Displaying items by tag: Acquisition
Germany: HeidelbergCement's revenue rose by 3% to Euro3.61bn in the third quarter of 2015. Excluding consolidation and exchange rate effects, revenue decreased by 1.9%. The weakening of the Euro against numerous currencies had a Euro162m positive impact on revenue. Operating income before depreciation (OIBD) improved by 8% to Euro865m and operating income rose by 8% to Euro675m. Besides the price increases in key core markets and the successful implementation of the margin improvement programmes in the aggregates business line, in particular, the low cost of fuels also made a contribution to the positive development of results.
"Despite partly adverse market conditions, the third quarter saw us continue our successful development and further increase our results," said Chairman of the Managing Board, Bernd Scheifele. "This was largely due to our advantageous geographical positioning and our good overall cost management. Consequently, we were able to considerably improve our operating margins once again. From our perspective, the weaker development of sales volumes compared with the previous quarters is temporary. The acquisition of Italcementi is making good progress and we significantly increased the synergy target to Euro300m."
In the third quarter of 2015, HeidelbergCement's cement and clinker sales volumes fell by 3% year-on-year to 21.8Mt. Whereas Africa registered double-digit growth, volumes in the other group areas remained stable or declined slightly. In Asia, the delayed start of the infrastructure projects announced by the Indonesian government had a negative impact on sales volumes. Volumes decreased in the Eastern Europe-Central Asia group area and in Russia, in particular, due to a downturn in investments. In the Western and Northern Europe group area, especially the Netherlands and the Baltic States, a decline in sales volumes was reported. In North America, deliveries remained more or less at the same level as in 2014, despite the bad weather in Texas and the unfavourable timing of building projects in Florida. In the first nine months of 2015, cement and clinker sales volumes decreased by 1% to 60.6Mt.
At the start of September 2015, joint work teams from Italcementi and HeidelbergCement started preparing for the integration. In the first instance, they embarked on best-practice comparisons and carried out an assessment of potential synergies. Based on the initial findings, it was able to increase the post-closing synergy target from an original Euro175m to Euro300m. The positive effects of financing costs and taxes were taken into account for the first time in the new synergy target. The combination of Italcementi's export-oriented cement plants in the Mediterranean Basin with the global trading business of HeidelbergCement following completion of the transaction also gives rise to significant potential beyond the identified synergies, as does the optimal use of Italcementi's production facilities. Import demand, for example in North America or Africa, that used to be bought from third party sources in the past, can be covered by Italcementi's plants in the future, thus leading to a higher capacity utilisation there. A savings potential in current assets of Euo100m could be confirmed. The bridge financing could be reduced by Euro1.1bn to Euro3.3bn because the initial risk of a mandatory takeover offer to minority shareholders in Morocco could be excluded and some of Italcementi's creditor banks have agreed to waive their change of control clauses. In addition, HeidelbergCement has reduced its target for cash-relevant investments from Euro1.2bn to Euro900m in accordance with the capital expenditure savings announced in the context of the Italcementi takeover. All necessary filings or pre-filings were lodged with the competition authorities in October 2015 as planned. The competition authority in India has already given its approval. HeidelbergCement expects the acquisition of the 45% stake to be completed in the first half of 2016.
In North America, HeidelbergCement expects a continuing economic recovery and a further increase in demand for building materials. Besides new residential building, commercial and infrastructure construction is also making an increasingly strong contribution to this growth. In Eastern Europe, markets should continue to stabilise and the first impetus is expected to stem from the EU's new infrastructure programme. In Western and Northern Europe, a stable overall market development is expected. This is based on the recovery in the UK, the stable development in Benelux and a slight slowdown in Germany as well as in Northern Europe, where exports are declining. In Asia, the delay in infrastructure projects in Indonesia is leading to a reduction in cement and ready-mixed concrete sales volumes. In Africa, the group is still counting on a sustained growth in demand. HeidelbergCement anticipates stable sales volumes for the core products of cement and ready-mixed concrete and an increase in the sales volumes of aggregates for the year.
As a result of the sustained fall in prices for crude oil and fuels, HeidelbergCement expects a moderately declining cost basis for energy in 2015. A modest rise in the cost of raw materials and personnel is still expected, partly owing to the devaluation of the Euro. It plans to offset this by means of suitable measures and to further improve the margins in the cement and aggregates business lines. Process optimisations are expected to achieve a sustainable improvement in results of at least Euro120m by the end of 2017. In addition, the optimisation of logistics activities in connection with the LEO programme will be pursued with the aim of reducing costs by Euro150m over a period of several years.
Based on the developments described in the first nine months, HeidelbergCement expects a moderate to significant growth in revenue and remains confident that the operating income and profit for the financial year before non-recurring items will increase significantly in 2015.
"We remain on track to significantly increase our results and substantially reduce our net debt in 2015," said Bernd Scheifele. "This provides us with a solid base for the acquisition of Italcementi. The acquisition process is on schedule and we expect the share purchase from Italmobiliare to be completed in the first half of 2016. Thereby, we significantly accelerate the growth of HeidelbergCement and create additional potential for higher returns for our shareholders. Following the acquisition, we want to reduce the leverage by the end of 2016 to a level that is in line with a solid investment grade rating."
Prism Cement acquires 50% stake in Coral Gold Tiles
06 November 2015India: Prism Cement has acquired a 50% stake in Coral Gold Tiles Pvt Ltd. It did not disclose the value of the deal. The acquisition will increase Prism Cement's tile business capacity to 58Mm2/yr from 54.5Mm2/yr.
