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UltraTech plans to take over Century Cement
08 May 2015India: Aditya Birla Group´s UltraTech Cement plans to merge the cement division of BK Birla-owned Century Textiles and Industries, Century Cement, in a share-swap proposal with a deal value of US$1.64bn. The transaction, if approved by the boards of both companies, would help UltraTech add 13Mt/yr to its existing capacity of 65Mt/yr, taking it to the total of 78Mt/yr.
India: The Meghalaya High Court has approved the de-merger plans between Star Ferro and Cement Ltd (SFCL), Shyam Century Ferrous Ltd and their respective shareholders. The company's board had approved a de-merger scheme in 2014 under which a new company, Shyam Century Ferrous Ltd, was formed to separate the company's ferro alloy division as part of an overall business reorganisation plan.
India: Birla Corporation has reported a 9% growth in its standalone net profit at US$4.45m for the quarter that ended on 31 March 2015. Its total standalone income rose marginally to US$125m in the quarter of the last fiscal from US$124m in the prior year period. During the fourth quarter of its 2015 financial year, cement production declined by 2.7% year-on-year to 1.87Mt. Cement dispatches also fell by 1.31% to 1.88Mt during the period.
During the 2014 - 2015 financial year, cement production was up by 3.77% year-on-year to 7.62Mt, while cement dispatches rose by 4.42% to 7.67Mt. Birla Corp's consolidated net profit during the year rose by 35% year-on-year to US$27.4m from US$20.3m in the same period of the previous year. Revenue grew by 6% year-on-year to US$502m.
"Barring the first quarter of the current financial year, cement demand and prices remained sluggish. East, North and Central markets, in particular, were the worst hit," said Birla Corp. Weak monsoon and widespread unseasonal rain during the last quarter of the year in the North and Central parts of the country reduced cement demand.
The performance of the company was 'severely impacted' due to coal shortages. According to Birla Corp, it had to procure coal from the open market, including imports, at a substantially higher cost. "The grid power rates have gone up. Also, the cost of power generation by the company increased due to the purchase of coal from the open market. Though road freight cost came down during the year on account of lower diesel prices the saving was negated by higher railway freight," it added. High limestone costs also added to the production cost.
"With the prediction of weak monsoon in the current financial year, the demand from the rural market may be impacted adversely," said Birla Corp. However, initiatives such as developing infrastructure, smart cities, 'Make in India,' concrete roads and an increase in the allocation of funds to states is likely to help improve the demand. "While signals are positive, ground-level actions will help 'rev up' the economy. It is expected that the demand - supply mismatch will reverse for the better, with a slower pace of capacity addition. Proposed implementation of Goods and Services Tax (GST) is expected to simplify the tax structure, benefiting the cement industry."
Greece: Titan Group has reported that in the first quarter of 2015 its consolidated turnover grew by 12.7% year-on-year to Euro284m. Its earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 23.7% year-on-year to Euro23.2m. Its net profit after minority interests and the provision for taxes grew to Euro6.6m compared to a Euro11m loss in the prior year period.
The continuing recovery in the US and the improvement in the Greek market due to the continuation of public works and the higher profit margins on exports had positive effects on operating results. However, profitability declined significantly in Southeastern Europe and Turkey due to the heavy winter, as well as in Egypt, where prolonged gas shortages necessitated the production of cement through imported clinker in order to meet domestic demand. The group is currently undertaking significant investments in Egypt which will enable the utilization of solid and alternative fuels and allow for the gradual recovery of the plants' operating capability.
Group net debt at the end of the first quarter stood at Euro660m, increased by Euro119m compared to 2014 year-end. Group debt levels reflect the increased investments undertaken primarily in the US and in Egypt, increased working capital requirements in growth markets, the seasonality in demand, as well as the negative effect on US Dollar and Egyptian Pound-denominated debt owing to foreign exchange movements.
Total turnover for Greece and Western Europe in the first quarter of the year declined by 2% to Euro65.3m. EBITDA grew to Euro9.4m compared to Euro3.9m in the same period in 2014.
In the US, despite the severe weather witnessed in the first two months of the year, the construction industry continued to recover, resulting in a tangible improvement in Titan America's results. The strengthening of the US Dollar also contributed to results. Total turnover in the US for the first quarter of 2015 grew by 37.5% to Euro130m while EBITDA reached Euro5.8m compared to Euro0.9m in 2014.
In Southeastern Europe, the harsh winter considerably affected building activity, resulting in a significant decline of results compared to the favourable winter experienced in 2014. Turnover declined by 31.2% to Euro28.2m while EBITDA reached Euro4.2m compared to Euro9.7m in 2014.
In Egypt, demand remained stable. The utilisation rate of production facilities improved compared to the second half of 2014 low levels due to the completion of the investment in solid fuels grinding at one of Titan's production lines at Beni Suef. However, the continuing disruptions in natural gas supply at other production lines led to the need for lower margin imports in order to meet demand. Overall, turnover in Egypt increased by 21.9% to Euro60.2m. Compared to the first quarter of 2014, when sales were met by domestic production, EBITDA declined from Euro15.9m to Euro3.9m.
In Turkey, due to the heavy winter, demand for building materials declined. Adoçim Çimento (in which Titan Group holds a 50% stake) posted lower volume sales and results versus the first quarter of 2014.
