Displaying items by tag: US

Germany: Poor weather in the US and lower asset sales than expected reduced HeidelbergCement’s earnings in 2018. Its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 6.8% year-on-year Euro3.07bn in 2018 from Euro3.3bn in 2017. Its revenue rose by 4.7% to Euro18.1bn from Euro17.3bn. Cement sales volumes grew by 3.4% to 130Mt from 126Mt and ready-mix concrete volumes increased by 3.7% to 49Mm3 from 47.2Mm3.

“In operational terms, we were almost able to offset the impact of adverse weather conditions, particularly in the US, and the higher than expected cost inflation through growth in sales volumes and price increases,” said Bernd Scheifele, chairman of the managing board. He added that the company achieved record sales volumes and revenues in 2018. He also said that its action plan is producing its first results, with a reduction in debt to below Euro8.4bn due to portfolio ‘optimisation’ and spending discipline.

By region the group reported that construction activity in North America was hampered by a long winter in the north and heavy rainfall, particularly in the north and southwest of the US. A ‘strong’ level of construction was noted in the group’s Northern and Eastern Europe-Central Asia Group area leading to revenue increases. In Asia-Pacific its operating EBITDA fell by 4.4% due in part to high competition in Indonesia and infrastructure project delays in Thailand. Cement sales volumes growth was reported in most counties in Sub-Saharan Africa.

Colombia: Poor weather in the US reduced Cementos Argos’ sales revenue in 2018. Its sales revenue fell by 1.4% year-on-year to US$2.7bn in 2018 from US$2.74bn in 2017. Cement sales volumes decreased by 1.1% to 16Mt from 16.2Mt. The cement producer said that its cement volumes in the US were impacted by weather and a 43 day halt at its Martinsburg Plant in Texas, US. However, its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 8% to US$494m from US$457m. This was in part due to an improved Colombian construction market.

India: US private equity company KKR is reportedly discussing investing up to US$284m in Emami Group. Sources quoted by the Economic Times newspaper said that Emami Group was looking to reduce its debts and raise funds for an expansion strategy.

US/Mexico: Growing cement sales volumes and higher prices in the US and Mexico drove Grupo Cementos de Chihuahua’s (GCC) sales in 2018. Its net sales rose by 7.2% year-on-year to US$883m in 2018 from US$824m in 2017. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 6.7% to US$256m from US$240m. However, its net income fell by 24.2% to US$63.5m from US$83.7m. US sales rose by 7.1% to US$883m and Mexican sales rose by 7.2% to US$237m.

“We completed a purchase-sale transaction exchanging GCC’s ready-mix plants in Oklahoma and Northwest Arkansas, which were not integrated into our cement distribution network, for a cement plant in Montana representing a strategic addition to our system that will also improve our profitability. This plant, along with the completion of capacity expansion at our South Dakota cement plant in Rapid City, will enable us to continue to benefit from the robust pace of growth in the US economy,” said Enrique Escalante, GCC’s chief executive officer.

US: Martin Marietta's sales rose by 7% year-on-year to US$4.24bn in 2018 from US$3.97bn in 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) remained stable at US$1.1bn. Revenue from its cement business grew by 4.5% to US$388m from US$371m.Cement shipments increased slightly to 3.5Mt. The building materials company said that its cement shipments had been negatively affected by bad weather in the fourth quarter. The bulk of the company's revenue comes from it aggregate business followed by ready-mix concrete.

Cemex was the first of the big multinational cement producers to release its fourth quarter results this week. Revenue, sales volumes of cement and gross profit were all up in single digits. Earnings growth was less impressive, with operating earnings before interest, taxation, depreciation and amortisation (EBITDA) rising by 1% year-on-year on a like-for-like basis to US$2.56bn in 2018. This was a decrease of 1% in real terms. Cemex blamed this on rising energy costs and on lower earnings from its territories outside of Mexico and the US.

Figure 1: Breakdown of Cemex’s net sales in 2018 by region: Source: Cemex.

As Figure 1 shows, over three quarters of Cemex’s sales come from Mexico, the US and Europe. Elsewhere its presence is smaller but it does have plants in key countries like the Philippines and Egypt. The former, for example, saw its cement sales rise by 7% in 2018 bringing along the rest of the Asia, Middle East and Africa region into volume growth.

