a significant impact in the second half," chief financial officer Maeve Carton added.

Sales in the US, where CRH is the leading producer of asphalt for highway construction, rose 8% on a like-for-like basis in the first half compared with a 5% drop in Europe where bad weather added to governments' debt problems. But CRH noted that the rate of economic growth in the US is tailing off and forecast that sales growth in the second half in the region will be 'well below' the 8% sales growth in the first half.

First-half results were propped up by favourable weather conditions and improving construction markets in the US, with revenue, profit and margin growth across all three of its divisions in the first-half, said CRH. The company said that key European markets such as the Netherlands continue to struggle, while it is expecting a contraction in sales in Poland in the second half of 2012.

The company is seeking to cut costs by more than Euro2bn over a five-year period in response.

Switzerland/India: Engineering company ABB has secured an order worth US$18m in India to design, engineer and supply integrated automation and modern electrification systems for Century Cement's Manikgarh cement plant in central India.

ABB's delivery is part of a two-line expansion and plant modernisation project that will add production capacity of 2.8Mt/yr, more than doubling its current production capacity. The project also includes a 60MW thermal power plant onsite. providing a reliable on-site power supply that will improve energy efficiency. The turnkey project is scheduled to be completed by early 2014.

"Our proven experience in executing large and complex projects, minerals and cement industry expertise and leading automation and power technologies helped us to secure this important order," said Veli-Matti Reinikkala, head of ABB's Process Automation division.

ABB will deliver integrated power and automation systems using a plant-wide 800xA automation system to control, connect and optimise the performance of all processes and systems. The scope of supply includes medium-voltage switchgear, distribution transformers and other electrical equipment and power systems, intelligent low-voltage motor control centres, variable speed drives, instrumentation and collaborative production management systems. ABB will also provide design, engineering, project commissioning and other site services.