Displaying items by tag: Forecast

Germany: HeidelbergCement has warned that its result from current operations before depreciation will be lower than expected so far in 2018 due to poor weather in the US and rising energy costs. It maintained that its sales volumes and revenue for the first nine months of 2018 would be ‘within expectations.’ The building materials company also reassured investors that its group share of profit for 2018 would also be as expected. It will release its results for the third quarter of 2018 on 8 November 2018.

India: N Srinivasan, the vice-chairman and managing director of India Cements, predicts that cement demand is improving in the south of the country. At the company’s annual general meeting in Chennai he said that demand for cement is expected to improve the 70% capacity utilisation rate recorded in the 2017 – 2018 financial year, according to the Financial Express newspaper. The region had a cement production capacity of 160Mt/yr but demand was only up to 80Mt.

He added that India Cements reported a utilisation rate of 71% in the previous financial year and that this had improved to 80% in the first quarter of the current year. He also expected that the second quarter would be better despite floods in Kerala and a transporters' strike.

Germany: ThyssenKrupp has decreased its earnings forecast for its 2017 – 2018 financial year due to the poor performance of its Industrial Solutions division. The division is expected to report a negative adjusted earnings before interest and taxation (EBIT) of Euro200m in the third quarter of the year due to higher expected total costs, particularly for a cement plant in Saudi Arabia and two other industrial projects. The group said that the number of major projects in the cement and fertiliser sector had decreased ‘considerably,’ partly due to the production overcapacity in the cement market.

"It is important to me to call it what it is. The results of our analysis at Industrial Solutions are anything but satisfying. The structure of plant construction must be adjusted to the changed market conditions in order to achieve a turnaround and finally become competitive again. We must act swiftly here," said Guido Kerkhoff, chairman of the executive board of ThyssenKupp. The group has proposed focusing its Industrial Solutions division on small and medium-sized projects and targeting plant construction on the higher-margin service business.

In mid-2017 the group announced plans to reorganised its Industrial Solutions division, including the decision to cut 1500 jobs in operational areas.

Cuba: The Nuevitas cement plant expects to produce 0.12Mt of cement in 2018. Nearly 80% of this output will be used to build houses, according to the Adelante newspaper. The plant serves the Camagüey province as well as Las Tunas, Granma and Ciego de Ávila.

China: Anhui Conch expects that its profit will double year-on-year for the first half of 2018. The company reported an unaudited net profit of US$1.01bn in the first half of 2017. It has attributed the growth in profit to a ‘significant’ increase in the price of its products and an increase in revenue. The cement producer plans to release its half year report by the end of August 2018.

Saudi Arabia: Cement sales revenue is expected to fall quarter-on-quarter in the second quarter of 2018 due to restructuring in the industry and holidays in the period. A report by Al Rajhi Capital found that cement sales volumes fell by 16.7% year-on-year in April and May 2018. 15 cement companies reported falling sales volumes, led by Riyadh Cement and Cement City with 44.1% and 37.5% declines respectively. Only two companies, Tabuk Cement and Hail Cement, reported growth. Total inventory for the industry grew by 1.2% quarter-on-quarter to around 36.2Mt at the end of May 2018. The financial services company forecasts that revenue in the cement sector will fall by 6% year-on-year.

India: ACC forecasts that demand for cement will grow by up to 7% in 2018. However, intense competition and insufficient consumption will lead to excess capacity it added, according to the Press Trust of India. Demand is expected to benefit from government-based infrastructure projects, rural development and affordable housing schemes.

Around 66% of ACC’s cement demand came from the housing sector, followed by infrastructure with 18% and 16% from the commercial sector. The country has a total cement production capacity of 465Mt/yr but it is only producing 305Mt/yr, giving it an utilisation rate of 66%. Cement plants in the south of the country are pulling the rate down compared to northern, central and eastern regions. Excess capacity is expected to continue until 2019, with the increased outlays on housing, infrastructure development and agricultural sector initiatives.

US: The Portland Cement Association (PCA) predicts growth of 2.8% in cement consumption in 2018 and 2019 in its Spring Forecast. Growth is then expected to climb to 4% in 2020 as impacts from potential federal infrastructure spending are likely to take effect. The analysis estimates cement consumption at 99.3Mt in 2018, 102.1Mt in 2019 and 106Mt in 2020.

Ed Sullivan, PCA senior vice president and chief economist, has attributed the forecast growth to a variety of positive economic factors including a strong economy, job market and anticipated increase in infrastructure spending. He said that in combination these factors, “suggest a modest acceleration in real GDP, construction markets and cement consumptions.”

However, the PCA projects that ‘robust’ infrastructure spending isn’t likely to occur until the fourth quarter of 2019, given the key steps that must occur, including passage of an infrastructure bill, federal and state paperwork, bid letting and review and finally contract awards leading to construction.

India: The credit agency ICRA forecasts that cement demand will grow by 4.5% in the 2018 – 2019 financial year due to growth in the housing sector and higher infrastructure spending. Improved rural incomes, higher rural credit and increased allocation for rural, agriculture and allied sectors are also likely to increase the demand for rural housing, according to the Press Trust of India.

Indian cement production rose by 2.7% to 217Mt in the nine months from April to December 2017 from 211Mt in the previous year. However, the first three months of this period, from April to June 2017, saw production drop due to local issues across the country such as a sand shortage, the implementation of Real Estate Regulatory Authority (RERA) Act and a drought. The following quarter then saw a fall in production due to the introduction of the Goods and Services Tax (GST), continued sand shortages and inclement weather. ICRA predicts that cement demand will grow by 3% for the remainder of the 2017 – 2018 financial year due to a boost in production in December 2017.

US: Ed Sullivan, the Portland Cement Association’s (PCA) Senior Vice President and Chief Economist says that economic momentum supported by tax reform and federal infrastructure programs will play key roles in the demand for construction in the next few years. Sullivan made his comments at the World of Concrete event in Las Vegas, where he revealed details from his forthcoming spring forecast.

“There is little doubt that the near-term outlook for construction and cement consumption in 2018 and 2019 remains favourable,” said Sullivan. “Strengthening economic conditions, with the addition of fiscal stimulus, and in the context of already low unemployment could awaken inflationary pressures. Down the road, this could lead to an even more stringent monetary policy, leading to an acceleration in interest rate increases and an eventual cooling of construction markets. If this scenario plays out, it will likely take time to gestate and not materialise to a significant degree until after 2019.”

Sullivan noted the strong economy comes in context of continued strain to find skilled workers, including those needed for construction projects. Weather conditions and other economic factors prompted PCA to revise its 2017 Fall Forecast down slightly, though it says that its ‘fundamental’ assessments pertaining to the economy, construction markets, and cement consumption remain on target.

The PCA Spring Forecast will be released in early March 2018.