
Displaying items by tag: Cemex
Cemex to operate second Regenera facility in Egypt
27 September 2024Egypt: Cemex has signed an agreement with Assiut Governorate to operate its second Regenera facility in Egypt. This facility processes about 7,000t/month of municipal solid refuse, treating it to generate alternative fuels before compost production, thereby ensuring minimal residual materials go to landfill. The Assiut agreement follows the first Regenera facility in Mahala, which began operations in May 2024. Cemex has invested over US$2.5m in an alternative fuel dryer at the Assiut plant.
Cemex recognised on Fortune's Change the World list
26 September 2024Egypt: Cemex has won a place on Fortune's 2024 Change the World list for its sustainable business practices. This recognition, the fourth for Cemex, highlights its collaboration with VeryNile to clean the Nile River and develop sustainable solutions for discarded materials. Supported by the Ministry of the Environment, VeryNile focuses on removing inorganic matter from the Nile, upcycling plastics, and converting non-recyclable materials into alternative fuel for Cemex's Assiut cement plant. This initiative not only reduces pollution but also improves water quality for the local community and provides alternative employment for 150 local fishermen and women affected by contamination of the Nile.
CEO of Cemex Fernando González said "We are once again honoured by Fortune's recognition of our sustainable business model, which aligns environmental conservation with social empowerment. The VeryNile initiative exemplifies how companies can collaborate with NGOs and society to change the world for the better."
Cemex launches new damp-proof cement
18 September 2024Mexico: Cemex has launched a new water-repellent cement under its Vertua brand, which is designed to extend the lifespan of construction projects by addressing humidity issues. The product reportedly does not require dosing and mixes like traditional grey cement. It was introduced on 12 September 2024 at the Construrama Convention in Mexico.
President of Cemex Mexico, Ricardo Naya, said “At Cemex, we have developed a new specialty cement designed to solve one of the main problems that affects almost every construction site: dampness. Our damp-proof cement is a true ‘all-in-one’. In addition to its traditional use, it incorporates water-repellent properties that not only protect structures, but also provide a smoother, more uniform finish.”
Cemex sells operations in Guatemala to Holcim
11 September 2024Guatemala: Cemex has sold its operations in Guatemala to Holcim Group for US$200m. The deal includes one grinding mill, three ready-mix plants and five distribution centres. The grinding mill has a capacity of 0.6Mt/yr.
CEO of Cemex Fernando González said "In 2024, we have accelerated the execution of our portfolio rebalancing strategy with the announced sale of more than US$2bn in assets located primarily in emerging markets. We are now primed for the next stage by redeploying most of the divestment proceeds in developed markets, primarily the US. We expect these efforts to drive sustainable growth for our business in the short and medium term."
Cemex acquires majority stake in RC-Baustoffe
04 September 2024Germany: Cemex has acquired a majority stake in the Berlin-based recycling company RC-Baustoffe to enhance its circularity business Regenera. The company processes construction, demolition and excavation materials. The acquisition integrates RC-Baustoffe with Regenera, allowing the facility to process up to 400,000t/yr, which will be turned into repurposed aggregates for concrete production.
CEO of Cemex, Fernando González, said “With acquisitions such as this, Cemex continues to strengthen its commitment to circularity through Regenera as well as promoting the world’s transition to a more circular economy. Construction and demolition materials account for more than 30% of global ‘waste’ streams and reintegrating these materials into the construction value chain can reduce the use of virgin raw materials."
Colombia: Cemex Colombia has reported that 90% of the water used at its Santa Rosa grinding plant in 2024 to date came from non-fresh water sources, including rainwater harvesting and water recycling systems. Additionally, the plant operates with zero water discharges. UK-based Environmental Resources Management (ERM) supported the development of the current water management protocol for the plant.
Philippines: Cemex has received approval from the Philippine Competition Commission (PCC) to sell 90% of Cemex Holdings Philippines's shares. The approval relates to a joint acquisition by DMCI Holdings, Semirara Mining and Power and Dacon of shares in Cemex Asian South East Corporation, which holds a major stake in Cemex Holdings Philippines. This clearance is a requirement for finalising the transaction, contingent on further compliance by the acquiring companies.