Some other non-financial results to consider lead with the good news that 2018 was the first year ever that Cemex has had without any employee fatalities. This probably doesn’t include contractors or third parties, we’ll have to wait for the next sustainability report to find out for sure, but this is undoubtedly a milestone. Another point of interest was the growth of Cemex Go, its online sales platform. In 2018 it was responsible for around 40% of the company’s sales volumes. Around 85% of its recurring clients use it and it has nearly 30,000 customers. The analytics alone from the system and the potential for further tailoring it towards both customer and company objectives sound promising. Lastly, Cemex was also keen to note its alternative fuels substitution rate of 27% in 2018.

In recent years the other metric that the analysts have been watching is Cemex’s debt. It dropped by 8% year-on-year to US$10.4bn in 2018 compared to a high of US$17.5bn in 2013. Its plan is to reach an ‘investment-grade’ balance sheet by 2020.

In this way Cemex has been ahead of the curve of the major European cement multinationals like LafargeHolcim and HeidelbergCement that have taken on ‘indigestible’ acquisitions more recently. Possibly behind all of these companies is CRH, which has steadily been growing in recent years through acquisitions. It made the headlines this week on the corporate side when Swedish so-called ‘activist investor’ Cevian bought what is thought to be around a 3% stake in the Irish company. The financial press thinks it’s after a seat on the board to try and influence CRH to focus on margins rather than its acquisition strategy. CRH’s EBITDA margin was 12% in 2017 compared to 23%, 19% and 19% for LafargeHolcim, HeidelbergCement and Cemex respectively. This is just one way of comparing these companies. CRH, for example, might be keen to promote how its other metrics like cash generation and return on capital employed perform compare favourably to its competitors.

The point though is that it has taken Cemex over a decade since its acquisition of Rinker to rebuild its finances. All being well, it stands ready to take advantage of whatever the cement market holds in the 2020s.

US: Port Manatee in Florida has received its first shipment of raw materials for cement production. The Osprey I delivered 47,650t of raw materials from Europe as part of a deal with Carver Companies to renovate the port. As part of the agreement arranged in mid-2018, Carver has renovated a 7.5 hectare cargo facility with deep-water access, including the rehabilitation a 425m conveyor system on the leased site.

Italy: Buzzi Unicem’s net sales rose by 2.4% year-on-year to Euro2.87bn in 2018 from Euro2.81bn in 2017. Its cement and clinker sales volumes increased by 4.3% to 27.9Mt from 26.8Mt. Ready-mix concrete sales fell by 3.6% to 11.8Mm³ from 12.3Mm³.

It attributed cement and clinker sales increase to acquisitions in Italy and Germany and good market conditions in the Czech Republic, Poland and Russia. However, poor weather hampered business in the US and a ‘strong’ decrease in business levels was reported in Ukraine. In Italy the cement producer benefited from its acquisition of Cementizillo in the second half of 2017. In Germany it purchased Seibel & Söhne and noted demand for oil well cements.

Mexico: Cemex’s operating earnings before interest, taxation, depreciation and amortisation (EBTIDA) rose by 1% year-on-year on a like-for-like basis to US$2.56bn in 2018 from US$2.57bn in 2017. It has attributed this decrease in real terms to lower earnings from its territories outside of Mexico and the US. Its net sales rose by 5% to US$14.4bn from US$13.6bn.

“We are pleased with our 6% top-line growth during 2018, supported by higher consolidated volumes and prices in our three core products. Operating EBITDA grew by 1% on a like-to-like basis in this period,” said Fernando A Gonzalez, the chief executive officer (CEO) of Cemex. He added the company had reduced its total debt to nearly US$1bn in 2018.

By region, Cemex’s sales and earnings rose in Mexico and the US, fell in the rest of the Americas and were mixed in Europe. In the Asia, Middle East and Africa sales increased due to growth in the Philippines but earnings fell.

US: President Donald Trump has signed an executive order making it the policy of the federal government to buy goods locally, including cement, for infrastructure projects. The directive aims to strengthen the ‘Buy American and Hire American’ executive order issues in 2017 by giving a preference for raw materials manufactured in the US for use in government-backed projects.