West China Cement to buy Yaowangshan Cement for US$121m
02 November 2015China: West China Cement has agreed to acquire the entire equity interest of Tongchuan Yaowangshan Ecological Cement Co Ltd as well as shareholder's loan of US$121m. The Yaowangshan cement plant in Yaowangshan, Tongchuan, Shaanxi has 2.2Mt/yr of cement production capacity.
China Conch Venture and Red Day Limited, which is owned by West China Cement's Non-executive Director Ma Zhaoyang, agreed to inject US$14.2m and US$4.73m into Xi'an Yaobai Environmental Technology Engineering Co Ltd. Upon completion, Yaobai Environmental will be 60% owned by Conch Venture, 20% by Red Day and 20% by West China Cement.
West China Cement expects to record a US$63,096 loss as a result of the transactions. The parties agreed to develop Yaobai Environmental into the only platform for the treatment of dangerous and hazardous waste for the parties within China. West China Cement believes that the investments from Conch Venture and Red Day, which will provide additional financial resources to Yaobai Environmental, is an important step towards this goal and paves the way for further collaboration among the parties.
Egypt: ASEC Cement, a subsidiary of Egypt's Qalaa Holdings, has announced plans to sell its stakes in ASEC Minya and ASEC Ready Mix to Misr Qena Cement for US$125m. The respective stakes are 46.5% and 55%. The deal is expected close on or before 20 November 2015.
Jaypee Group revives talks with JSW to sell cement portfolio
26 October 2015India: To improve its finances, Jaypee Group has revived its negotiations with JSW to sell its entire 20 – 22Mt/yr cement portfolio. The top officials, including Manoj Gaur, Executive Chairman and CEO of Jaypee Group, met Sajjan Jindal, Chairman on JSW Steel, to discuss the acquisition. Jaypee Group has an outstanding debt of around US$11.6bn. The talks are still at early stage.
HeidelbergCement reduces refinancing needs by further Euro500m
23 October 2015Germany: HeidelbergCement has taken another step to optimise the financing of the Italcementi acquisition. The volume of the bridge financing could be reduced by a further Euro500m from Euro3.8bn to Euro3.3bn. The refinancing needs in the bond market declined by Euro500m to around Euro2.5bn, correspondingly.
Decisive for the reduction of the financing volume was that some of Italcementi's creditor banks have agreed to waive their change of control clauses. As a consequence, HeidelbergCement will have access to additional credit lines totalling Euro500m on a long-term basis also after the takeover. Therefore, refinancing of these credit lines after the acquisition is no longer necessary and the volume of the bridge financing could be reduced accordingly. As already communicated in the announcement of the Italcementi acquisition, the bridge financing should be refinanced by free cash flow, the sale of production sites and the issuance of bonds. The reduction in the volume of bridge financing thus also reduces the need for refinancing in the bond market by the same amount.
Reliance Infrastructure to sell cement business to cut debt
08 October 2015India: Reliance Infrastructure plans to sell its cement business as part of plans to cut debt through the sale of non-core assets.
As many as 10 global companies have been sounded for a 100% stake of Reliance Cement, a wholly-owned subsidiary of Reliance Infrastructure. These include CRH, Cemex, HeidelbergCement, GE, Blackstone, Carlyle and KKR. Local companies JK Cement and Prism Cement may also be interested. Reliance Group has appointed Morgan Stanley as banker to scout for buyers for Reliance Cement.
The sale of the cement business is aimed at reducing debt by selling non-core assets. Reliance Infra's debt stood at around US$3.86bn on 31 March 2015. Reliance believes that the sale will help reduce its debt by 20 – 25%. It is looking at a valuation of US$769 – 922m for Reliance Cement, which has a cement production capacity of 5.6Mt/yr.
Reliance Cement started operations in 2007 and has plants in Maihar in Madhya Pradesh (2.8Mt/yr), Kundanganj in Uttar Pradesh (2.2Mt/yr) and Butibori in Maharashtra (500,000t/yr). It is also developing a 5Mt/yr greenfield plant at Wani in Maharashtra.
Lafarge Nigeria unit acquires United Cement
06 October 2015Nigeria: An affiliate of Lafarge Africa, Nigerian Cement Holdings (NCH), has completed a 100% acquisition of Nigeria's third-largest cement manufacturer United Cement Company of Nigeria (UNICEM). Lafarge did not disclose the purchase price. NCH owned 70% equity in UNICEM before agreeing to the deal in November 2014 to buy the remaining 30% from Flour Mills. UNICEM cement plant in Cross River has a production capacity of 2.5Mt/yr and is undergoing an expansion to 5Mt/yr, to be completed in 2016.
Egypt: Misr Qena Cement has denied that it has acquired a 46% stake of ASEC Cement Company and a 55% stake of ASEC Concrete, which has been published in local newspapers. Misr Cement said that the published news was based on an assumption and that it would announce the deal when it was finalised.
Brazilian cement firms pay up over Indian acquisition infringements
30 September 2015India: Brazilian cement major Votarantim Cimentos, InterCement Austria Holding and Camargo Corrêa have settled a case with the Securities and Exchange Board of India (SEBI) for alleged violation of takeover protocols regarding Shree Digvijay Cement. They have paid over US$115,000 in settlement charges.
SEBI had initiated adjudication proceedings against the three companies over the violation of provisions Substantial Acquisition of Shares and Takeovers (SAST) regulations. It was alleged that the entities failed to comply with certain provisions of the SAST regulations while making an open offer for acquisition of 36.7 million shares, representing a 26% stake in Shree Digvijay Cement.