First half 2024 update on selected cement producers
14 August 2024Votorantim Cimentos released its half-year results this week giving us the opportunity to assess how well some of the larger cement producers are doing so far 2024. The general picture from the western multinational cement companies has been one of sluggish sales in the first half of the year but respectable earnings. So, for example, both Holcim and CRH were reporting static sales or revenue but earnings increases of over 10%. Heidelberg Materials and Cemex noted similar situations.
Graph 1: Sales revenue for selected multinational cement producers in the first half of 2024 and the first half of 2023. Source: Company financial reports.
Holcim was keen to play up that its net sales actually rose on a local currency basis. However, its recurring earnings before interest and taxation definitely rose, by 12% year-on-year to €2.33bn. Net sales were down in both North America and Europe, the group’s main two regions, but earnings were strong in both. Sales revenue for cement and aggregates may have been down across the group but earnings were up sharply. No such luck for ready-mixed concrete though, with both sales and earnings down overall. Another trend to watch is that sales and earnings were both up in the group’s Solutions & Products division. This part of the business has been growing due to merger and acquisition activity, and it is nearly the group’s second largest division after Europe.
CRH reported similar things overall. However, it has been busy selling off its Europe-based lime business, finishing the acquisition of its new assets in Texas and buying a majority stake in Australia-based AdBri. Its Americas Materials Solutions division reported both increasing revenues and earnings in the second quarter of 2024, at least, and the acquisitions in Texas helped too. Revenue in its Europe Materials Solutions division fell by 5% on an organic basis and this was blamed on subdued markets in Western Europe and poor weather.
Heidelberg Materials had a tougher time of it in the first half of 2024, with revenue down by 5% to around €10bn. It attributed the falling revenue to decreasing sales volumes across all business lines. It described its second quarter as follows, “The pressure on volumes is largely attributable to prolonged weak activity in the construction industry and adverse weather conditions in individual core markets. Active cost and price management largely offset the impact.” For clinker and cement this was noticed prominently in Europe despite volumes increasing in North America and Asia-Pacific. However, its result from current operations rose slightly. One reason for this appeared to be a ‘significant’ fall in material costs including energy.
Similarly, Cemex’s net sales were flat but its operating earnings were positive. Drilling down between its main geographical markets revealed a strong market in Mexico, a stable one in the US and declines in Europe, Middle East, and Africa (EMEA). In the US Cemex apportioned falls in cement and ready-mix concrete sales volumes to “...difficult weather conditions, a softening residential sector, portfolio rationalisation, competitive dynamics in certain micro markets and timing of several large projects.” Operating earnings were also hit by higher maintenance costs. In its EMEA region the trend was downwards but this was due to volume declines in Western Europe and geopolitical issues in the Middle East.
Votorantim Cimentos’ net revenue and adjusted earnings were down slightly in the first half of 2024 stemming from softer results in North America and Brazil in the first quarter. Revenue in Brazil was flat for the half year after a better second quarter. Revenue in North America though was hit by a slowdown in demand although price rises staved off some of this. Meanwhile, the group’s Europe, Africa and Asia region reported higher revenue due to higher volumes in most places.
Finally, UltraTech Cement is the odd company out in this group. The size of its annual revenue earns it a place in the list but it is more like some of the large China-based cement companies because it mostly sticks to one territory: India in this case. Yet, its revenue rose by nearly 6% to €4.2bn in the first half of 2024, making it the best performer in this article’s grouping. Domestic sales volumes increased at a similar rate in the April - June 2024 quarter. Similar to Heidelberg Materials, UltraTech Cement also reported that its energy costs fell by 17% year-on-year mainly due to reduced fuel prices. Its profit didn’t grow by much especially but the company is racing against Adani Cement to build capacity. It added 8.7Mt/yr alone in the April - June 2024 period compared to 13.3Mt/yr in its entire 2024 financial year that ended in March 2024.
The picture from the companies covered above suggests that the US market may have cooled for some since 2023. Despite this the earnings have mostly held up and cement companies enthusiasm for the market remains high led by Holcim’s impending market spin-off. Europe has been mixed, with declines in the west and stronger markets towards the east. Energy costs have finally fallen following the market shock when Russia invaded Ukraine in 2022 and this is helping earnings. That last point may be universal here given that it has affected both western multinationals and a large regional player such as UltraTech Cement. That’s it for now. In a future week Global Cement Weekly will take a look at how well the large China-based cement companies have done in so far in 2024.