The market trends recorded in the beginning of the year are consistent with the group's positive outlook for 2015, despite significant uncertainties and challenges. This reserved optimism can be attributed to the expectation of improved operating results from the group's two most important markets: the US and Egypt. The recovery of the US market continues unabated within the context of a broader US economic recovery. In order to meet higher demand and improve competitiveness, the group is increasing capital spending. In Egypt, demand for building materials is expected to remain at high levels, supported by both private and public construction. The group expects to recover production and sales volumes in 2015, following the investments undertaken in order to ensure the gradual self-sufficiency of the plants, in terms of their fuel needs.
In Greece, private construction continues to decline with no recovery expected in 2015 due to the dire economic conditions prevailing in the country. Cement consumption in 2015 is expected to remain at the same levels as in 2014, mainly supported by roadwork activity. Construction activity in Southeastern Europe appears stable, although cement demand is considerably below the group's capacity. No significant improvement is expected in the short-term since the region continues to be affected by the weakness of Eurozone neighbour countries.
Germany: HeidelbergCement has posted a 29% rise in core earnings in the first quarter of 2015 as it has benefited from a construction industry recovery in North America and the UK as well as low energy prices and the weak Euro. Operating income before depreciation (OIBD) was Euro299m and sales rose by 4% on a like-for-like basis to Euro2.84bn.
"Business development in the first quarter has strengthened our conviction in our outlook for 2015," said chief executive Bernd Scheifele. HeidelbergCement has reiterated its aim for significant improvements in 2015 sales, operating income and adjusted net profit thanks to strong demand in its core markets, the weaker oil price and Euro and efficiency measures.
HeidelbergCement also anticipates a significant decrease in financing costs due to the decline of net debt to Euro6.1bn from Euro7.8bn, following the sale of its building products business.
Pakistan/Afghanistan: Pakistan's cement exports to Afghanistan fell by 24% during the first nine months of the 2015 fiscal year due to the exit of North Atlantic Treaty Organisation (NATO) forces and smuggling. Industry sources said that the withdrawal of NATO forces from Afghanistan is also affecting Pakistan's economy.
"Since the announcement of the exit of NATO forces, Pakistani cement exports to Afghanistan have been in decline as development work in Afghanistan has come to standstill after the exit of foreign forces, resulted in lower cement demand," according to the industry sources.
The set-up of a new cement plant in Tajikistan has also affected Pakistan's cement exports to Afghanistan. Previously, Pakistani cement was being exported to central Asian countries via Afghanistan, but the new plant in Tajikistan targets the same markets. The industry sources said that the smuggling of Iranian cement is another major factor behind the recent decline in exports to Afghanistan.
According to official statistics of All Pakistan Cement Manufacturers Association (APCMA), the cement export to Afghanistan notably fell by 24% during the first nine months of the current fiscal year. Pakistan exported 2.3Mt of cement to Afghanistan during July 2014 - April 2015 compared to 3.05Mt in corresponding period of the previous fiscal year.
"We are expecting a further fall in cement exports to Afghanistan in the coming years as NATO forces were the major consumer of Pakistani cement. As per industry estimates, by the end of this fiscal year, cement exports to Afghanistan will be some 2.7Mt," said the industry sources.
CRH forecasts earnings growth of 10%
07 May 2015Ireland: CRH has forecast earnings growth of close to 10% for the first half of the year as it reported 'modest growth' in Ireland.
CRH said that group sales for the first four months of 2015 rose by 2.5% compared with the same period of 2014. The strong performance was largely driven by positive momentum in the Americas, where the economic and business environment remained upbeat. Sales in the US rose by 8% as CRH benefited from improving construction activity. In Europe, trends are improving across CRH's main markets, but sales fell by 2%. In Ukraine, CRH said that the markets were resilient despite the political instability, but that cement volumes were below the prior year. CRH reported a 'continued recovery in market conditions' in Ireland and said that it was 'well-positioned to benefit from modest growth.'
Looking to the first six months of 2015, CRH said that it expected earnings to be 'close to 10% ahead of last year on a constant currency basis' and predicted further progress in the second half of the year with earnings again ahead of 2014. These forecasts do not take into consideration the impact of CRH's proposed acquisition of certain assets from Lafarge and Holcim for Euro6.5bn.
CRH disposed of assets worth Euro540m in the first four months of 2015, bringing total proceeds from its divestment programme to Euro900m since its inception in August 2014. CRH said that its cost-reduction programme remained on track to deliver a further Euro75m of savings in 2015, which would bring cumulative (2007 - 2015) savings to Euro2.6bn.
Nigeria: In November 2013, FLSmidth signed a number of contracts with Dangote Cement for operation and maintenance of production lines at its Ibese and Obajana cement plants in Nigeria for five years. Due to changes to market conditions, Dangote and FLSmidth have reached an agreement to end the operation and maintenance collaboration at the two plants.
The discontinuation of the operation and maintenance contracts will have no impact on FLSmidth's Group guidance for 2015. However, the demobilisation in Nigeria will have a negative impact on earnings before interest, taxes and amortisation (EBITA) in the customer services division in the first quarter in 2015 of US$11.1m. Additionally, the order backlog was reduced by US$102m at the end of the first quarter of 2015 as a consequence of the agreement.
India: Dalmia Cement has commissioned its 7000t/day greenfield cement plant, 5000t/day clinker plant and a coal-based power plant at Yadwad, Belagavi, Karnataka. Out of the total 40MW of power production capacity, 27MW has been commissioned and the remaining capacity will be commissioned in the future.