Displaying items by tag: Brazil
Nine-month financial results from the major Brazilian cement producers have been reported this week and they are not looking good. The local construction market is weak and cement sales volumes are down. This has been blamed on a 30% shrinkage of real estate financing and a 20% decrease in infrastructure works.
Votorantim has seen its cement sales volumes drop by 4% year-on-year to 26.7Mt for the first nine months of 2015. InterCement has seen its cement and clinker sales volumes drop by 7.2% to 21.1Mt. LafargeHolcim has reported unspecified declines in its cement sector in its disappointing third quarter results.
Overall, the Sindicato Nacional Da Indústria Do Cimento (SNIC) - Brazil's cement industry body, has reported that domestic cement sales fell by 7.7% to 49.2Mt for the period. Particular sales drops by region have been observed in the Midwest (5.8Mt, -11.2%) and the Southeast (22.8Mt, -9.4%). That last region, Southeast, is pertinent given that it contains the country's biggest cement producing state, Minas Gerais.
Votorantim has been pointing out all year that its costs are soaring due to issues in Brazil. Maintenance costs, energy-related costs and the impact of the depreciation of the Brazilian Real on petcoke were all hitting costs. Net revenue has grown so far in 2015, with a growth of 5% to US$2.75bn, mainly due to the company's geographic spread outside of Brazil.
InterCement has noted that new cement production capacity in north-eastern and southern markets have reduced its sales volumes and prices by 1.7%. It too has experienced a rise in energy costs, pegged to the US Dollar. To act against this InterCement is implementing adjustment measures including suspending production at two grinding units and the closure of concrete units.
Alongside this Camargo Corrêa, the Brazilian construction group that owns InterCement, has been planning to sell a stake in InterCement to pay off debt since at least mid-2015. At the time local media reported that Camargo Corrêa planned to sell 10 – 18% of Intercement for between US$648m and US$1.17bn. CEO Vitor Hallack confirmed this week that Camargo Corrêa is still looking for a buyer. In the meantime it has extended US$536m of its short-term debt.
All of this is mirrored by wider economic woes in the country. In October 2015 the International Monetary Fund projected a 3% drop in real Gross Domestic Product (GDP) in 2015. The situation has been blamed on a wider world economy, the slowing Chinese economy and internal factors.
Back on cement, in July 2015, SNIC announced that domestic cement demand could contract by 10 - 15% in 2015 and that consumption could fall to around 60Mt in 2016. Brazil's cement production capacity currently stands at 70.75Mt/yr. Perhaps not coincidentally LafargeHolcim announced a 'portfolio optimisation' in its third quarter results with asset sales of US$3.5bn in 2016. Brazil may be on that list.
For more information on the Brazilian cement industry look out for our report in the December 2015 issue of Global Cement Magazine
Brazil: Votorantim Industrial, Brazil's largest industrial conglomerate, has posted a net loss for the third quarter of 2015 due to the impact of a deep economic recession and rising US Dollar debt-servicing costs after a currency plunge, according to Reuters.
Votorantim posted a net loss of US$22m, down sharply from a profit of US$155m a year earlier. Earnings before interest, taxes, depreciation and amortisation fell by a third to US$429m from a year ago, when Votorantim booked one-time earnings from an energy auction. The Brazilian Real fell to an all-time low in the third quarter of 2015, driving up Votorantim's gross debt by US$1.88bn to US$8.06bn at the end of September 2015.
Chief Executive Officer João Miranda highlighted investments outside of Brazil as the country suffers its sharpest economic contraction in 25 years. "In the face of Brazil's economic recession, our diversified business and international presence become even more important in delivering consistent results," said Miranda. Votorantim's capital spending rose by 55% to US$246m in the quarter, half of which was intended to expand capacity, particularly at cement plants outside of Brazil.
Brazil: Brazilian construction group Camargo Corrêa is prepared to sell assets to help reduce its US$6.38bn debt, according to CEO Vitor Hallack.
"We put up US$2.41bn to acquire cement manufacturer Cimpor in 2012, which became InterCement. It was a strategic option to double our size in Brazil and increase our international presence," said Hallack. Brazil's economy, however, has negatively impacted the company's plans.
To resolve matters, Camargo Corrêa has extended US$536m of its short-term debt. After negotiating with banks, its obligations have been extended to 66 months from 12 months. Moreover, assets in two companies could be sold off if the price is right and the opportunities arise. The company could sell off textile group São Paulo Alpargatas and seek partners for InterCement, according to Hallack, who reiterated that the company's energy firm CPFL Energia and transportation infrastructure arm CCR will not be sold.
