Displaying items by tag: Adbri
Adbri's lime contract with Alcoa ends early
21 March 2024Australia: Adbri has announced the early termination of its contract to supply quicklime to aluminium producer Alcoa, ending in April 2024 instead of the original plan for six months later. This decision is part of an amendment to meet changing demand. The news comes amid Adbri's ongoing review of its Western Australia lime operations and follows Alcoa's recent production curtailment at its Kwinana refinery. Adbri previously supplied to three Alcoa alumina refineries in Western Australia, but the number was reduced to one in 2021.
Adbri is also in the process of finalising a US$2.1bn buyout with Irish company CRH.
Adbri reports sales and earnings growth in 2023
28 February 2024Australia: Adbri reported 13% year-on-year growth in sales to US$1.25bn in 2023, up from US$1.1bn in 2022. The company's earnings before interest, taxation, depreciation and amortisation (EBITDA) also rose, by 5.2% to US$193m. The year marked the successful launch of its EcoCem and Futurecrete reduced-CO2 cement and concrete ranges. At the end of the year, Adbri’s ongoing US$255 – 277m upgrade to its Kwinana grinding plant was 70% complete.
Deputy chair Samantha Hogg and CEO Mark Irwin said “In 2023 we took significant steps to refocus and reshape our organisation to support a more resilient Adbri and to invest in our future. Our focus on best‑in-class customer solutions and margin recovery has supported a strong full-year financial result.”
CRH to acquire Adbri majority stake for US$1.4bn
27 February 2024Australia: CRH has concluded a deal to acquire the remaining 57% of shares in Adbri not owned by Barro Group for US$1.4bn.
CRH CEO Albert Manifold said “We are pleased to reach this important milestone in the potential acquisition of Adbri in partnership with the Barro family. Adbri is an attractive business with high-quality assets and leading market positions that complement our core competencies in cement, concrete and aggregates, while creating additional opportunities for growth and development for our existing Australian business. We look forward to working with the Barro family over the coming years to enhance the long-term growth and performance of Adbri.”
Australia: Adbri has concluded a new interim arrangement with Independent Cement and Lime (ICL), extending ICL’s existing exclusive cement distribution contract from 1 March – 30 June 2024. ICL is a joint venture of Adbri and Barro Group.
New Zealand: Holcim New Zealand has appointed Michael Miller as its Executive General Manager. He succeeds Kevin Larcombe in the post, who moves to Holcim Australia as General Manager - NSW & ACT Concrete. Miller previously worked as the Chief Strategy Officer for AdBri in Australia and previously joined the company in 2007. He holds a degree in management and marketing from the University of South Australia.
CRH to pay US$737m for enlarged Adbri stake
21 December 2023Australia: MarketLine News has reported that CRH has offered to pay US$737m to raise its stake in Adbri to 57% from 4.6%. The consideration forms part of a non-binding offer for the company by CRH and Barro Group, both minority shareholders in Adbri.
CRH looks south
20 December 2023We end 2023 with the news that CRH and Barro Group are preparing to acquire AdBri in Australia. The two companies have teamed up to buy all the ordinary shares in the building materials company that they do not already own for about US$750m. Barro already owns a 43% stake in AdBri and CRH owns just under 5% via a cash settled derivative. The plan is for CRH to buy the remaining shares so it ends up with a 57% holding in total. It requires shareholder approval at AdBri, regulatory consent and other conditions to be met to move forward.
Barro Group has been increasing its stake gradually in AdBri over the last 25 years. It hit 43% in 2019 and subsequently the Australian Competition and Consumer Commission (ACCC) investigated it. Barro Group’s course was cleared in 2020, with the ACCC determining that the acquisition would not ‘substantially lessen’ competition in the market between the two companies that overlap for the supply of cement, ready-mixed concrete and aggregates. It also found Barro and AdBri would continue to face competition locally from Boral, Holcim and Hanson. However the ACCC added that it might reopen its investigation if it received further information that altered its conclusion at that time.
The dynamic between Barro Group and AdBri is complicated because they are, at present, both partners and rivals. Barro owns a significant minority stake in AdBri, and its managing director, Raymond Barro, became the chair of the latter company in 2019. The two companies operate a joint venture, Independent Cement and Lime, which distributes cement and lime in Victoria and New South Wales, and runs a slag cement grinding plant in Melbourne. They sell goods to each other too. Yet Barro Group and AdBri also compete against each other, principally in the sale of concrete. Comments made by Raymond Barro to the Australian Financial Review newspaper indicate that this competition looks set to continue even if CRH and Barro Group buy AdBri, given the family ownership structure of the former company. To this end AdBri set up a governance framework for its board in 2015 in part to handle the interaction between the business interests of itself and Barro Group, and this was further revised in 2019. Due to this convoluted relationship, it set up an independent board committee to assess the current proposal from CRH and Barro Group with Barro family nominee directors removed from the consideration process. It then approved the proposal to the next step of negotiations.
