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Votorantim shone a glimmer of hope for the Brazilian cement industry with the release of its first quarter financial results this week. Increased sales volumes in Brazil, Turkey, India and Latin America led to an 11% rise in revenue to US$682m in the period. Admittedly back home in Brazil, most of this came from concrete and mortar sales, but after the slump Brazil’s had they’ll take whatever they can get. This compares to a 14% drop in sales revenue in the same period in 2017 due to falling cement consumption.
Graph 1: Accumulated 12 months local cement sales in Brazil. Source: SNIC.
SNIC, Brazil's national cement industry association, preliminary figures for April 2018 show a similar trend. Cement sales for April 2018 rose by 8.9% year-on-year to 4.35Mt from 4Mt. Sales for the first four months of the year dipped slightly by 0.2% to 16.9Mt although this is an improvement on the first quarter figures showing the benefit a strong April has had. Improvements are driven by growth in the central and southern parts of the country. SNIC’s graph of accumulated sales (Graph 1) definitely shows a slowing trend of decreasing cement sales with April 2018 being the only the second month in over two years where sales have risen.
Paulo Camillo Penna, the president of SNIC, even went as far as to speculate that the three months from April to June 2018 might see the first sustained period of improvement since 2015 and that sales could even grow by 1% for the year as a whole. This is a far cry from Penna’s description of his industry at the start of 2017 as, “One of the worst moments in its history.”
Votorantim reported that some regions of Brazil were starting to show a positive trend in the second half of 2017. Unfortunately it wasn’t enough to stop the cement producer’s overall sales falling for the year. LafargeHolcim didn’t release specific figures for its Brazilian operations in 2017 but it did say that its cost savings programme had, ‘provided for material improvement versus prior year both in recurring earnings before interest, taxation, depreciation and amortisation (EBITDA) and cash flow.’ It reckoned that despite the market contracting, it had managed to increase its market share. Meanwhile, on the supplier side RHI Magnesita said in a first quarter trading update that its cement and lime business was flat due to continuing low capacity utilisation rates in China and Brazil.
If this truly is the end of the Brazilian cement market slump then it seems surprising that there haven’t been more mergers or acquisitions. Mineração Belocal, a subsidiary of Belgium’s Lhoist, said this week that it had purchased L-Imerys, a lime producer that operates a plant at Doresópolis in Minas Gerais. Local refractory producer Magnesita merged with RHI in mid-2017.
The big deal that hasn’t happened is the sale of InterCement, the country’s second largest cement producer. Owner Camargo Corrêa was reportedly selling minority stakes in the company in 2015. Then in early 2017 local press said that it was aiming for a price of US$6.5bn for the whole company with Mexico’s Cemex as a potential bidder. Since then nothing has happened publicly although the initial public offering of InterCement’s Argentine subsidiary Loma Negra in November 2017 for US$954m may have bought Camargo Corrêa the time it needed to wait for the market to improve. Rumours of a public listing of InterCement’s European and African operations have followed.
In its World Economic Outlook in April 2018 the IMF forecast a 2.8% rise in gross domestic product (GDP) in Brazil in 2018. If SNIC’s forecast for 2018 is correct then Camargo Corrêa may have survived the worst of the slump to live to trade another day. The price for InterCement at this point can only rise, as should the prospects of the Brazilian industry.
US: LafargeHolcim has appointed of Jamie M Gentoso as the chief executive officer (CEO) of its US cement operations. She succeeds John Stull, who was recently appointed as the CEO of Holcim Philippines.
Gentoso joins LafargeHolcim from Construction Specialties, an architectural building products manufacturer, where she held the position of vice president of Sales and Marketing and, prior to this, she was senior vice president of Concrete at Sika US. She began her career at Holcim as a technical service engineer and Architectural and Engineering market manager, with a focus on specialty cements, Ordinary Portland Cement, slag cement and fly ash.
Gentoso received her Masters of Business Administration from the University of Michigan and holds a Bachelor of Science in Civil Engineering, also from the University of Michigan. She has sat on the board of directors for several industry organisations and intends to continue to her involvement.
Shree Digvijay Cement appoints Vikas Kumar
16 May 2018India: Shree Digvijay Cement has appointed Vikas Kumar as its chief financial officer with effect from 1 May 2018. He succeeds MV Ramaswamy who has resigned from the company.
Pakistan: Gharibwal Cement has started commercial operation of a 250t/hr vertical cement mill for grinding cement. It says it is the single largest cement grinding mill in the country. The cement producer operates a 2.1Mt/yr integrated plant at Ismailwal in Chakwal.
Tokyo Cement launches resource-planning software
16 May 2018Sri Lanka: Tokyo Cement has launched resource-planning software across its business. The software was developed by Abas and implemented by Providence Global, according to the Daily News newspaper. The software is being deployed across all of Tokyo Cement’s operations, including its cement plant at Trincomalee, its ready-mix concrete plants, and its bulk cement import terminal and biomass power generation units. The new software is intended to fully integrate supply chain management and warehouse operations.
Saudi Arabia: GE has struck a deal with Saudi Cement to upgrade three GE 6B gas turbines at Saudi Cement’s Hofuf plant with its Advanced Gas Path (AGP) product. The AGP upgrade is intended to increase the combined output of the three turbines by 16.9%. The upgrade should help Saudi Cement increase power output and efficiency while reducing the need to draw power from the local power grid. No value for the deal has been disclosed.
Barbados: Trinidad Cement and its Barbadian subsidiary Arawak Cement have taken legal action against the Government of Barbados over allegedly breaking the Caribbean Community Single Market and Economy. The complaint relates to accusations that the country broke import duties on cement, according to Barbados Today. The government has been accused of reducing import tariffs to 5% from 60%.
Arawak Cement and competitor Rock Hard Cement have battled for the local market since the entry of the latter company in the market in 2015. Trinidad Cement has also taken action against Turkish cement importers previously.
Ivory Coast: Morocco’s Ciments de l'Afrique (CIMAF) has started work on a 0.3Mt/yr cement plant at Bouake. The company has acquired land for the project and is currently preparing the necessary permits to begin construction, according to the African Press Agency.
CIMAF built its first 0.5Mt grinding plant in Abidjan in 2013. The production capacity at this unit was then increased to 1Mt/yr in 2016. In late 2017 the cement producer started building a second 1Mt/yr plant at San Pedro. The latest project at Bouake will be its third plant in the country.
Ghana/Portugal: Cimpor and ETE Group have collaborated to export 55,900t of clinker from Portugal to Ghana. The clinker was transferred via barges from the river terminal of Cimpor’s Alhandra cement plant before being loaded into a bulk carrier at the Port of Lisbon, according to CE NoticiasFinancieras.
Bangladesh: Two workers have been killed at the cement grinding plant at Paschim Muktarpur in Munshiganj operated by Crown Cement. The workers died after being struck by falling material when entering a room at the site to clean it, according to the New Nation newspaper. Another worker was critically injured in the incident.