19 March 2015
Europe: Holcim's board of directors has determined that its merger with Lafarge will be delayed due to the disagreement of terms on the deal. In a statement, Holcim said that the agenda for its upcoming annual general meeting will only focus on direct Holcim business and not the merger.
According to local media, Lafarge and Holcim are discussing a change in the planned leadership of their combined company to rescue the merger amid growing resistance to Lafarge CEO Bruno Lafont taking the top job. The companies are considering naming another Lafarge executive as CEO instead of Lafont to address demands from Holcim that would allow the deal to go ahead. Lafont could become co-chairman of the new entity, together with Holcim chairman Wolfgang Reitzle. The appointments are among various management changes being discussed.
Australia: Boral will repurchase up to US$182m of its shares after a string of divestments bolstered the company's balance sheet. It intends to buy back up to 5%, or about 39 million shares, of its issued capital on-market over the next 12 months.
Boral chief executive Mike Kane said that the completion of a number of transactions, including the US$127m sale of its Western Landfill business in Melbourne to Transpacific Industries, had allowed for the share repurchase.
"This buyback reflects Boral's commitment to efficient capital management and delivering improved returns to shareholders," said Kane. "At the same time, we are maintaining flexibility to respond to changes in market conditions and to take advantage of appropriate growth opportunities that may present in the future." Kane had already flagged acquisitions in Asia and North America and said that Boral was too unbalanced towards Australia.
Boral was reportedly considering a sell-off of its building products division, but indicated it would instead look for savings through cost-reduction programs and joint ventures. A brickmaking joint venture with CSR will proceed after receiving approval from the Australian Competition & Consumer Commission, with the expectation of savings of between US$5.39 – 7.69m between Boral and CSR.
Saudi Arabia: Saudi Arabia's cement producers have again asked the government to lift a three-year-old ban on their exports so they can supply Egypt with 6Mt of cement, according to the chairman of Saudi Arabia's Cement Association.
"We are ready to export 6Mt of our cement surplus to Egypt following the signing of large contracts between that country and global companies this week," said Jihad Al-Rasheed, chairman of the national cement committee in the council of Saudi chambers of commerce and industry. Al-Rasheed said that it was time for Saudi authorities to lift the export ban after the emergence of 'golden' opportunities for the country's cement manufacturers to export their products to nearby Qatar, which needs large quantities of building materials for the planned stadia and other facilities for the FIFA 2022 World Cup. He added that other key markets that need Saudi cement include Kuwait, Bahrain, Sudan, Yemen and Ethiopia.
"Some Saudi cement plants were constructed in border areas with the aim of exporting their products to neighbouring countries, but the export ban has inflicted heavy losses on them and could force them to lay off workers," said Al-Rasheed. He added that cement companies in Saudi Arabia are trying to reduce a surplus of >20Mt by supplying domestic projects. "Most of the local government and private sector projects now have sufficient cement supplies. We want the Saudi government to lift the ban on cement exports in line with international trade rules," said Al-Rasheed.
Saudi Arabia partially lifted the cement export ban in 2009 before enforcing it again in 2012 to ensure enough supplies for domestic projects. According to Al-Rasheed, cement demand in Saudi Arabia stood at around 57.2Mt in 2014 and is projected to grow to nearly 59.5Mt in 2015.
Wonder Cement to double production 19 March 2015
India: Rajasthan-based Wonder cement, part of the RK Marble Group, plans to double its cement production by the end of 2015. The company will increase the capacity of its cement plant in Chittorgarh, Rajasthan from 3.25Mt/yr to 6.75Mt/yr by investing US$256m in the project. The plant, which currently runs at full capacity, sells 180,000bags/day of cement.
Buzzi presents binding offer to buy SACCI 19 March 2015
Italy: Buzzi Unicem has presented a binding offer to buy 99.5% of the Italian cement producer SACCI for Euro120m. The offer would be funded from cash and existing credit lines and would see Buzzi take on SACCI's debt. Buzzi said that it might in future pay an additional sum, depending on events like the achievement of a certain level of sales of the two companies and the possible sale of non-core activities.
Keurig K-Cup recycling programme that turns waste coffee pods into cement looks to expand 19 March 2015
Canada: A British Colombia programme that recycles Keurig coffee K-Cups into cement has been so successful that it may expand into Alberta. The Lafarge cement plant in Kamloops, British Colombia, Canada used about 1.4m K-Cups as ash in its cement in 2014 after teaming up with Van Houtte Coffee Services, which collects the used pods for recycling.
