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News GCW114

Displaying items by tag: GCW114

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Is the Indian summer over?

21 August 2013

'Below expectations' was the headline message from Holcim's half-year results this week. Canada, Mexico and Morocco were all singled out as problem areas for Holcim but surely India represents the biggest headache for the debt-reducing multinational.

How badly its bottom line was hit by India in particular, Holcim declined to say. Overall its entire Asia Pacific region saw sales volumes of cement fall by 3.7% to 37.8Mt to 36.4Mt for the first six months of 2013. In 2012, India represented over half of the group's Asia Pacific installed cement production capacity. This suggests that the actual drop in sales in India was probably at least 6%, more if the other countries in the territory did better than in 2012. Overall profits for the Asia Pacific region fell by 14% to US$650m. What we do know is that Holcim announced major restructuring to its businesses in India in late July 2013 to cut costs.

The other major cement producers in India have fared similarly badly. UltraTech's first quarter profit, for the period ending on 30 June 2013, fell by 13.5% to US$111m. Its revenue fell by 2% to US$820m. Jaiprakash Associates also reported a 2% dip in its cement sector revenue to US$247m in the quarter ending on 30 June 2013. Profits fell by 24% to US$27m. India Cements' sales revenue rose by 3% to US$196m. Yet its operating profit fell too, by 41% to US$19.8m.

Both Holcim and India Cements blamed falling cement prices in the south of India. India Cements directly mentioned overcapacity. The only explanation UltraTech offered for its poor performance was rising input and logistics costs.

Problems in India are not unexpected. Overcapacity has loomed over the Indian cement industry for some time as the race for growth far overtook the increase in demand. In the wider economy, India hit its lowest gross domestic product increase in a decade, 'just 5%', for the financial year ending on 31 March 2013. Meanwhile the Indian Rupee fell to a record low of 61 against the US Dollar in late June 2013. Not good news at all for any cement producers looking to offset energy or raw materials costs from abroad.

As predicted in our overview of the Indian cement industry back in February 2013, the smaller cement producers are now likely to get picked off by the larger firms as capacity utilisation falls and fuel costs rise. It is interesting to compare this free-market led cement industry consolidation to the state-directed one happening in China.

The Indian media are certainly wise to this with reports and speculation on endless takeover rumours. One example of this is the Irish building materials conglomerate Cement Roadstone Holdings's (CRH) decision to purchase Sree Jayajothi Cements that was announced in early August 2013. However with CRH itself having just reported that it made a loss in the first half of 2013 it may be regretting that it finally has a presence in the south of India.

Published in Analysis
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Najran Cement appoints board chairman and deputy chairman

21 August 2013

Saudi Arabia: The management board of Najran Cement has approved the appointment of Mohammed bin Mani bin Sultan Aba al-Ala as board chairman and managing director, with a three-year term. The company also named Daifullah al-Ghamidi as deputy board chairman.

Published in People
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Boral makes US$192m loss in 2012 - 2013

21 August 2013

Australia: Boral has made a loss of US$192m for its 2012 – 2013 financial year which ended on 30 June 2013. In the previous year it made a profit of US$160m. The building materials supplier attributed the loss to capacity reduction, organisational restructuring and wider problems with the Australian market.

"Like the rest of the industry, Boral's businesses have been contending with low levels of activity, unfavourable mix shifts in demand, increased competition and unrecovered costs associated with the carbon tax. However, in line with the turnaround strategy that I announced in late 2012, we have been relentless about reducing costs, generating cash and reducing capital expenditure, which positions Boral well as markets improve," said Boral's chief executive officer and managing director, Mike Kane.

Boral's sales revenue rose by 5% to US$4.71bn in the year to 30 June 2013 from US$4.26bn in the prior year. Its profit after tax but before significant items rose by 3.2% to US$94.3m from US$91.4m. Earnings before interest and tax (EBIT) before significant items rose by 14% to US$206m from US$180m.

By business sector, Boral's Construction materials and Cement division saw total sales revenue rise by 7% to US$2.87bn from US$2.67bn. Operating profit rose by 17% to US$243m from US$208m. Kane explained in the company's results that the improvement came from major project activity, prior year acquisitions and property sales. In the 2013 – 2014 financial year the division's performance is expected to remain strong, despite lower property sales and reduced major project work. However, overall the results in 2013 – 2014 are not expected to exceed those in 2012 – 2013.

Published in Global Cement News
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Adelaide Brighton profit down 9% to US$55m in first half of 2013

21 August 2013

Australia: Adelaide Brighton's net profit has fallen by 9% to US$55m in the first six months of 2013 from US$60.1m in the same period in 2012. Managing Director of Adelaide Brighton, Mark Chellew, blamed the fall on weak residential and commercial building activity.

"While headline earnings fell, modest growth in underlying net profit on healthy sales growth is encouraging," said Chellew. The Australian building materials manufacturer and lime producer's sale revenue rose by 4.5% to US$523m from US$501m. Earnings before interest and tax (EBIT) fell by 7.2% to US$81m from US$87.3m.

