Displaying items by tag: FLSmidth

Cement producers and suppliers are now reacting to the coronavirus pandemic at scale. The biggest obvious development has been the lockdown in India that began on 24 March 2020. The implications for the cement industry are profound given the country’s population (1.3Bn) and massive cement consumption under normal conditions. It is the country with the world’s second largest cement production capacity.

UltraTech Cement, the biggest producer, said that it was suspending production at ‘various’ locations although it added that the situation was ‘dynamic’ and that it was monitoring it from time to time. Ambuja Cement and JK Lakshmi Cement have done likewise. The latter has suspended cement production at an integrated plant in Rajasthan and three grinding plants in Gujarat. Some Indian states have moved faster than others towards shutting down movement of people so JK Lakshmi’s decision may merely be based on legal necessity. However, a difference may arise in producer strategies between keeping integrated and grinding plants open. Building up inventory is one strategy seen in poor market conditions previously around the world. Alternatively, moving to more of a grinding model might make sense in some territories if, as is happening, countries implement lockdowns at different periods. However, some Indian states have moved faster than others towards shutting down movement of people and JK Lakshmi Cement’s closure pattern may simply reflect this.

At the international scale HeidelbergCement gave an idea to Reuters of the challenge facing the multinationals. Chief executive officer (CEO) Dominik von Achten described the start of 2020 as being strong but that construction projects were being delayed in the US and that activity in France and Spain was starting to weaken. Unsurprisingly, the company has shut down three of its plants in Lombardy at the centre of the Italian epidemic. He added that the group was holding a daily crisis call to assess the effect of the virus upon staff. He also said that the group was stockpiling cement amid the disruption. The clear warning sign was of an existential threat like that faced by the airlines whereby sales could simply stop for a three or four week period… or longer.

On the supplier side, Denmark’s FLSmidth has issued a robust plan on how it is aiming to maintain service and support for its customers. Past all the now-usual stuff such as remote working it included detail on how to support clients on site where absolutely necessary on a case-by-case basis. With regards to its supply chain it pointed out that it was confident, “that any local interruptions to our suppliers can be minimised, even when the agility of some suppliers is put to the test. We have redundancy built into the system.” To this end it emphasised the global nature of its business to ensure that it could deliver parts and equipment to its customers. It claimed that it coped with coronavirus in China due to its ‘very flexible’ supply chain but did admit to some supply chain impacts. Yet it says that production is back to approaching full capacity with workshops in Qingdao and Shanghai above 90% as they work their way through accumulated backlogs. Finally, it is also offering advice on how the company can support its customers on reducing or shutting down operations.

Other supplier comments on the situation have mainly been about protecting staff, working remotely and supporting customers through continued supply of equipment and services. Back in India, Sameer Nagpal, the CEO of refractory manufacturer Dalmia-OCL told Business Standard that the company was coping so far with the crisis with little major impact seen so far. Its raw material supply chain was dependent on China but after some minor disruption it was secure. Most of its customers are domestic, where it hadn’t reported problems so far, although this may change with the Indian lockdown. Exports were a different story as it sends around 10% of its production abroad and it has a plant in Germany. In Europe it was seeing a challenge due to supply chain disruption.

The experiences above are a snapshot of some of what is happening in parts of the industry as coronavirus disruption hits home. China’s restrictions are easing, most of Europe is in lockdown, India has started its quarantine and the US has restricted movement in about a third of its states. The current restrictions in the UK, for example, allow for construction work to continue but local media is debating the associated risks for workers. Other territories have different rules. All of this is affecting demand for cement and concrete. This in turn feeds through to producers and their suppliers. Global Cement continues to monitor the situation and wishes readers a safe passage through the pandemic.

Denmark: FLSmidth has reported ‘increasing disruptions to customers’ and its own operations’ and higher costs due to ‘more complex logistics and a weaker fixed cost absorption’ following the coronavirus outbreak. It says that around half of employees are working remotely.

FLSmidth continues its business improvement initiatives launched in 2019 and has implemented a capital expenditure (CAPEX) reduction, salary adjustment postponement and hiring freezes.

Tunisia: Carthage Cement has submitted a statement to Tunisian police in which it alleges false testimony by FLSmidth’s lawyer who advised the Danish supplier in a criminal case which saw one employee sentenced to five years for illegal payments to Carthage Cement’s owners in 2017. Ritzau Finans newspaper has reported that FLSmidth’s management admitted to knowledge of the payments on 21 February 2020, something it had denied to authorities when under investigation prior to the trial, which concluded in November 2019.

Denmark: FLSmidth has increased the sales from its cement division despite ‘challenging’ marketing conditions. Its revenue grew by 3% year-on-year to Euro1.13bn in 2019 from Euro1.10bn in 2018. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 28% to Euro65m from Euro51m. It achieved this despite its order intake falling by 16% to Euro1bn from Euro1.19bn. It attributed its revenue increase to high order backlog conversion and positive currency exchange effects. Internal efficiency measures and a ‘selective’ approach to large projects were also said to have helped.

