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Germany: HeidelbergCement’s revenue fell by 10% year-on-year to Euro8.25bn in the first half of 2020 from Euro9.21bn in the same period in 2019. Its result from current operations before depreciation and amortisation (RCOBD) decreased by 2% to Euro1.40bn from Euro1.44bn. Sales volumes of cement dropped by 8% to 56.3Mt, aggregates by 7% to 135Mt and ready-mixed concrete (RMX) by 11% to 21.7Mm3. Its net debt decreased by 1.4% to Euro8.99bn.
“In the second quarter, revenue dropped in many countries, in some cases by double-digit percentages. Nevertheless, we achieved a good result, which was almost at the previous year’s level. The successful implementation of our COPE action plan played a large part in this,” said Dominik von Achten, chairman of the managing board of HeidelbergCement.
By region the group noted major falls in sales volumes, revenues and RCOBD in Western and Southern Europe and Asia-Pacific. Although it said that the construction industry in Germany had ‘hardly been affected by the corona crisis’ despite significant negative effects elsewhere in Europe.
Titan grows earnings in first half of 2020 30 July 2020
Greece: Titan Group says that cost savings, lower prices for solid fuels and price ‘resilience’ all helped to grow its earnings in the first half of 2020. Its earnings before interest, taxation, depreciation and amortisation (EBTIDA) rose by 12% year-on-year to Euro137m from Euro122m in the same period in 2019. Its revenue remained stable at Euro786m in the first half of 2020. Cement sales volumes fell by 2% to 7.9Mt but ready-mix concrete increased by 1.3% to 2.64Mm3 and aggregates increased by 2.6% to 9.2Mt. Although coronavirus-related lockdowns were mostly blamed for falling cement sales volumes they were also affected lower exports from Greece and the lack of fly ash supply in the US. Its US and Eastern Mediterranean regions contributed the most to its performance, with strong starts to the year in Egypt and Turkey before as the pandemic mounted.
UK/Ireland: Breedon Group’s sales fell by a quarter in the first half of 2020 due to coronavirus-related lockdown measures. Its revenue fell by 25% to Euro371m in the first half of 2020 from Euro495m in the same period in 2019. Its underlying earnings before interest and taxation (EBIT) dropped to Euro0.7m from Euro54.8m. Cement sales volumes deceased by 20% to 0.8Mt, aggregates by 20% to 8Mt and ready-mixed concrete (RMX) by 33% to 1Mm3. Its net debt fell by 26% to Euro281m.
“Following the encouraging performance of our businesses in the first 12 weeks of the year, the move into lockdown and immediate fall in demand in the latter part of March led us into a swift and managed shutdown of the majority of our operations, leaving open only those which were servicing critical needs,” said group chief executive officer (CEO) Pat Ward. He added, “The recovery in our markets now appears to be well underway, and we have seen continued improvement into July. The great majority of our sites are now open, including both our cement plants. While near-term uncertainty remains, there is significant pent-up demand to be satisfied in both housing and infrastructure.”
India: Calderys has completed its acquisition of Hysil’s calcium silicate insulation division. The deal was signed in January 2020 but delayed to July 2020 due to coronavirus-related lockdowns. Calcium silicate boards are used for thermal insulation in industries such as cement, metallurgy, oil refinery, petro-chemical and power plants. Calderys says it now the largest manufacturing capacity of calcium silicate boards in India and South East Asia. The purchase will enable it to expand its product portfolio and offer calcium silicate insulation products along with refractories solutions.
CNBM consolidates its cement businesses
Written by David Perilli, Global Cement
29 July 2020
Consolidation of the Chinese cement industry looks set to take a major step forward this week. China National Building Material Company (CNBM) announced that it is restructuring its cement production assets and companies under one subsidiary, Tianshan Cement. The move is significant since CNBM is the world’s largest cement producer, with a production capacity of over 500Mt/yr. That’s more than the total output of any single country except China. It’s also between a quarter and a third of national capacity domestically.
Little information has been revealed except that it concerns most of CNBM’s cement producing subsidiaries. Namely: China United Cement, South Cement, North Cement, Southwest Cement and Sinoma Cement. Note that this leaves out Ningxia Building Materials and Qilianshan Holdings, although some commentators have suggested that they may be merged in later on. It was announced to stock markets as a proposal with a ‘letter of intent of cooperation’ exchanged between CNBM and Tianshan Cement. CNBM will remain the controlling shareholder of Tianshan Cement after the restructuring. However, the assets concerned - the cement companies are still being discussed and considered. The aim of the reorganisation is to ‘facilitate resolving industry competition’ among the subsidiaries of CNBM.
The move is expected to significantly increase operational efficiency at the cement companies as they start to act in a more coordinated manner. It also fits the government-requested drive for the industry as a whole to consolidate and follow supply-side reform initiatives by, hopefully, eliminating old production assets and other measures. Indeed as CNBM’s president Peng Shou said in the company’s report for 2019, “Production overcapacity of the industry has not been fundamentally resolved. The task of cutting production overcapacity was arduous, and the supply-side structural reform remains the major task.” The company says it is committed to building a three-pillar development platform of cement, new materials and engineering services.
How much more operational efficiency the world’s largest cement producer will need to do this is a key question. In 2019 the sales revenue from its cement business rose by 12% year-on-year to US$18.7bn and its earnings before interest, taxation, depreciation and amortisation (EBITDA) increased by 19% to US$5bn. Growth at this level is novel to western-based multinational cement producers! So the implication might be that CNBM is hoping to turbo-charge its financial performance before (or if) the serious government-forced supply side cuts occur or a general economic slowdown happens so that it can return to ‘normal’ Chinese performance afterwards.
The Chinese Cement Association presented a good overview of the history of CNBM that you can read here. The quick version is that it’s the embodiment of the Chinese government’s desire to build and merge its cement industry since 2005. The latest restructuring with Tianshan Cement is the latest chapter in this 15 year story. What the reorganisation means internationally is ‘probably not much’ in the short term. Better coordination between CNBM’s cement companies could have implications in the longer term if they acted together on an international strategy, such as a strategy on exports for example, or if group-wide suppliers were agreed upon.
That’s all on China but finally if readers were not able to join us for Global Cement Live last week on 23 July 2020, we recommend watching the playback of Arif Bashir, Director (Technical/Operations) of DG Khan Cement Nishat Group Pakistan. He gave a great overview of Pakistan’s cement industry and the challenges it is facing and overcoming. Be sure to tune in for this week’s guest speaker, Regina Krammer from Loesche who will be discussing how the coronavirus crisis will change communications in the sector.
To register for Global Cement Live visit: www.globalcement.com/live