Global Cement News

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.

Russia: Eurocement Group has announced plans to build a cement plant in the Samara Region in the Volga region. The groundbreaking ceremony took place on 19 January 2011.

The plant, which will have a dry-process kiln, will have a capacity of 2.4Mt/year. The facility will be located on a site of 40 hectares and its launch is scheduled for 2015. Eurocement plans to invest Euro395m in the project.

The announcement follows the start of another Eurocement plant in Spasskoe village, Blagodarnniy district, Stavropol Krai. Construction of this 1.3Mt/yr plant began in December 2011. Euro346m has been committed to this build.

Kenya: A court has ordered the government to re-open the East Africa Portland Cement Co plant and provide security to ensure operations at the site. Justice Mohamed Warsame directed Police Commissioner Mathew Iteere, Rift Valley police boss and his Eastern Province counterpart to ensure adequate security.

The judge said the interest of the company must come first by safeguarding the interests of the public and shareholders. The judge warned that any politicians that interfered in the affairs of the company would be cited for contempt of court. He said that if the directors were not ready to reopen the company, he would 'fire' them and appoint an interim board.

"We must look at the bigger picture and how we can move this company forward and save it from being run down. The court cannot let it go on," he said.

The judge dismissed allegations that politicians incited workers and warned that any employee who failed to report to work should be sacked for absconding duty. He said that the ethnic direction the company was taking was wrong adding that, "we cannot address the grievances of the Kamba and Maasai, but the company has to operate."

Brazil: Votorantim Industrial, Brazil's largest diversified industrial conglomerate, intends to use proceeds from the sale of its stake in steelmaker Usiminas to expand its cement and mining output.

Chief executive, Raul Calfat, announced that the US$1.34bn raised by Techint's purchase of Votorantim's 13.5% voting stake in Usiminas had boosted the group's cash holdings to US$6.5bn. This high level of cash will allow the investment holding company to avoid borrowing at a time when financial markets remain shut for all but the most credit-worthy companies, said Calfat. It also gives the company room for funding heavy investment plans with its own cash.

Calfat said that the group's cement unit, Brazil's largest producer of the building material, would get one-third of the Usiminas stake sale proceeds. He said that the money would go towards the construction of four factories by 2013.

Holcim announced yesterday a shock profits warning after it included Euro641m in one-off charges in its 2011 accounts. Over half of this amount, a massive Euro343m, came from writedowns at its former South African subsidiary AfriSam, which has been unable to deal with poor trading conditions there. Writedowns in the US and parts of Europe made up the rest of the one-off costs. The move has prompted fears from analysts that other cement manufacturers may follow suit, taking the sector into unknown territory. What other skeletons are hiding in the cupboards of the big multinationals?

Meanwhile, an old cement industry problem that is not unfamiliar to AfriSam, cartelisation, has reared its ugly head again. After five Spanish producers were ordered to pay a combined Euro11.1m over an alleged cartel in northern Spain, authorities in Pakistan searched the offices of its national cement association, the APCMA, on Monday. They were following a tip-off that cement companies have been monitoring each others' dispatches, a practice deemed illegal in previous investigations. A previous cartel case from 2009-2010 is still pending in Pakistan so any action against producers will likely to take years to be brought.

Elsewhere, the situation has gone from bad to worse at the East Africa Portland Cement Company in Kenya, with protests over the re-instatement of previously-fired board members turning violent on Monday. With one worker hospitalised after being shot by an over-zealous security guard, it is hard to see how the current situation can be resolved without the removal of the current management. The government has assured the workers that it is working on the problem.

At the same time in Kenya, National Cement Company's (NCC) plans to build a quarry and clinker plant south of Nairobi have been slammed by local Massai groups, environmental NGOs and even the state-owned Kenya Wildlife Service. NCC plans to 'buy-off' the Massai with a jobs scheme, but this doesn't address the conservation issues. Global Cement urges NCC to re-examine its plans and the location of its proposed plant, and to work closely with the Kenya Wildlife Service.