“We were pleased to see that the financial performance of our Cement business showed a positive development despite challenging market conditions,” said FLSmidth Group chief executive officer (CEO) Thomas Schulz. He added that sustainability and digitalisation would be key differentiators in the coming years and that the engineering company was ‘well-positioned’ in both areas.

Vietnam: The Vietnam National Cement Corporation (Vicem) and Denmark-based supplier FLSmidth have announced a cooperation agreement with the aim of radically reducing the greenhouse gas emissions from cement production and improving air quality. The cooperation will consist of Vicem implementing solutions pioneered by FLSmidth. FLSmidth said that a key focus of the cooperation will be Vicat’s use of ‘municipal and other waste streams as alternative fuel sources,’ with the aim of achieving 100% substitution using FLSmidth solutions, in accordance with FLSmidth’s ambition ‘to enable cement companies to operate with zero emissions by 2030.’

Denmark: FLSmidth has announced details of the business improvement initiative it gave forewarning of in late 2019. The cement technology supplier is sacking 500 staff. Its most recent Annual Report stated that it had 11,368 staff at the end of 2018, meaning that around 4.4% of employees will lose their jobs. 80 of these redundancies will effect employees at its Copenhagen headquarters, with the remainder impacting personnel at operations across the globe. “Despite a healthy pipeline, this is an unfortunate yet necessary action given the weakening market for large capital investments in 2019 and our ongoing efforts to improve internal efficiency,” said FLSmidth CEO Thomas Schulz.

Denmark: FLSmidth’s chief financial officer (CFO) Lars Vestergaard has agreed with the board of directors to resign from the company, effective immediately. FLSmidth has stated as the reason for the change a need for ‘a different set of competences to strengthen our organisation and execute long-term financial targets.’ It thanked Vestergaard for his commitment and dedication in helping FLSmidth achieve milestones in ‘creating a stronger and more focused organisation. FLSmidth Head of Group Reporting and Compliance Naja Barrisøe supersedes Vestergaard as interim CFO until the newly appointed CFO joins the company on or before 1 July 2020.

Bangladesh: Mohammed Amirul Haque, the managing director, of Premier Cement, says that the company has built two more units at Narayanganj and Chattogram for around US$150m. He said that upgrade has increased the company’s production capacity to 5.2Mt/yr from 2.4Mt/yr, according to the Daily Star newspaper. The new units are currently at the trial stage. Vertical roller mills (VRM) supplied by Denmark’s FLSmidth will be used to attain production rates of 460t/hr and 270t/hr at the new plants in Narayanganj and Chattogram respectively.

The expansion plans were initiated in 2017. At present the country has a cement production utilisation rate of 57%. Bangladesh’s per capita cement consumption is around 181kg. It is expected to increase to 220kg by 2020.

Denmark: FLSmidth has recorded a third-quarter profit of Euro25.4m in the three months to 30 September 2019, up by 17% year-on-year from Euro21.7m in the corresponding period of 2018. Its revenue over the period rose by 9.3% to Euro634m from Euro580m. FLSmidth CEO Thomas Schulz noted the delivery of supply operations to the cement industry on expected profitability.

UK: The Global Cement and Concrete Association (GCCA) has launched ‘Innovandi,’ a research network between industry and scientific institutions. The network intends to research the areas of process technology, including the impact of co-processing, efficiency of clinker production and implementation of CCUS/ technologies, and products. This will include the impact of clinker substitutes and alternative binders in concrete, low carbon concrete technology and improve the understanding of CO₂ reduction through re-carbonation.

“Our industry is fully committed to taking action to reduce CO₂ emissions. As such, Innovandi is an industry led initiative and will bring together the best minds from all corners of the cement and concrete world, academia and business. Together we will truly collaborate on a global scale and use our expertise to find new ways of working and developing effective innovations,” said Benjamin Sporton, the chief executive officer (CEO) of the GCCA.

24 companies from the cement and concrete industry, including cement and concrete manufacturers, admixture specialists and equipment suppliers, have committed to the initiative, with scientific institutions and additional companies set to join as its work begins work. These include Buzzi Unicem, Cementir Holding, Cementos Argos, Cementos Molins, Cementos Pacasmayo, Cemento Progresso, Cemex, CNBM, Chryso, CRH, Dalmia Cement, FLSmidth, Grupo Cementos de Chihuahua (GCC), GCP Applied Technologies, Mapei, HeidelbergCement, LafargeHolcim, Nesher Israel Enterprises, SCG Cement, Titan Cement, Refratechnik Cement, Sika Technology, Subote New Materials and Votorantim.

As part of the new initiative, the GCCA also intends to establish an annual Innovandi global conference to promote collaboration on innovation and research in the sector.