Cemex sells in the Dominican Republic
07 August 2024Cemex announced this week that it is preparing to divest its operations in the Dominican Republic for US$950m. At first this seems a little close to home for the Mexico-based company but it felt similar at the start of 2022 when it sold its businesses in Costa Rica and El Salvador to the same company, Cementos Progreso. Readers may also recall that the business press reported, correctly we now know, in mid-2023 that Cemex was seriously considering its options in the Dominican Republic.
The current agreement will see Cemex sell one cement plant in the Dominican Republic along with related cement, concrete, aggregates and marine terminal assets for US$950m. The deal is expected to close towards the end of 2024. Cemex says that it is making the transaction to reduce its exposure to emerging markets and refocus its capital upon priority markets, such as the US. This reasoning is very much in line with its international peers in the building materials sector, which have been doing likewise.
This is the potential biggest divestment Cemex will have made since 2009. It is bigger than the agreement to sell the share of its business in the Philippines, revealed earlier in 2024, for an enterprise value of US$660m. Back in 2000, Cemex sold its Australia-based subsidiary to Holcim for US$1.7bn. Holcim still operates in Australia today via Cement Australia, a joint-venture with Heidelberg Materials. Plus, CRH, one of Cemex’s competitors that has also shown a keen interest in the US market previously, concluded a deal to buy a stake in AdBri in July 2024. Infamously, Cemex took over building products company Rinker in 2007 just as the 2007 - 2008 financial crisis burst. It then spent the next decade-and-a-half reducing its debt levels. In April 2024 it was pleased to announce that it had been awarded full investment grade status by rating agency Fitch Ratings.
Selling up in the Dominican Republic seems curious at first but, as mentioned at the start, we’ve been here before with Cemex’s subsidiaries in Central America and the Caribbean, plus the company has been working on it for at least a year. It is worth noting though that Cemex reopened a second production line at its San Pedro de Macorís site in 2022 giving the plant a cement production capacity of 2.4Mt/yr. That gives the current deal a value of US$380/t based on capacity. Local competitor Domicem also started up a second line at its Sabana Grande de Palenque cement plant in late 2023, demonstrating that other cement companies have also been investing in the market. Cemex’s sales from its business in the country were reasonable in 2023 but its operating earnings were the fourth biggest in the group after Mexico, the US and the UK. In its results for the first half of 2024 the group noted that tourism projects were driving demand in the country.
Graph 1: Mix of sales by region for Cemex, 2019 - 2023. Source: Company reports.
Graph 1 above presents the general way Cemex has been directing its business internationally over the last five years. Sales were roughly half-and-half between Mexico & the US and the rest of the world in 2019. In 2023 the ratio was more like 60:40. Operating earnings have tracked the same way with an even greater emphasis on Mexico and the US. It should be noted though that despite sales revenue being higher in the US, operating earnings remain higher in Mexico.
Pretty much every western international cement company is watching the US market intently right now. So, Cemex’s decision to sell a profitable business in the Dominican Republic to fund further investment in the US makes sense. Although what it might actually want to buy at US prices right now might be a tough call. CRH, for example, paid US$2.1bn in late 2023 to buy the 2.1Mt/yr Hunter cement plant, a network of cement terminals and 20 ready-mix concrete batching plants in South Texas. This was arguably quite a high price. One last point to consider is that the financial press was reporting falls in the global stock markets this week amid fears over the outlook of the US economy. Whatever happens next, at least Cemex is selling rather than buying this time round.
Cemex to divest operations in the Dominican Republic
06 August 2024Dominican Republic: Cemex has signed an agreement to sell its operations in the Dominican Republic to Cementos Progreso Holdings and partners for US$950m. The sale includes a cement plant with a capacity of 2.4Mt/yr, 12 concrete plants, a quarry and two distribution centres, as well as export businesses to Haiti.The divestment is expected to finalise in the fourth quarter of 2024, pending closing conditions.
Fernando Gonzalez, CEO of Cemex, said "This transaction advances us significantly in our portfolio rebalancing strategy which is focused on reducing our exposure in emerging markets and redeploying capital into growth investments in priority markets, primarily the US."