Displaying items by tag: Cemex
Puerto Rico: The US Environmental Protection Agency (EPA) has announced that Cemex de Puerto Rico will spend US$1.7m on pollution controls that will reduce emissions of nitrogen oxides. In addition, the company will pay a US$160,000 penalty for Clean Air Act violations.
"Nitrogen oxides emissions can lead to a number of serious health and environmental problems, including respiratory problems, heart disease and smog," said Judith A Enck, EPA regional administrator. "The EPA settlement protects children with asthma and other vulnerable populations from harmful air pollution by requiring that Cemex install state-of-the-art technology and take immediate steps to reduce pollutants."
The Cemex cement kiln system in Ponce has operated for over 20 years and is a major source of nitrogen oxide emissions. The settlement addresses modifications Cemex made to its cement plant without obtaining the proper permit, as required by the Clean Air Act. Businesses that produce large quantities of air pollution are required to obtain permits and install pollution control technology before making changes that would significantly increase emissions.
Following an EPA inspection, Cemex conducted a smokestack test at its Ponce facility and potential violations were discovered. In the settlement, Cemex will install control technology, which will reduce emissions of nitrogen oxides by approximately 1423t/yr.
Nicaragua: For the seventh year in a row Cemex has been awarded a national prize as a 'leading business' for its industrial safety and hygiene management procedures by Nicaragua's National Council for Work Safety and Hygiene at the Ministry of Labour.
This continued recognition is linked to its programmes that encourage workers to report poor behaviour or unsuitable conditions that could otherwise lead to accidents. Cemex Nicaragua is on the verge of reaching zero incidents through more than 14,000hr of training per year.
San Miguel Corporation has upped the pace of its capacity expansion this week to a US$1bn investment towards five new 2Mt/yr cement plants in the Philippines. The announcement builds on its previous plans to build two plants for US$800m. At that time construction had already begun at subsidiary Northern Cement's plant in Pangasinan and Quezon. Plants in Bulacan, Cebu and Davao have now joined the list for completion in 2017.
The scale of this expansion is vast considering that the Philippines has 17 active cement plants with a total integrated production capacity of 24.6Mt/yr. San Miguel president and COO Ramon Ang's comments to media that if there were an oversupply of cement the market would correct itself in a couple of years may sound flippant to anyone who isn't the head of a multi-billion dollar corporation. However, if achieved it will propel the San Miguel subsidiaries from the country's fourth largest cement producer to its largest.
However each of the other major producers also have their own expansion plan in various stages of completion. Holcim Philippines announced US$40m plans in May 2015 to expand its production capacity to 10Mt/yr by the end of 2016, mainly through reviving existing projects. Cemex announced plans in May 2015 to spend US$300m towards building a new 1.5Mt/yr integrated line at its Solid Plant. Lafarge Republic had plans in April 2015 to raise its cement output through the opening of grinding plants at its Rizal and Bulacan cement plants. The former was opened in April 2015 but this is the one plant that hasn't been acquired by CRH following the sale of Lafarge Republic in the run-up to the LafargeHolcim merger. The latter was last reported due for opening in December 2015.
The big change in the Philippine cement industry in 2015 has been the merger of Lafarge and Holcim to form LafargeHolcim. Given that Lafarge Republic and Holcim Philippines held over 55% of the country's production capacity before the merger, it was inevitable that they would be forced to sell off assets. In the end CRH picked up most of Lafarge Republic's cement assets bar the Teresa Plant in Rizal, which stayed with Holcim. The merger has skewed the market towards one clear leader, LafargeHolcim (9.5Mt/yr), followed by Cemex (4.73Mt/yr) and CRH (4.19Mt/yr) with similarly sized cement production bases. These producers are then chased by San Miguel (2.15Mt/yr) and the other smaller firms. If San Miguel succeeds in its expansion strategy then the market will change once again.
Cement sales rose by 11.1% to 11.9Mt in the first half of 2015 according to the Cement Manufacturers Association of the Philippines (CeMAP). They attributed this growth to strong construction activity helped by increases in government infrastructure spending. Alongside this, gross domestic product (GDP) is predicted to rise by 6% in 2015 and 6.3% in 2016 by the Asian Development Bank. Another promising sign for development came from a study by Antoinette Rosete of the University of Santo Tomas which forecast that cement demand would meet 27Mt/yr. Capacity utilisation rates rose to 85% from 68% in 2014 according to Department of Trade and Industry data.
