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Extent of Afghan ban on Iranian cement imports unclear 20 September 2018
Afghanistan/Iran: The Afghanistan Customs Department has banned imports of cement at the Farah border crossing from Iran’s South Khorasan Province. Mozaffar Alikhani, the Secretary-General of Iran-Afghanistan Chamber of Commerce, said that the ban had been implemented at the border point due to a lack of an online monitoring system, according to Eghtesadonline. The ban also includes oil products, steel products, tiles and ceramics.
Afghan officials have made contradictory statements about a ban of imported commodities from Iran. Ali Shariati, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, told the ILNA news agency that the Afghanistan Customs Department had banned cement imports and those of other materials from 16 September 2018 to bring it into alignment with US sanctions on Iran. However, Alikhani dismissed this and said that the goods in question continue to be exported as usual from Iran to Afghanistan through the border crossings of Dogharoun in Khorasan Razavi Province and Nimrouz in Sistan-Baluchestan Province.
Sakhi Ahmad Peyman, the president of the Afghanistan Industrial Association, has also described the ban as temporary.
DG Khan Cement’s sales and profit up 20 September 2018
Pakistan: DG Khan’s sales rose by 3% year-on-year to US$271m in the year than ended on 30 June 2018 from US$263m in the same period in 2017. Its profit increased by 14% to US$72.4m from US$63.6m.
Raysut Cement joins list of Sharia-compliant companies in Oman 20 September 2018
Oman: Raysut Cement has been added to a list of Sharia-compliant companies for the second quarter of 2018 compiled by the Muscat Securities Market. It joins Oman Cement, which was listed in the first quarter of 2018, according to the Oman Daily Observer newspaper. The list includes 31 publically listed companies that conform to the requirements of Islamic Sharia according to the rules approved by the Accounting and Auditing Organization for Islamic Financial Institutions, Companies on the list cover a cross-section of industrial sectors.
Lafarge Africa – was it worth it?
Written by David Perilli, Global Cement
19 September 2018
Nigerian financial analysts Cordros Securities concluded this week that the merger of some of Lafarge’s Sub-Saharan African businesses had reduced earnings at Lafarge Africa. The report is interesting because it explicitly points out a situation where the consolidation of some of Lafarge’s various companies have failed in the wake of the formation of LafargeHolcim.
Cordros Securities’ criticism is that Nigeria’s Lafarge WAPCO performed better in 2013 alone before it became part of Lafarge Africa, with a higher standalone earnings before interest, taxation, depreciation and amortisation (EBITDA) margin. Lafarge Africa formed in 2014, a year before the LafargeHolcim merger was completed, through the consolidation of Lafarge South Africa, United Cement Company of Nigeria, Ashakacem and Atlas Cement into Lafarge WAPCO. Since the formation of Lafarge Africa, Cordros maintains that its earnings per share have consistently fallen, its share price has dropped, its debt has risen, its margins have decreased and its sales volumes of cement have also withered.
Cordros mainly focuses on the Nigerian parts of Lafarge Africa’s business, given its interest in that market and the fact that about three quarters of the company is based in the country. It blames the current situation on growing operating costs since the merger, skyrocketing financing costs for debts and efficiency issues. In Nigeria, Lafarge Africa has had to cope with disruptions to gas supplies. Nigeria’s Dangote Cement had similar problems domestically in 2017 with falling cement sales volumes in a market reeling from an economic recession but Cordros reckoned that Dangote is picking up market share in the South West due to an ‘aggressive retail penetration’ strategy. Finally, Lafarge Africa faced a US$9m impairment in 2017 due to its abandoned pre-heater upgrade project at AshakaCem. The project has been suspended since 2009 due to security concerns in the North-East region. The plant faced an attack by the Boko Haram militant group in 2014 and the group has seemed reluctant to invest further in the site subsequently.
Cordros’ final word on the matter is that with the Nigerian cement market performing slower than it has previously, the local market has become a battleground between the established players of Dangote Cement, BUA Group and Lafarge Africa. What little the report does have on South Africa covers problems with old and inefficient hardware, labour disputes, low prices due to weak demand, high competition and a negative product mix.
Lafarge Africa itself presents a more mixed picture, with market growth picking up in Nigeria following end of the recession but continued market problems in South Africa. Overall, its reported sales grew by 4.8% to US$448m in the first half of 2018 but its EBITDA fell by 25% to US$76.4m. Overall cement sales volumes were reported as up by 5.4% to 2.6Mt in the first half but volumes were still falling in South Africa in the second quarter.
Part of the backdrop to all of this is the intention of Lafarge Africa to cut its debt. In May 2018 its chairman Mobolaji Balogun said that the company wanted to cut its debts by 2020 before continuing with its expansion programme. Part of this process will include a new rights issue later in 2018 to allow shareholders to buy stock at a discount.
It must have made sense, on paper at least, to merge the Lafarge subsidiaries in the two largest economies in Sub-Saharan Africa. Once the merger had settled in, with synergies generating extra revenue, the group could have considered adding extra territories such as Kenya. However, it’s not turned out like that. Two recessions in Nigeria and South Africa respectively, old equipment, debt and serious competition from locally owned producers have piled on the pressure instead. From a stockholder perspective, Cordros is not impressed by the performance of Lafarge Africa. The wider question is: what else did Lafarge and Holcim get wrong when they joined to form LafargeHolcim?
Jenny Larsson appointed district manager for Cementa south region
Written by Global Cement staff
19 September 2018
Sweden: Cementa has appointed Jenny Larsson as the district manager for its south region. She succeeds Lars-Åke Andersson, who has held the role for 20 years. Andersson will retire in the spring of 2019 and the pair will work together until this time.