The general consensus is that the CRH-Barro Group deal looks likely to succeed. CRH has a limited presence in Australia and Barro Group’s ownership of AdBri doesn’t seem to change much under the limited details released publicly about the proposal. Potential problems could arise from a rival bidder, if the ACCC decided to re-evaluate the situation or if the Foreign Investment Review Board became involved, but we’ll have to wait and see about these. AdBri owns two of the country’s five clinker plants, both in South Australia. Subsidiary Cockburn Cement also used to produce clinker at its Munster plant in Western Australia but this moved over to grinding-only in the mid-2010s. The company also runs three grinding plants. One of these, Cockburn Cement’s Kwinana plant, has been undergoing a costly upgrade project that overshot its original estimate. Purely in terms of active integrated cement production capacity, this places the deal at US$875/t, a high figure but not as much as CRH stumped up to buy Martin Marietta Materials’ South Texas business in November 2023.
This then leads to how CRH and Barro Group might interact running the business in the future. CRH is by far the bigger company, in charge of a multinational building materials concern, and among the world’s largest producers of cement and concrete outside of China. Its decision to make a large acquisition outside of Europe and North America marks a turning point in its growth strategy since the late 2010s. In a statement, CRH’s head Albert Manifold was quick to compare how Australia was “similar in nature to the Southern US and Central and Eastern Europe where we have a significant presence.” Barro Group, meanwhile, has doggedly been taking over AdBri bit by bit over a quarter of a century. What it gains from the current proposal is mostly unknown, but simplifying the ownership structure and delisting from the Australian Stock Exchange could offer a number of advantages to it. Their ambitions appear aligned for the moment but this may not stay the case forever.
That’s it from Global Cement Weekly for 2023. Enjoy the seasonal break if you have one. Global Cement Weekly will return on 3 January 2024.
Adbri orders new limestone carrier
20 December 2023Australia: Adbri has entered into an agreement to obtain a new limestone carrier for its South Australian cement operations, to replace its MV Accolade II vessel currently in operation there. Specifically, the new carrier will supply raw materials for the Birkenhead cement plant. It is 100% battery electric capable. Adbri has hired marine transport company CSL to supply and operate the vessel. The contract will last until 2043, with the option for two five-year extensions.
Adbri chief executive officer Mark Irwin said “The new vessel will support Adbri to increase cement volumes at Birkenhead, while also supporting the production of lower carbon products such as EvoCem cement, which uses limestone as a clinker substitute.” He continued “The new vessel is expected to start operations with a hybrid system, where electric power will replace about 25% of its diesel fuel. This is expected to reduce Scope 1 emissions by about 40% compared to the current emission intensity seen in the Accolade II operation. By 2031, we aim to achieve 100% electric power capability, further reducing Scope 1 emissions to less than 10% of the current emission intensity seen in the Accolade II operation. This milestone is a crucial step forward in our on-going net zero emission journey.”
CRH to acquire majority stake in Adbri
18 December 2023Australia: Ireland-based CRH and Barro Group have partnered to jointly acquire Adbri outright. The companies currently control 47.6% of Adbri combined – a 4.6% stake under CRH and a 43% stake under Barro Group. Under their offer to shareholders, CRH will raise its stake in the company to 57%. The partners have valued the company at US$1.4bn as part of their proposal. Following the conclusion of any such deal, the companies reportedly plan to delist Adbri from the Australian Securities Exchange (ASX).
CRH chief executive officer Albert Manifold said "Adbri is an attractive business with quality assets that complement our core competencies in cement, concrete and aggregates. With its leading market positions in Australia, we are delighted that this opportunity has presented itself to us.” He added “It is the next logical step for CRH to expand our existing presence in Australia, where we have been operating for 15 years. We look forward to working with the Barro family over the coming years to enhance the long-term performance of the business, leveraging our scale, industry knowledge and technical expertise to improve long-term growth and operating performance and drive value to achieve the true potential of the business.”
Adbri updates market on Kwinana grinding plant expansion
15 December 2023Australia: Adbri says that the cost and timing of its on-going expansion of its Kwinana grinding plant in Western Australia remain ‘on track.’ To date, the producer has invested US$161m in the expansion, towards a projected cost of US$385-420m.
In an accompanying trading update, Adbri said that it expects its full-year earnings before interest, taxation, depreciation and amortisation (EBITDA) to be US$208 -212m in 2023, ‘moderately’ above its previous outlook. In 2022, its earnings before interest and taxation (EBIT) amounted to US$106m. The company has forecast total capital expenditure investments for 2023 of US$208-215m. It previously expected to invest US$221-235m during 2023.