"I think we've been fairly successful here," said Eric Isenor, the Lafarge Kamlooops plant manager. "Van Houtte is happy with the programme so far and is looking to expand." He added that the company might start collecting the used pods in Alberta, Canada for recycling in British Colombia.
The single-serving coffee pods are not recyclable because they are a mixture of materials coffee grounds, a paper filter, plastic cup and foil top that cannot be efficiently separated. After collecting the used coffee pods, Van Houtte, a coffee service that delivers supplies to offices and retailers around Kamloops, brings them in large bins to the Lafarge cement plant for processing. The pods are dried out, shredded and heated to 2000°C to form ash, which is then used for cement production.
Germany: HeidelbergCement has reported a 26% decline in its 2014 net profit, reflecting a one-time loss and the absence of the prior year's gain. Operating income and revenues, however, increased on higher sales volumes and price increases in major markets. Further, HeidelbergCement announced higher dividend and said that it sees strong growth in fiscal 2015 results and sales volumes.
"We are confident about 2015. The outlook for the global economy is positive but there are still macroeconomic and geopolitical risks," said Bernd Scheifele, chairman of the managing board. "We will continue to benefit from the positive development in North America, the UK, Germany and Northern Europe. These countries generate almost 50% of our revenue. The results of the first two months in 2015 confirm our outlook."
In 2014 HeidelbergCement's profit plunged to Euro687m from Euro933m in 2013. The latest results were hurt by a non-recurring evaluation loss of Euro236m from the sale of the building products business, while 2013's results included Euro420m of non-recurring gains. Pre-tax profit fell by Euro91m to Euro931m. Operating income, however, grew by 5% on a reported basis and by 13% on a like-for-like basis to Euro1.6bn. Operating income before depreciation (OIBD) grew by 3% to Euro2.29bn, while its OIBD margin dropped to 18.1% from 18.3% in 2013. Revenue for the year totalled Euro12.6bn, up by 4% from Euro12.1bn in 2013. On a like-for-like basis, revenue growth was 8%. Cement sales volumes grew by 5% year-on-year to 81.9Mt.
HeidelbergCement expects to make Euro1.2bn of investments to upgrade and expand its capacities in 2015. New capacities of more than 5Mt/yr are set to be commissioned in 2015, primarily in Indonesia and sub-Saharan Africa. HeidelbergCement expects to significantly increase its revenue, operating income and net profit for the financial year in 2015. Cement sales volumes are also expected to grow, reflecting the positive development of demand and the commissioning of new capacities.
CRH assumes LafargeHolcim merger will proceed 19 March 2015
Europe: Ireland's CRH is assuming that the LafargeHolcim merger will still happen, according to CRH chief executive Albert Manifold. "At this moment in time, we're working forward on the basis that the deal will close, the merger will happen," said Manifold. He added that he had spoken to both companies on 19 March 2015.
CRH has agreed to buy a number of mostly European assets from Lafarge and Holcim for Euro6.5bn so that Lafarge and Holcim can get antitrust clearance for their plan to merge. According to Reuters, CRH's shareholders voted to approve the acquisition on 19 March 2015 at its extraordinary general meeting. According to Manifold, the CRH vote was a procedural step that had to be done, regardless of the uncertainty at Lafarge and Holcim, as a failure to approve the asset purchase would have left CRH exposed to a potential Euro158m break-up fee.
Manifold also confirmed that if the merger should fail, the break-up fee would apply in the other direction. "Likewise, if other parties don't conclude this deal for whatever reason, we would then be in receipt of a break fee," said Manifold. "I'm not going to speculate on whether it is or isn't going to happen. There are discussions going on to decide what they want to do over the next couple of days," said Manifold, adding that CRH was interested in buying the assets even if the merger falls through.
According to CRH, the LafargeHolcim assets would transform CRH into the world's third-largest building materials supplier, the biggest in central and eastern Europe, and double its presence in emerging markets. CRH makes about half its sales in the US and wants more exposure to new markets such as the Philippines and parts of Europe it believes are beginning to recover.
Manifold said that CRH also has its eye on other acquisitions, should the purchase of Lafarge and Holcim assets fall through. "This deal is an important part of the strategy of CRH, but it is not the strategy of CRH," said Manifold.