With this kind of encouragement, no wonder San Miguel is betting on such a large expansion project. If Rosete's forecast and capacity utilisation rates hold then the Philippines might need a capacity base of around 36Mt/yr. San Miguel's growth will fill that gap.
Of course other players might have their own ideas about giving away market share. LafargeHolcim and Cemex are likely to be saddled with debt or existing projects. CRH meanwhile is the wildcard as its expansion strategy is opaque. In recent years it has seemed to focus on acquisitions over building its own projects. The Euro5.2bn the company has spent on buying Lafarge and Holcim assets this year seems likely to slow down investment on any internal development plans. However CRH is bringing in local partner Aboitiz in the Philipines to help with a US$400m loan.
The Philippines is clearly an exciting market for the cement industry at the moment. One consequence of the current situation is that it may signal what CRH's global intentions are following the LafargeHolcim merger. If it decides or is able to start building new capacity then it may reveal the start of a new phase for the Ireland-based multinational.
Nicaragua: Cemex has announced that it will open a new grinding plant in Managua department, Nicaragua by the end of August 2015. The facility required an investment of US$30m and is expected to double the firm's output in the country. This inauguration is part of an expansion strategy with a total allocation of US$55m, which will be developed by 2017.
In early 2014 the top of the global cement producer charts looked very different to how it does today. The big four multinationals, Lafarge, Holcim, HeidelbergCement and Cemex, were clearly out in front and ahead of the rest of the global top 10. While there was discrepancy in their sizes, the largest, Lafarge (224Mt/yr) had just over twice the cement capacity of fourth-placed Cemex (95Mt/yr), with Holcim (218Mt/yr) and HeidelbergCement (122Mt/yr) between these extremes.1 With an impressive 659Mt/yr of capacity between them, these four accounted for just shy of half of global cement capacity outside of China.
However, as those with even a passing interest in the cement sector will know, this is no longer the case. The merger between Lafarge and Holcim and the subsequent acquisition of Italcementi by HeidelbergCement has stretched out the range of the top producers significantly. Today LafargeHolcim has around 340Mt/yr of installed capacity and HeidelbergCement 200Mt/yr. Meanwhile Cemex is still 'stuck in the 90s,' with a capacity of around 92Mt/yr following the sale of its Croatian cement assets last week. The Mexican 'giant' is now almost a quarter of the size of LafargeHolcim. What does this mean for the world's number three (excluding Chinese producers) and what might the future hold?
Well... the old adage goes that you have to move forward to stand still. However, Cemex has not moved forward over the past two years, meaning that is hasn't kept up the pace with its immediate rivals. It hasn't been able to, hemmed in by the debt that it took on from its poorly-timed acquisition of Rinker in 2007. Indeed, Cemex is looking to contract further, with aims to shed a further Euro600 - 1100m of non-core assets in 2015.2 Against improved positions at LafargeHolcim and HeidelbergCement, Cemex increasingly looks like an 'Americas specialist' rather than a full-blown multinational. A stake in Cemex LatAm Holdings is up for sale, but the sale of more cement plants may also be on the way. This is all being done to improve Cemex's investment grade rating from B-plus, four grades below investment grade.
If Cemex does have to shed further physical assets on the ground, it is very unlikely that it would chose to do so in the Americas, where it is a very major player. It is number one in Mexico, third in the US and well-postitioned in numerous growth markets in Central America. If push comes to shove, it is far more likely that it would sell assets that are further from home. These are in Europe, the Middle East and the Far East.
Cemex has 43% of its production capacity outside the Americas. Certain assets, such as those in Thailand, Bangladesh and the Philippines, may be appealing to CRH, which is already set to acquire LafargeHolcim divestments there and is known to be considering other purchases in the region.3 Cemex also owns several cement plants in better-performing EU economies like Germany and the UK. In Germany, the company has already completed a small downsizing exercise by selling its Kollenbach plant to Holcim (LafargeHolcim). Meanwhile, Cemex UK is a major player in the UK, where the Competition Commission has recently been very keen to increase the number of producers. Elsewhere, Cemex's share in Assuit Cement in Egypt could provide much needed revenue, as could its small stake in the Emirati markets.
Thinking more radically, and in keeping with the current trend of mega-mergers and large-scale acquisitions, could Cemex find itself the target of the next global cement mega-merger / acquisition? Certainly, its strength in Central and South America completely complements HeidelbergCement's lack of coverage here, making a future 'HeidelbergCemex' a potential winner.