Portugal: Cimpor has reported that its net loss grew by 52.5% year-on-year to Euro26.7m in the third quarter of 2015. The quarterly loss follows a general trend for the year as a whole. Sales volumes, revenue and profit are all down for both the third quarter and the year. The InterCement subsidiary has blamed the result on the slowdown of the Brazilian economy.
Cement and clinker volumes fell by 9.7% year-on-year to 7.07Mt in the third quarter of 2015. Sales revenue fell by 11.8% to Euro625m. Earnings before interest, taxes, depreciation and amortisation fell by 32.5% to Euro116m. For the first nine months of 2015, cement and clinker volumes fell by 7.2% to 21.1Mt. Sales revenue fell slightly by 1.2% to Euro1.93bn. EBITDA fell by 14.2% to Euro396m. Net loss grew by 90.2% to Euro33.7m.
By geographical area, Cimpor suffered from reduced demand for cement in Brazil due to the poor economy, along with increased competition and higher thermal costs. Elsewhere, some slowing has been observed in Africa in the third quarter as a result of one-off situations in Egypt, where an intensification of competition has lead to a fall in market prices, and Mozambique, where profitability was restricted by local energy limitations and the increase of costs pegged to the dollar.
Brazil: Votorantim Cimentos has inaugurated a 206,000t/yr mortar plant at the Camacari industrial hub, in Salvador, north-eastern Brazil. This is Votorantim's sixth unit in operation in north-east Brazil and it received US$6.48m in investment. The plant will generate 80 direct and indirect jobs.
Brazil: Portugal's Secil plans to upgrade its production capacity in Brazil by 2Mt/yr by the end of 2015. The move results from the addition of a new US$149m plant by its local division, Supremo, in Adrianopolis, Parana. Supremo also runs another plant in Pomerode, Catarina. The new plant will increase Secil's total cement production capacity from 7.65Mt/yr to 9.65Mt/yr, a 26% rise.
Brazil/Turkey: Votorantim Cimentos has announced investment plans of up to US$158m to expand its business in Turkey. As well as tripling the output of its cement plant in Sivas, Votorantim may set up or acquire a new plant to tap the growth potential of Turkey's construction sector, according to company officials.
"The investment in our Sivas plant will boost production capacity to 1.8Mt/yr, up from its current level of 600,000t/yr. Following the upgrade, the Sivas plant will account for 42% of Votorantim's cement production capacity in Turkey," said Sefik Tuzun, Votorantim Turkey's CEO. "Votorantim sees the potential of Turkey's construction sector and this investment shows our commitment to reinforcing our presence in Turkey. Sivas' expansion will bring a crucial dynamism and competitiveness to the company in the Turkish cement market."
The capacity upgrade will be completed by April 2017. The construction works for the extension will create employment for 700 people. Votorantim Turkey is active in cement production as well as concrete and aggregate businesses in the country, accounting for a share of about 29% of Votorantim Cimentos' total production capacity, excluding China.
India: Brazilian cement major Votarantim Cimentos, InterCement Austria Holding and Camargo Corrêa have settled a case with the Securities and Exchange Board of India (SEBI) for alleged violation of takeover protocols regarding Shree Digvijay Cement. They have paid over US$115,000 in settlement charges.
SEBI had initiated adjudication proceedings against the three companies over the violation of provisions Substantial Acquisition of Shares and Takeovers (SAST) regulations. It was alleged that the entities failed to comply with certain provisions of the SAST regulations while making an open offer for acquisition of 36.7 million shares, representing a 26% stake in Shree Digvijay Cement.
Brazil: Cement group LafargeHolcim has announced the launch of a new promotional campaign for its Maua cement brand in Brazil. The campaign, launched in Rio de Janeiro with the concept 'Orgulho de Fazer Bem Feito' or 'Proud of doing things well', will include radio spots and outdoor advertising in addition to point-of-sale material. The campaign also includes a radio competition that will award smartphones to eight winners.
Brazil: Based on Brazil's 2015 GDP forecast, cement production and civil construction in Brazil are expected to remain flat in 2015 for the first time in more than a decade.
GDP rose by 7.53% in 2010, but growth dropped in the following four years to 2.73%, 1.03%, 2.49% and 0.1%, according to BNamericas data. The amount of cement produced has followed the same trend. While in 2010 production was up by 14.2%, it rose by 7.55%, 8.19%, 2% and only 1.5% in the following four years, ending 2014 at 71.2Mt. Finally, civil construction revenue jumped by 33.5% in 2010, but the industry posted increases of 12.6%, 12.9%, 7.60% and 8.48% over the next four years. The last drop in Brazil's civil construction industry occurred in 2002. As GDP estimates are pointing toward a 1.7% contraction for 2015, cement production and civil construction are unlikely to grow in 2015 if they continue to follow Brazil's overall economy.