Displaying items by tag: US

US: Bloomberg has named Germany-based HeidelbergCement, Switzerland-based Holcim and Turkey-based Sabancı Holding as possible bidders for some of Sika’s US admixtures assets. Sika is seeking to divest the assets in order to obtain competition authorities’ approval for its US$6bn acquisition of Germany-based construction chemicals company MBCC from Lone Star Funds.

Germany: The World Economic Forum and US State Department have welcomed HeidelbergCement as the newest member of the First Movers Coalition. Founded in 2021, the coalition brings together companies across multiple industrial sectors to coordinate the creation of demand for emerging reduced-CO₂ production technologies. As part of its membership, HeidelbergCement commits to purchasing zero-emission vehicles for 30% of new heavy-duty truck purchases and 100% of medium-duty truck purchases by 2030.

US Special Presidential Envoy for Climate John Kerry said “I welcome HeidelbergCement to the First Movers Coalition, and its commitment to purchasing zero-emissions trucking solutions that the world must focus on scaling up over this critical decade. The First Movers Coalition is a critical pillar of the world's efforts to advance breakthrough zero emissions technologies to decarbonise many of the largest sectors of the global economy and to put us on a track to achieve net zero emissions by 2050.”

Holcim agreed to sell its Indian assets to Adani Group this week for US$6.37bn. These include Holcim’s stakes in its local subsidiaries Ambuja Cement and ACC. The deal, if approved by the local competition body, should complete in the second half of 2022. This is one of the larger sales of cement company assets over the last decade. Adani Group, an Indian-based conglomerate with businesses across energy, transport and more, is now poised to become the second largest cement producer in India.

Global Cement Weekly previously covered a potential sale of Ambuja Cement and ACC in April 2022 when the story that Holcim was looking for a buyer first emerged in the Indian press. At the time local press speculated that the sale could generate as much as US$15bn for Holcim. So it is interesting to see that a figure of US$6.37bn has been agreed upon instead, less than half of the speculative figure. Roughly, as ever, this places a value of a little below US$100/t of cement production capacity. This seems like a relatively low pricing for these plants by international standards over the last decade. However, this doesn’t take into account many factors such as, for example, the condition of the plants, Holcim’s desire to change its business, the ease of selling up in India all in one go, other non-cement assets and so on. For Adani Group though, buying into heavy building materials production in a large market like India clearly seemed attractive. It is also worth noting that, similar to other cement sector acquisitions recently, here again is a buyer with a background in another carbon-heavy industry buying into another heavy emitter.

Table 1: Selected large scale acquisitions of controlling shares in non-Chinese cement production assets since 2012. Source: Global Cement news and company releases. Italcementi acquisition value reported by Reuters.

Table 1 above provides some historical context to Adani Group’s agreed acquisition by comparing it to other large completed deals in the cement sector over the last decade. Don’t forget that it is only looking at this from the cement sector. This list excludes changes in ownership in the Chinese cement companies in this period because, generally, there has been a government-driven consolidation in the industry through mergers rather than large-scale acquisitions. So, for example, the world’s current biggest cement producer CNBM had a reported production capacity of 350Mt/yr in 2012 and this rose to 514Mt/yr in 2020 as it absorbed other state-owned companies. The big merger it underwent during this time was with China National Materials (Sinoma) in 2018, primarily an engineering company that also produced cement.

The most obvious trend in Table 1 is the journey of Lafarge and Holcim from their merger in 2015 and the gradual realignment of the business subsequently. During this time the company has sold up in large markets outside of its core regions in Europe and North America. Latterly, it has also started to diversify away from heavy into lightweight building materials. One notable ‘nearly happened’ was LafargeHolcim’s attempt to sell its business in the Philippines to San Miguel Corporation for US$2.15bn in 2019. That deal collapsed when the Philippines Competition Authority failed to approve it within a year of its proposal. CRH enlarged itself from assets sold during the creation of LafargeHolcim and then picked up Ash Grove in the US in 2018. CRH’s head Albert Manifold memorably said in 2018 that his company was focusing on markets in developed countries and CRH’s large-scale acquisitions have largely followed this.

As for the others, HeidelbergCement’s purchase of Italcementi in 2016 almost appeared as a riposte to the formation of LafargeHolcim, albeit on a slightly smaller scale. It confirmed HeidelbergCement’s place as the world’s second largest non-Chinese cement producer. It is also one of the minority of truly multinational acquisitions on this list. Unlike LafargeHolcim and now Holcim though, HeidelbergCement hasn’t exhibited a desire to downsize or diversify at quite the same speed. UltraTech Cement’s acquisition of Jaiprakash Associates in 2017 confirmed its place as the largest Indian producer. That deal was publicly one of the longer lasting one as it originally started out in at least 2014 on a smaller scale and was later slowed down by the Mines and Minerals (Development and Regulation) (MMDR) Amendment Act. Smikon’s purchase of Eurocement in 2021 almost looks like part of the isolation of the Russian economy, especially with the benefit of hindsight given by the invasion of the Ukraine in early 2022.

Mega-deals have lots of moving parts but two of the most tangible to broader audiences are the price and the timing. Cemex infamously got both of these wrong with its acquisition of Rinker in 2007 as it paid high just as the US subprime mortgage crisis started a wider global financial one. This was despite Cemex’s emergence over the previous 15 years as a multinational force to be reckoned with due in part to the so-called ‘Cemex Way’ approach to management, acquisitions and integration. Clear winners from the big acquisitions over the last decade are harder to spot but CRH and UltraTech Cement look strong so far. Adani Group has certainly picked a lively time to make a purchase on this scale following a global pandemic with ongoing global supply chain issues and disruptions to energy and food markets.