The other option, if/when Cemex regains its investment rating, would be for Cemex to acquire or merge with a company further down the list of global cement produers. Africa is an obvious target, with rapid growth and a lack of Cemex assets at present. A foreigner buying up Dangote is probably out of the question, but PPC would be an interesting target, as would increasingly isolated Brazilian producers that could help shore up Cemex's South American position.
If the past 18 months in the global cement industry have shown anything, it is that we should expect the unexpected. It will be very interesting to see how all players, both large and small, will react to the recent goings on in the rest of 2015 and beyond.
1. 1. Saunders A.; 'Top 75 Cement Producers,' in Global Cement Magazine – December 2013. Epsom, UK, December 2013.
1. 2. Reuters website, 'Mexico's Cemex could sell part of business to pay down debt: CEO,' 10 February 2015. http://www.reuters.com/article/2015/02/11/us-mexico-cemex-idUSKBN0LF05320150211.
1. 3. Global Cement website, 'CRH investment spend set to pass Euro7bn with South Korea cement deal,' 12 June 2015, http://www.globalcement.com/news/item/3721-crh-investment-spend-set-to-pass-euro7bn-with-south-korea-cement-deal.
Cemex announces sale of its operations in Austria, Hungary and Croatia, Bosnia & Herzegovina, Montenegro and Serbia12 August 2015
Europe: Cemex has signed an agreement for the sale of its operations in Austria, Hungary, Croatia, Bosnia and Herzegovina, Montenegro and Serbia.
Its assets in Croatia, Bosnia and Herzegovina, Montenegro and Serbia will be sold to Duna-Dráva Cement (HeidelbergCement) for approximately Euro231m. The assets mainly consist of three cement plants (approximately 1.66Mt of cement sold in 2014), two aggregate quarries (approximately 0.16Mt of aggregates sold in 2014) and seven ready-mix plants (approximately 0.25Mm3 of ready mix sold in 2014). Cemex's operations in Croatia, including Bosnia and Herzegovina, Montenegro and Serbia had net sales of approximately Euro124m in 2014.
Its assets in Austria and Hungary will be sold to Rohrdorfer Group for approximately Euro160m. The Austrian operations consist of 24 aggregate quarries (approximately 6.47Mt of aggregates sold in 2014) and 34 ready-mix plants (approximately 1.60Mm3 of ready-mix sold in 2014). Cemex's operations in Austria had net sales of approximately Euro217m in 2014. The Hungarian operations being divested consist of five aggregate quarries (approximately 1.36Mt of aggregates sold in 2014) and 34 ready-mix plants (approximately 0.46Mm3 of ready-mix sold in 2014). Cemex's operations in Hungary had net sales of approximately Euro42.2m in 2014.
The proceeds obtained from the transactions will be used mainly for debt reduction and for general corporate purposes. The closing of the transactions is subject to the satisfaction of standard conditions for this type of transaction, which includes authorisation by regulators. Cemex currently expects to finalise the transactions during the fourth quarter of 2015.
Europe: The European Commission has decided to close an antitrust investigation opened in December 2010 against a number of European cement manufacturers including Cemex, Holcim and HeidelbergCement, according to Construction Europe.
Originally the cement companies were suspected by the EC of colluding with rivals to fix prices in Austria, Belgium, the Czech Republic, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the UK. The commission said that there had been indications suggesting possible import/export restrictions, market sharing, price co-ordination and information exchanges in the markets for cement and related products. It said that inspections had been carried out in November 2008 and September 2009 at the premises of companies in Germany, France, the UK, Belgium, the Netherlands, Italy, Luxembourg and Spain.
The EC has now said that the evidence obtained in its investigation 'was not sufficiently conclusive to confirm these initial concerns,' adding 'the commission will continue to monitor closely developments in the European cement markets.'
The alleged cartel was said to have colluded in market sharing and price fixing in the markets for cement and cement-based materials such as ready-mix concrete, clinker, aggregates, blast-furnace slag, granulated blast-furnace slag, ground granulated blast-furnace slag and fly ash.
Mexico: Cemex has completed the refinancing of a bank loan agreement, paying off the remnants of what was originally a US$15bn debt refinancing at the height of the 2009 global crisis, according to Dow Jones.
Cemex said that it paid ahead of time the remaining US$1.94bn of a 2012 accord, using funds from 17 financial institutions that joined others in a refinancing deal reached about a year ago. The amount owed under the new credit agreement now stands at around US$3.79bn, including Euro620m (US$681m) and the rest in US Dollars.
