Global Cement News

Germany: The German multinational cement giant HeidelbergCement has announced preliminary financial results for the fourth quarter of 2012 and for the full year. In the fourth quarter it saw its revenue rise by 6.5% year-on-year to Euro3.5bn, its operating income before depreciation increased by 8.2% to Euro691m.

Over the whole of 2012 the group saw its revenue increase by 8.7% relative to 2011, rising to Euro14bn. Its operating income rose by 9.5% to Euro1.61bn. HeidelbergCement reported that it owed improvements in its cement margins to its cash-saving 'FOX 2013' programme, which saved outgoings of Euro384m.

The improvements reflect the continuing positive development in HeidelbergCement's growth markets and the ongoing recovery in North America. Sales volumes and result declined in Europe, mainly as a result of government budget constraints in some countries, which led to significant reductions in infrastructure spending.

"We are pleased that we achieved our goal of increasing revenue and operating income despite the negative impact of the Euro crisis on many countries in Europe," said Dr Bernd Scheifele, CEO of HeidelbergCement. "Once again we could reap the benefit from our advantageous geographical positioning in growth markets and the successful continuation of our programmes for efficiency and margin improvement. The margins in the core businesses cement and aggregates continued to increase. The strong development in our markets in Asia, Africa and North America contributed to the positive margin development."

In western and northern Europe the business development was not supported by mild weather at the beginning and the end of the year, which had been the case in 2011. Nevertheless, demand for construction materials remained stable in HeidelbergCement's native Germany and northern Europe, driven by positive economic development. In contrast, construction activity in the UK and the Netherlands weakened noticeably, mainly as a result of lower infrastructure spending in the UK due to budget consolidation and the decline in residential construction in the Netherlands following the end of housing subsidy programmes. Revenues here were Euro4.2bn, a decrease of 2.7% over 2011. Cement, clinker and ground granulated blast-furnace slag (GGBFS) sales came to 21.3Mt, a 3.9% decrease compared to 2011.

The development in the group's Eastern Europe-Central Asia region was divided. While cement sales volumes and prices developed positively in Russia and Central Asia, the demand for construction materials declined significantly in Poland, Hungary and the Czech Republic as a result of budget consolidation measures in these countries and the completion of construction projects related to the 2012 European Football Championship in Poland and Ukraine. Overall, cement, clinker and GGBFS sales volumes increased slightly to 17.2Mt, a 1% year-on-year increase. Revenues across all business activities in this region came to Euro1.44bn.

In North America demand for cement and ready-mixed concrete continued its recovery in 2012, driven especially by an increase in residential construction. Cement, clinker and GGBFS sales volumes recorded growth of 11.7%, rising to 11.7Mt. However, the group's result in the fourth quarter of 2012 was affected by Hurricane Sandy and an early winter start in Canada. In this region its revenue came to Euro3.44bn, a 13.4% increase year-on-year.

In the group's Asia-Pacific region, Demand for all of its products remained very strong due to construction activities that were supported by economic growth across the region. As a consequence, revenue showed growth of 17.6% for the full year and 12.8% for the fourth quarter. This rose to Euro3.48bn for the whole of 2012. Meanwhile, cement, clinker and GGBFS sales rose by 3.9% to 30.0Mt.

In HeidelbergCement's Africa-Mediterranean Basin region, cement, clinker and GGBFS sales were up by 0.9% to 9.2Mt. Revenues increased by 11% year-on-year to Euro1.135bn. The group noted particular improvements in its key markets of Ghana and Tanzania.

With regards to its progress in 2013 HeidelbergCement cited the IMF's expectations for slightly improved global economic growth, presumably linking this directly to demand for building materials. It cautioned that this growth was dependent on the continued focus of North America and Europe on their respective debt crises. There are still risks for the global economy from armed conflicts in the Middle East.

In North America, the company expects a continuing economic recovery and consequently a further increased demand for building materials, especially from residential construction and the raw materials industry. In Europe and Central Asia, HeidelbergCement anticipates divided development. While markets in Germany, Northern Europe, Russia and Central Asia should remain stable or continue to grow, weak economic development and low demand for building materials is expected in all other regions. In Asia and Africa the company expects sustained demand.

