06 April 2016
Israel restricts entry of cement into Gaza 06 April 2016
Gaza/Israel: Israel has once again blocked the entry of cement and other construction materials into the Gaza Strip for private sector projects. It accused Hamas, the militant Islamic organisation in control of the territory, of using the materials to build tunnels in violation of an agreement made after the 2014 Gaza war. The ban will not affect supplies to large international construction projects such as those coordinated by the United Nations.
China: China Resources Cement has issued a profit warning for the first quarter of 2016. It expects its profit for the three-month period to drop ‘significantly’ year-on-year due to lower prices of cement and clinker in China. The Chinese cement producer reported a profit of US$85.1m for the first quarter of 2015.
Brazil: Votorantim’s cement sales volumes fell by 6% year-on-year to 35Mt in 2015 from 37Mt in 2014. However, net revenue from the group’s cement business rose by 6% to US$3.82bn. The Brazilian industrial group blamed the loss of sales volumes on the poor economic situation in Brazil. However, its revenue rallied due to currency variations and growing sales outside of Brazil.
Overall across all business sectors Votorantim reported that its revenue rose by 11% to US$8.57bn. This was supported by higher metal prices in Brazil and positive effects from the consolidation of the group’s foreign operations. Net income dropped by 77% to US$103m
Ireland: Justice Max Barrett of the High Court has ruled that the Competition and Consumer Protection Commission (CCPC) breached the terms of a search warrant by seizing the email account of a CRH executive in 2014. The court also determined that the competition body had breached the Data Protection Acts, the Irish constitution and the European Convention on Human Rights. The court added that the seized emails contained material outside the scope of the investigation.
The CCPC responded by saying it was ‘considering carefully’ the implications of the judgment and the next steps that it would take. However, its investigation into alleged anti-competitive practices by Irish Cement in the supply of bagged cement continues.
The CCPC carried out an unannounced search at the premises of Irish Cement on 14 May 2015 as part of an on-going investigation into alleged anti-competitive practices in the supply of bagged cement. During the search, the CCPC seized a number of electronic documents including the mailboxes of a number of current and former employees of Irish Cement. CRH argued that certain emails in the mailbox of one such employee, Seamus Lynch, were unrelated to the business of Irish Cement and were therefore not entitled to be seized. Accordingly, in November 2015, CRH brought a High Court action against the CCPC seeking an injunction to prevent the CCPC from examining these emails.
Germany/Italy: HeidelbergCement has released details on how it will integrate Italcementi into its business. Key details of the plan include the sale of Italcementi’s Belgium operations, the retention of the Italcementi brand and headquarters and the Italian cement producer’s i.Lab centre will assume research and development responsibilities for the entire group. However the acquisition is expected to result in up to 260 job losses at Italcementi’s base in Bergamo. The full integration plan is expected to be complete by 2020.
“Following our motto ‘all business is local’, it is important for us to preserve Italcementi's strengths and professional expertise, which have ensured its success in Italy and abroad. I am convinced that we will be able to achieve the planned Euro400m in synergies and bring Italcementi back to profits by operational improvements, streamlining the administration and leveraging the increased size of our combined business,” said Bernd Scheifele, chairman of the managing board of HeidelbergCement.
The acquisition still depends on approval from the European Commission and the Federal Trade Commission. On 1 April 2016, HeidelbergCement formally submitted the merger plan to the European Commission.
To this end, HeidelbergCement has decided to sell Italcementi’s entire Belgian operations, primarily consisting of Italcementi’s Belgian subsidiary Compagnie des Ciments Belges. The proposed divestment would remove all overlaps between the activities of HeidelbergCement and Italcementi in Belgium and the Netherlands. Preparations forthe divestment have already started and ‘significant’ interest has been noted. BNP Paribas will support the process.
The plan presented in Bergamo by Scheifele says it intends to keep the industrial network and plants in Italy as well as the Italcementi brand. In addition, HeidelbergCement builds on Italian management heading the Group's operations in Italy. i.Lab, based in Bergamo, where Italcementi will keep the headquarter of Italian country organisation, will become the home of the product research and development division of the whole group.
In order to streamline the overall group organisation some staff and administrative functions will be centralised in Heidelberg. According to the integration plan around 170 people will receive relocation offers to other offices within the group. Any redundancies in Bergamo, which could potentially affect between 230 and 260 people, will be handled using Italy's temporary layoff scheme. In addition, severence packages will be negotiated with the unions. At the end of the transition period in 2020, about 210 to 250 professionals will remain in Bergamo.
HeidelbergCement expects the closing of the acquisition of the 45% stake to be finalised in early July 2016 depending on the decision of the cartel authorities in Europe and the USA. Implementation of the integration plan will start after the closing.