"We have now consolidated our syndicated bank debt in a single agreement under improved conditions that better reflect our financial metrics. We are pleased with the interest shown by the bank market in this transaction and the continued support of our lenders," said CFO José Antonio González. With the latest refinancing, Cemex's only significant debt payments in the next two years are US$352m in convertible notes due in March 2016 and a US$373m principal payment in September 2017 on the existing bank loan agreement.
Cemex refinanced around US$15bn in bank debt during the 2009 global crisis, when the company's earnings fell and put payment of its heavy debt load at risk. In 2012, with about half of the amount left to pay, Cemex rescheduled around US$6bn and has since carried out further refinancings to lower the cost and extend the maturity of its debt. Cemex's total debt at the end of June 2015 stood at US$15.9bn, down from US$17.1bn a year earlier.
Mexico: Cemex's consolidated net sales in the second quarter of 2015 grew by 5% year-on-year on a like-for-like basis for ongoing operations and adjusting for currency fluctuations to US$3.8bn. Its operating earnings before income, taxes, depreciation and amortisation (EBITDA) increased by 1% during the quarter to US$744m. On a like-for-like basis, operating EBITDA increased by 13%.
The increase in consolidated net sales on a like-for-like basis was due to higher product prices in local currency terms in most of its operations, as well as improved volumes in most of its products in Mexico, the US, and the northern Europe and Asia regions.
Cemex's net sales in Mexico decreased by 9% in the second quarter of 2015 to US$745m while its operating EBITDA increased by 4% to US$256m. In the US, its net sales grew by 5% year-on-year to US$1.01bn and its operating EBITDA increased by 31% to US$156m. In northern Europe, net sales for the second quarter of 2015 fell by 21% to US$904m and its operating EBITDA fell by 8% year-on-year to US$111m. In the Mediterranean region its net sales fell by 9% to US$409m as its Operating EBITDA fell by 25% to US$75m. Cemex's net sales from operations in South, Central America and the Caribbean fell by 8% year-on-year to US$517m and its operating EBITDA fell by 10% to US$160m. In Asia, net sales grew by 11% year-on-year to US$177m and operating EBITDA was up by 34% year-on-year to US$45m.
"We are pleased with our results. Our controlling interest net income during the quarter was the highest in six years. In addition, our operating EBITDA grew by 13% on a like-fir-like basis. This is the third quarter with double-digit, like-for-like growth in EBITDA," said Fernando A Gonzalez, Cemex CEO.
Colombia: Cemex Latam Holdings' consolidated net sales fell by 11% year-on-year US$394m during the second quarter of 2015. The decline was attributed to currency fluctuations and lower sales. Operating earnings before interest, taxes, depreciation and amortisation (EBITDA), also adjusted for the currency fluctuations, increased by 2% year-on-year during the second quarter of 2015.
Operating EBITDA in Colombia decreased by 23% year-on-year to US$68m in the second quarter of 2015, with a 24% decline in net sales to US$198m. Adjusting for currency fluctuations, EBITDA in Colombia grew by 2% year-on-year. Consolidated cement volumes decreased by 3%, while ready-mix and aggregates volumes increased by 6% and 3%, respectively. In Panama, operating EBITDA fell by 3% to US$33m during the quarter and net sales grew by 9% to US$79m. Cement, ready-mix and aggregates volumes increased by 4%, 10% and 21%, respectively, year-on-year. In Costa Rica, operating EBITDA grew by 5% year-on-year to US$20m and net sales increased by 15% to US$46m. Volumes for the three main products grew at double-digit rates during both the second quarter and the first half of 2015. In the rest of Cemex Latam Holdings' region, net sales during the quarter reached US$76m and operating EBITDA fell by 7% year-on-year to US$20m.
In the first six months of 2015, Cemex Latam Holdings'cement volumes declined by 11%, while ready-mix and aggregates volumes increased by 4% and 2%, respectively. Compared with the first quarter of 2015, cement, ready-mix and aggregates volumes increased by 11%, 8% and 6%, respectively.
"We are pleased with the continued positive volume performance of our operations in Panama, Costa Rica and Nicaragua, where we are improving our volume guidance for the year. Additionally, our cement volumes in Colombia increased by 11% during the quarter compared with the first quarter of 2015," said Carlos Jacks, CEO of Cemex Latam Holdings.
"This year our priority is to continue working persistently towards improving our profitability, which has been affected by the depreciation of the Colombian Peso. Additionally, we continue to evolve as a company into a more customer-centric organisation, offering differentiated construction solutions to our specific customer segments."