"Due to the continuing strong economic growth in the emerging markets and the recovery in the USA we are cautiously confident for the future," said Bernd Scheifele. "Macroeconomic risks have recently eased but still remain significant. The need for countries to deleverage will likely dampen volume growth in mature markets for the foreseeable future. In addition, we still have not recovered the margin loss from massively increasing energy costs over the past years. Therefore, we will unabatedly continue our efforts to reduce costs and improve efficiency and will continue to right-size capacities where necessary."

US: The US-based building materials provider Eagle Materials has reported financial results for the third quarter of the 2013 fiscal year, which ended on 31 December 2012. These showed that its revenue was up by 33% compared to the same period of the prior fiscal year. Earnings per share were up by 429% year-on-year.

Eagle's third quarter sales volumes improved across all business lines, with sales prices improving in all but one of it business lines. Operating earnings from its cement operations for the quarter came to US$16.6m, a 7% increase from the same quarter a year ago. Cement revenues for the quarter, including joint venture and inter-segment revenues, totalled US$74.9m, 22% greater than the same quarter of the previous year. Cement sales volumes for the quarter were 0.82Mt, 17% above the same quarter a year ago.

On November 30, 2012, Eagle completed its previously announced acquisition of Lafarge North America's Sugar Creek, Missouri and Tulsa, Oklahoma cement plants, as well as related assets. Eagle used cash proceeds from an equity offering completed on 3 October 2012, along with borrowings under its bank credit facility to fund the purchase.

A stark reminder came this week of the thankfully rare but potential risks of working in the cement industry. Five deaths were reported at Ambuja Cement's Bhatapara cement plant in India on 31 January 2013.

According to a press release Ambuja issued, the steel construction supporting a fly ash hopper located on top of a building, and connected to the cement mill, collapsed at the Bhatapara plant. Further details in local press reports added that about 200t of fly ash fell from a height of 15m. Five labourers and plant employees working at the site were buried under the debris and subsequently died. Four officials from the company have since been arrested and the plant closed while investigations are conducted.

Previously in January 2013 burn injuries were reported as another Ambuja cement plant, this time at Darlaghat. Eight workers received burns after a blast from a boiler unit.

However, despite these incidents the safety figures for Ambuja Cement and the other major Indian producers are high. In Ambuja Cement's 2011 sustainability report it recorded that its lost time injury frequency rate (LTIFR) was 1.04 for total employees and supervised workers. Its LTIFR has been dropping steadily since 2008, when it was 3.18.

This compares to other major Indian cement producers as follows. UltraTech Cement reported that its LTIFR for permanent employees was 0.82 in 2011-2012, a consistent drop year by year since 2008-2009. ACC reported that its LTIFR for its own and subcontracted employees was 0.31 in 2011. Shree Cement reported a LTIFR of 0.91 in 2010-2011 for employees and contractors. For international comparison the Mineral Products Association set a LTIFR target of 1.79 or lower for 2014 in the UK. Lafarge's global LTIFR in 2011 was 0.63 and Holcim's was 1.6.

An Ambuja's plant in Rajasthan picked up two national awards from the Government of India for Safety Performance in mid 2012. One was for first place for outstanding performance in Industrial Safety based on 'Lowest Average Frequent Rate'. The second was a runners-up prize for the category 'Accident Free Year'. Lafarge India, UltraTech, ACC and the other major producers all hold similar accolades. Sadly, any safety record is only as good as the shift that has just finished.

Pakistan: Lafarge Pakistan has announced the appointment of Amr Reda as the new Country CEO. Prior to joining Lafarge Pakistan he was the Regional Business Controller Lafarge Middle East and Pakistan and has served as member Board of Directors' Lafarge Pakistan since January 2007.

"We are fortunate to have Amr as the new CEO and I have full faith that he will take the company to the new heights of professionalism. We will together work for the benefit of all stakeholders of the Company," said outgoing Lafarge Pakistan CEO Major General Rehmat Khan. Khan will take a new role as Chairman Board of Directors of Lafarge Pakistan.

Saudi Arabia: Arabian Cement has said its chief executive, Ali Al Khuraimi, has resigned for personal reasons. A new CEO will be appointed as soon as possible, the cement maker said in a statement posted on 2 February 2013 on the Saudi bourse website.