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Pakistan cement sector under financial pressure 06 July 2012
Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has revealed that the Pakistan cement sector remained under financial pressure during the fiscal year 2011-2012, which ended on 30 June 2012. This was attributed to increases in input costs in electricity, diesel, paper sack and gypsum and a devaluation of the Pakistani Rupee. However, for the same period the industry's local cement despatches met the highest levels ever recorded in the country.
Revealing the performance of the cement sector in the fiscal year 2011-2012, a spokesman for APCMA said that local cement despatches were 23.9Mt, an increase of 8.84% year-on-year. However exports remained under pressure throughout the year and declined by 9.12% to 8.57Mt. 2011-2012 was the third consecutive fiscal year when exports declined.
In 2011-2012 the cement sector increased its capacity by 3Mt. Total production capacity increased by 7.23% to 44.2Mt from 42.2Mt in 2010-2011. Capacity utilisation remained under pressure due to sluggish export demand, a sluggish construction sector, lack of investment in the housing sector and the government's 'inability' to initiate mega-projects.
Exports to India were only 0.61Mt in 2011-2012, a figure well below the expectations of the cement sector. However, exports to Afghanistan remained stable at 4.72Mt in 2011-2012. Exports to other destinations by sea declined to 3.25Mt, a drop of 17%.
Cade approves Camargo's Cimpor share purchase 05 July 2012
Brazil: Brazil's competition regulator, Cade, has approved Camargo Corrêa's June 2012 purchase of a controlling stake in the Portuguese cement maker Cimpor subject to several conditions. The main requirement is that Votorantim, a competitor of Camargo in the Brazilian cement market, must sell its own stake in Cimpor. Votorantim and Camargo Correa both bought shares in Cimpor in 2010.
The Cade decision is expected to result in an agreement between Camargo and Votorantim whereby Camargo gets Cimpor assets in Brazil and Votorantim gets Cimpor assets abroad including those in Spain, Turkey, China and India.
With 40% of Brazil's cement market, Votorantim is Brazil's largest cement maker. Through their shareholdings in Cimpor, both Camargo and Votorantim previously increased their share of Brazil's market. Cade also said that Camargo must sell some assets in Brazil's São Paulo state, the country's most populous and industrially-developed region, and create a technological development programme.
Under the terms of the Cade decision, Votorantim's exit from Cimpor will be carried out either by selling its Cimpor stock back to France's Lafarge or by a sale to a third party, according to Alessandro Octaviani Luis, the Cade board member who wrote the decision. "We take Votorantim's willingness to negotiate its departure from Cimpor as a symbol of goodwill to Cade," said Vinicius de Carvalho, Cade's president.
Luis had recommended rejecting the initial Votorantim purchase of Cimpor on the grounds that it would raise Votorantim's dominance of Brazil's cement market, saying that while it has less than half of Brazil's total market, in some states, Votorantim's market share is as high as 70%. "In the cement market, Votorantim does not have the means to grow through acquisitions," he said. Votorantim said later in a statement that it bought its Cimpor stake to expand internationally and it was never its intention to remain a partner in Cimpor with Camargo.
The Cade decision comes as two decades of consolidation in Brazil's cement and concrete markets have led to limited competition and kept prices high. The market conditions have created problems for a government seeking to spend hundreds of billions of dollars in road, port and housing construction and for companies expanding mines, farms, factories and transport infrastructure to supply soaring Asian demand for commodities.
Chinese halftime profit warning
Written by Global Cement staff
04 July 2012
Cement industry results from China have all told an alarming story this week: profits for the first half of 2012 look set to fall by more than 50% year-on-year.
China Resources Cement Holdings warned that its first-half earnings were down sharply. China National Materials Co. Ltd. (Sinoma), the cement equipment and engineering services provider, and Gansu Qilianshan Cement, a small Shanghai-listed cement producer, have both forecast similar drops. Sinoma blamed its drop in profit partly on an overseas project but 'interestingly' no further information was released detailing which project.
Previous to this in June 2012 Anhui Conch Cement warned that its net profit would fall by more than 50% due to weak demand and falling product prices. In May 2012 China National Building Material Co Ltd (CNBM) reported that its net profit for the first quarter of 2012 was down by 45% year-on-year. In April 2012 Jidong Cement reported an increase in its net loss for the first quarter and a year-on-year revenue drop of 14%.
Each of the Chinese big players in the cement industry have issued profit warnings of a similar scale suggesting that the Chinese market faces a uniform downturn or that a slowdown is being centrally managed. Official signs that the Chinese industry faced a slowdown emerged in March 2012 when the national growth target was lowered, analysts' predictions were released forecasting weakened profits for the nation's main producers and government officials admitted that overcapacity loomed within five years.
According to OneStone Research data on the Chinese market in 2010 CNBM, Anhui Conch, Jidong and Sinoma represented over 20% of Chinese capacity. To give these figures some perspective, in 2011 CNBM's profit was US$1.7bn. Holcim's operating profit for the same period was US$2bn and Lafarge's operating income was US$2.74bn. Even halved, CNBM's profit is a massive figure for a company with less of an international presence than the European multinationals.
Tomasz Czop leads business development at MVW Lechtenberg & Partner
Written by Global Cement staff
04 July 2012
Germany: Tomasz Czop, former Purchase Director of Ożarów Cement Poland (CRH Group) is now leading business development at MVW Lechtenberg & Partner, the German consulting firm for the implementation of alternative fuels from biomass and useable wastes in the cement industry.
As a former member of the management board of the Polish subsidiaries of Ireland's CRH he was directly responsible for the whole procurement of all business units in Poland and Ukraine. Within MVW Lechtenberg he will lead the business unit of alternative fuels and raw materials trade which is currently focused on the supply of refuse derived fuels for the cement and power generating industry in northern and eastern Europe.
New Chief Executive for Cembureau
Written by Global Cement staff
04 July 2012
Europe: Koen Coppenholle took over as the new Chief Executive of Cembureau on 1 July 2012. He follows Dr Jean-Marie Chandelle, who retired at the end of June 2012.
Following a distinguished legal career, Koen Coppenholle has been Head of European Affairs for ArcelorMittal in Brussels since November 2007. Between September 2000 and November 2007, he was Senior Counsel European Affairs with General Electric Europe in Brussels. Coppenholle joined the Cembureau team on 2 April 2012 to help to ensure a smooth transition.
Jean-Marie Chandelle has held the position of Chief Executive of Cembureau since 1996. A qualified lawyer, with a Master of Law and a PhD, Chandelle has held numerous positions in his native Belgium and abroad.