Adelaide Brighton expects that cement and clinker sales in 2013 will be similar to those in 2012, with demand from projects in South Australia, Western Australia and the Northern Territory offset by general problems with the residential and commercial building sectors. In its press release, Adelaide Brighton also mentioned that the Australian Carbon Tax cost the company US$1.81m after tax in the half-year and it is estimated to read US$4.52m for the entire year. However due to policy statements from the political parties ahead of the September 2013 Australian federal election and the company strategies to reduce its carbon output, it reckoned that carbon pricing is unlikely to have any major impact on long term growth.

Published in Global Cement News
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Nepal Bureau of Standards & Metrology closes two cement plants

21 August 2013

Nepal: The Nepal Bureau of Standards & Metrology (NBSM) has closed two cement plants, Butwal Cement Mills and Shubha Shree Jagadamba, for manufacturing and selling substandard products. It has also threatened to remove 16 other cement plants from the market for not acquiring the Nepal Standard (NS) mark.

"We initiated action against these factories after their products failed to meet the standard," said NBSM Director General Ram Aadhar Sah. The NBSM standard requires that cement should have a strength of 16MPa within three days of setting, 22MPa within seven days and 33MPa within 28 days. Products from Butwal Cement Mills and Shubha Shree Jagadamba were found to have strengths below these levels.

The 16 factories facing the threat of a ban include CG Cement, Rolpa Cement, Arniko Cement, Ghorahi Cement, MJP Cement, Maruti Cement, Kailash Cement, Star Cement, Krishna Cement, KP Cement, Shree Cement, Om Cement, Eastern Cosmos Cement, International Cement and others.

Published in Global Cement News
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Zambezi Portland Cement halves cement exports due to local demand

21 August 2013

Zambia: Zambezi Portland Cement has reduced its export sales by 50% to cope with increased domestic demand in Zambia. According to sales and marketing manager Isaac Ngoma, the company had been exporting more than 14,000t/month to neighbouring countries. Export sales will now be limited to 7000t/month.

"For us, the Zambian market is our first priority and only the excess product is sold abroad, so with demand reaching an all time high locally, we see little sense in continuing to service foreign markets while starving the local market," said Ngoma.

Zambezi Portland Cement has a cement production capacity of 1400t/day and it is currently producing at over 95% of its installed capacity.

Published in Global Cement News
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China to release plan on reducing cement industry overcapacity

21 August 2013

China: The Ministry of Industry and Information Technology (MIIT) and the National Development and Reform Commission (NDRC) had finalised details of an overall plan to reduce overcapacity in the cement industry according to Xin Renzhou, an official with the MIIT interviewed by an affiliate of the Xinhua News Agency.

Xin said that the plan would require higher standards for environmental controls including fuel efficiency measures. Cement plants failing to comply with the new requirements will be ordered to make changes or face losing market access. Jing Xiaobo, another official from the MIIT, added that the through the plan China also intends to reduce overcapacity mby expanding domestic demand, accelerating its decommissioning strategy and optimising organisational structures in cement producers.

In addition to joint efforts between the MITT and the NDRC, the China Banking Regulatory Commission and other related authorities will issue a series of supporting policies on curbing overcapacity, and adopting more commercial measures to strictly control the output capacity of major industries, such as the cement industry.

Published in Global Cement News
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Tanga Cement launches US$160m clinker line project

21 August 2013

Tanzania: Tanga Cement Company has launched a US$160m expansion project that includes building a new clinker production line. Tanga board chairman Lau Masha said that the project was scheduled for completion by the first quarter of 2015.

"Apart from increasing our clinker manufacturing capacity to match the current cement grinding capacity, this project will also reduce cement manufacturing costs, improve quality and increase cement availability," said Masha.

He said that the first phase of the plant expansion project, which involved installation of cement mill number two between 2009 and 2010, increased the plant's cement grinding capacity by 73% to 1.3Mt/yr. However clinker production capacity remained at 500,000t/yr with the short-fall being covered by imports.

Published in Global Cement News
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Eurocement to fight cement imports to Russia

21 August 2013

Russia: Eurocement Group intends that its Podgorensky cement plant will fight imports from Turkey and Iran. The Russian cement producer's plant in the Voronezh Region in the south of the country will help to replace 80% of imports from these countries, said Eurocement president Mikhail Skorokhod in a press conference reported upon by the Moscow Times.

"If you look at the southern ports, you'll see that the amount of incoming cement has fallen sharply," said Skorokhod. "That is because the Podgorensky plant came into being." He added that the customers agreed to switch to the more expensive Eurocement products after the company convinced them of their higher quality.

Imports accounted for almost 8% of the 65.2Mt of cement that the Russian market consumed in 2012, an increase from 5% in 2011. Skorokhod said Iran's state-owned companies were able to offer lower prices because they receive subsidies from a government that is under US-led trade restrictions. Eurocement may also turn to the World Trade Organization for an antidumping investigation.

Published in Global Cement News
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Oyak plans to sell 24% stake in Aslan Beton to Aslan Çimento

21 August 2013

Turkey: Turkish cement producer Aslan Çimento said its parent company Oyak has proposed to sell its 24.24% stake in Aslan Beton to Aslan for US$4.52m.

After the acquisition, Aslan Beton will become a wholly-owned unit of Aslan Çimento while Aslan Beton, As-san Insaat, Birtas Birlik Insaat and Marmara Madencilik will be merged under the control of Aslan Çimento, Aslan Çimento said in a bourse filing. The managing board of Aslan Çimento will now assess the proposed move.

Published in Global Cement News
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