Brazil: Votorantim Cimentos’ net revenue grew by 22% year-on-year to US$954m in the first quarter of 2022 from US$781m in the same period in 2021. Its cement sales volumes rose by 5% to 8Mt from 7.6Mt. However, its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 57% to US$81.4m from US$189m. The group attributed its increased sales to ‘favourable price dynamics’ in Brazil, North America, Europe, Asia and Africa. However, its earnings suffered from inflation, mounting commodity and energy prices and a strong comparison base in the same period in 2021.

"The war in Europe, sanctions imposed on Russia, new lockdowns in China and bottlenecks in logistics chains continue to impact the global economy. In addition, rising interest rates and cost inflation have affected companies and markets as a whole. Faced with this challenging environment, we remained aligned with our strategy and attentive to costs, our operational excellence and our business plan in all regions," said Marcelo Castelli, Global chief executive officer of Votorantim Cimentos.

Italy: Buzzi Unicem’s net sales grew by 17.2% year-on-year to Euro800m in the first quarter of 2022 from Euro682m in the same period in 2021. Its cement and ready-mixed concrete sales volumes rose by 2.9% to 6.36Mt and 6% to 2.69Mm³ respectively. The group reported growing sales volumes in Central Europe, Poland, the Czech Republic and the US but it noted a slowdown in Italy. Sales volumes were also disrupted in Ukraine and Russia due to the ongoing war between the countries. The group added that its prices were ‘markedly’ up in all markets where it operates to offset rising prices of raw materials and energy.

The company said that in Ukraine it was forced to suspend nearly all of the production and commercial activities at both of its plants when Russia invaded the country. In Russia it said that retaliatory economic sanctions led by the US and European Union had led to a “significant revision of the country's growth prospects.” Local sales volumes significantly slowed down in March 2022 after hostilities started but local operations still managed to report some growth in sales even in spite negative currency exchange effects. Buzzi Unicem said that, “Due to the sanctions imposed on Russia by the European institutions, we decided to immediately withdraw from any operational involvement in the activities carried out by the subsidiary OOO SLK Cement in Russia. Consequently, further strategic initiatives in the country will be suspended.”

France: Fives’ Process Technologies division’s commercial activities, including those to the cement market, have improved in 2021 following recovery in market confidence following the start of the coronavirus pandemic in 2020. Its order intake increased by 43% year-on-year to Euro702m in 2021 from Euro490m in 2020. Its sales fell by 2% to Euro623m from Euro637m. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 63%. In the cement sector, Fives said that the North American market had been active. It reported ‘significant’ orders in Mexico, partly in response to the growing US market driven by the government’s infrastructure bill that was approved in late 2021. Fives also noted growth in Canada, where several companies are working towards carbon neutral production.

Overall, across all market divisions, Fives’ order intake, sales and earnings increased in 2021.

Greece: Titan Cement recorded consolidated sales of Euro455m in the first quarter of 2022, up by 23% year-on-year from Euro371m in the first quarter of 2021. Due to a 29% increase in its cost of sales to Euro395m from Euro307m, the group’s earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 17% to Euro46.4m from Euro56.1m.

The producer noted ‘significant’ cement volumes growth in its USA region, including ‘progress’ in its lower carbon footprint cement sales. Titan Cement increased its prices across its regions, and will raise prices again ‘in most markets’ by mid-2022.

US: The state governments of Arizona, Maryland and Vermont have approved the use of Portland limestone cement (PLC) in public construction projects. The rule changes bring the total number of states in which PLC may be used in this way to 44.

The Portland Cement Association (PCA) has welcomed the decision. The association said "Widespread acceptance of PLC marks a significant step to reducing the carbon footprint of concrete construction and advancing the goals laid out in the PCA Roadmap to Carbon Neutrality."

World: The Global Cement and Concrete Association (GCCA) has named its first six startups to receive backing under the inaugural Innovandi Open Challenge. The startups have partnered with GCCA members to help increase cement’s sustainability towards achieving net zero CO₂ concrete production by 2050. This will lead to the formation of six consortia to further test, develop and deploy their new technologies.

Carbon capture, utilisation and storage (CCUS) startups CarbonOrO, MOF Technologies and Saipem, all based in Europe, are among the participants. GCCA members are currently involved in dozens of pilot projects and aim to have 10 industrial-scale carbon capture plants installed by 2030. Other startups Carbon Upcycling Technologies and Fortera, from Canada and the US respectively, use captured CO₂ to produce low-carbon cement and cementitious materials, while UK-based Coomtech has developed a low-cost drying technology using turbulent air.

GCCA CEO Thomas Guillot said “It’s a proud moment to see the industry coming together to support such innovative start-ups on their journey. Our member companies were greatly impressed by their ambition to be a key part of the climate solution. The programme is another big step forward towards unlocking innovation to help us achieve our net zero goal.” He continued “As the need for resilient and sustainable communities to support a growing global population becomes more pressing , cement and concrete will be essential to providing the infrastructure and buildings that society needs. Achieving net zero concrete relies on a number of different groups playing their part, and as an industry we’re looking outwards as well as inwards, to see how start-ups like these can support our goals.”

Italy: Cementir’s revenue rose by 21% year-on-year to Euro362m in the first quarter of 2022 from Euro301m in the same period in 2021. It attributed this to higher prices linked to the increase in the costs of fuels, electricity, raw materials, transport and services. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) grew by 26% to Euro60.7m from Euro48.1m. Grey, white and clinker sales volumes increased by 1.8% to 2.4Mt and ready-mixed concrete sales volume remained stable at 1.13Mm³. Cement sales volumes grew in Belgium, Denmark and the US but fell in Turkey. Concrete sales volumes grew in Belgium and Norway but fell in Turkey, Sweden and Denmark.