Displaying items by tag: Results

Saudi Arabia: Riyadh Cement Company’s net profit after Zakat and tax shrank by almost 47% to US$22.6m in the first half of 2022, compared to US$42.7m in the same period in 2021. The firm ascribed the drop earnings to lower sales, with its revenues standing at US$68.8m in the first six months of 2022, compared to US$107m in the first six month of 2021, a 36% drop year-on-year.

Indonesia: Semen Indonesia Group has focused on the domestic cement market in the first half of 2022 due to the better availability of coal supplies. Its revenue fell by 2.1% year-on-year to US$1.07bn in the first half of 2022 from US$1.09bn in the same period in 2021. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) remained stable at US$237m. Overall sales volumes of cement dropped by 12% to 17Mt from 19.3Mt. However, domestic sales volumes fell by 2.6% to 14Mt but overseas sales fell by 39% to 3Mt. The group also raised its prices twice in the reporting period to further shore up revenue.

China: Tangshan Jidong Cement’s operating income rose by 3% year-on-year to US$2.44bn in the first half of 2022 from US$2.36bn in the same period in 2021. However, its net profit fell by 7% to US$165m from US$178m. Its sales volumes of cement and clinker dropped by 20% to 38.4Mt from 48Mt. It has a reported clinker and cement production capacity of 110Mt/yr and 176Mt/yr respectively. The cement producer said that demand for cement was weak, especially in April and May 2022, with no seasonal rebound. It blamed its falling profits on geopolitics, coronavirus and a downturn in the real estate sector.

China: Dongwu Cement recorded consolidated sales of US$25.9m in the first half of 2022, down by 26% year-on-year from US$34.8m in the first half of 2021. The company’s loss was US$2.54m, compared to a US$3.76m profit in the previous period. At 30 June 2022, Dongwu Cement’s cement segment’s borrowings were US$14.8m, down by 4.5% from US$15.5m at the beginning of the year.

Morocco: LafargeHolcim Maroc’s sales were US$377m in the first half of 2022, consistent with its first-half 2021 sales, according to the L’Economiste newspaper. In the second quarter of 2022, the producer’s sales fell by 7% year-on-year to US$181m. It attributed this to a drop in its cement sales volumes, amid a national decline in demand of 10% year-on-year during the quarter. During the first half of 2022, Moroccan cement demand declined by 4.5% year-on-year. LafargeHolcim Maroc said that this was the result of global economic factors.

The producer’s net debt was US$590m on 30 June 2022, up by 5% year-on-year.

The larger cement producers in China have published their half-year financial results and the numbers are looking grim. Starting with data from the National Bureau of Statistics of China, cement output in the country fell by 14.5% year-on-year to 979Mt in the first half of 2022 from 1.14Bnt in the same period in 2021. This is the lowest first half output figure since 2012. The decline on a monthly basis started in May 2021 and has carried on consistently since then. Rolling cumulative annual output hit a low of 2.18Bnt in July 2022, the lowest figure since at least the start of 2019 and well before the coronavirus pandemic started.

Graph 1: Cement output in China, 2018 to 2022. Source: National Bureau of Statistics of China.

The financial figures from the cement producers have mostly followed this trend. Of the companies covered here, Anhui Conch’s drop in sales revenue was the most distinct at 30% year-on-year to US$8.14bn. However, Jidong Cement actually managed to increase its revenue and Huaxin Cement’s decrease was fairly small, possibly due to its growing stable of overseas projects. None of these companies could avoid falling cement and clinkers sales volumes though. Again, Anhui Conch is the outlier here with a larger fall in sales volumes proportionally at nearly 40% compared to around 20% for the rest. Chen Bolin, the deputy secretary-general of China Cement Association (CCA), told the 21st Century Business Herald newspaper that of the 20 or so listed cement companies that have published their half-year reports by the end of August 2022, more than half had reported falling sales revenue and net profit and only one company had managed to increase its net profit.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports. Note: Cement revenue shown only for CNBM & Taiwan Cement.

Graph 3: Sales volumes of cement and clinker from selected Chinese cement producers. Source: Company financial reports.

The financial reports from the Chinese cement companies detailed here have been fairly light on the reasons for the current state of the sector. Repeated coronavirus outbreaks, instability in the real estate market, a lack of funding for infrastructure projects, growing energy and raw materials costs, pressure on prices and a generally weak economy have all been blamed for the situation. Media channels outside of China have continued to scan the country’s real estate sector for signs of collapse following Evergrande’s problems in 2021. However Chen Bolin diplomatically held back by describing the real estate market as not yet stabilised and a drag on cement demand. Instead he hoped that large-scale infrastructure projects would offer some form of relief.

One last point to note, that both the CCA has made and could be seen in some of the company reports, is that some of the Chinese cement companies are already starting to diversify their businesses. This is in parallel to what some of the larger western-based multinational cement producers have also been doing in recent years with forays into concrete, light building materials and construction chemicals. CNBM already has large concrete, light building materials and engineering subsidiaries. However, Huaxin Cement and Anhui Conch have also started to branch out recently into aggregates, concrete and new energy generation, in the case of the latter company. Things may get worse before they get better, especially depending when or if the Chinese government decides to act on the real estate market. However, whatever kind of adjustment the cement sector may face, there are some signs present already of what some of the companies may do next.

China: CNBM has blamed declining sales of cement on repeated coronavirus outbreaks, a decline in the real estate market, lack of funding for infrastructure projects and a generally weak economy. Its cement sales revenue fell by 10% year-on-year to US$7.80bn in the first half of 2022 from US$8.65bn in the same period in 2021. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 39% to US$1.72bn from US$2.82bn. Cement and clinker sales volumes decreased by 17.8% to 128Mt and 14.6% to 18Mt respectively. Sales volumes of concrete decreased by 24% to 39.5Mm³.

Overall, the group’s revenue fell by 11% to US$15.8bn in the first half of 2022 from US$17.6bn in the same period in 2021. Its adjusted EBITDA dropped by 23% to US$2.87bn from US$3.71bn.

China: Anhui Conch’s operating revenue fell by 30% year-on-year to US$8.14bn in the first half of 2022 from US$11.6bn in the same period in 2021. Its net profit dropped by 33% to US$1.44bn from US$2.17bn. Its overall sales volumes of cement and clinker decreased by 37% to 130Mt. By region the group reported its biggest drop in sales volumes in East China. Anhui Conch blamed its falling sales and profit on continued coronavirus control measures, falling market demand and rising energy prices.

China: Huaxin Cement’s operating income decreased by 2% year-on-year to US$2.08bn in the first half of 2022 from US$2.13bn in the same period in 2021. Its net profit dropped by 35% to US$230m from US$353m. Its sales volumes of cement and clinker declined by 22% to 29Mt. Domestically, the group blamed the situation on the coronavirus pandemic, a “sharp” decline in demand for cement, the high cost of fuel and pressure on prices.

China: China Resources Cement’s (CRC) turnover fell by 21% year-on-year to US$2.05bn in the first half of 2022 from US$2.57bn in the same period in 2021. Its profit decreased by 50% to US$230m from US$463m. Its cement and concrete sales volumes dropped by 26% to 30.7Mt and 23% to 5.4Mm³ respectively. However, its clinker sales volumes rose by 5% to 2Mt. The group also reported that the capacity utilisation rate for its cement and clinker production lines were 70% and 87% in the first half of 2022 compared to 97% and 108% in the same period in 2021.