Displaying items by tag: GCW71

News from Mexico and the US over the past week confirms the contrasting fortunes of the cement industry in the 'Old World' and the 'New World,' of Europe and North America. First, Cemex reported a significantly reduced loss of US$203m in its third quarter, compared with a loss of US$730m in 2011. However, the firm's European units again faired worse than other regions. 

The European problem is not limited to Cemex, but while much of the continent has seen a poor 2012 so far, North America appears to be in the midst of a construction renaissance. HeidelbergCement estimates US cement sales growth of 8-11% in 2012. In Mexico, a strong and growing industry, it has also been announced that the Mexican billionaire Carlos Slim had partly financed a new US$300m plant in Mexico, due to go into production early in 2013.

In light of this apparent upward trend in North America, it is surprising that France's Lafarge has agreed to sell two more of its US cement plants, this time to Eagle Materials. If the Eagle deal is approved, it will represent (along with the May 2011 sale of Lafarge's Roberta and Harleyville plants to Cementos Argos) a continued and substantial reduction in Lafarge's presence in the US. In under 18 months, Lafarge will have offloaded four plants, taking its total from 12 to eight.

Lafarge's decision to sell to Eagle seems like an attempt to meet its own debt-reduction schedule. Yet to do this it may be losing important territory in North America. This can't have been an easy decision.

Mexico: Mexican billionaire Carlos Slim and businessman Antonio del Valle have joined forces in a new cement venture in Mexico that plans to start operations in early 2013 with a capacity of 1Mt/yr.

Cementos Fortaleza, part of business group Elementia, is nearing completion of a plant in central Mexico at an investment of US$300m. In its initial phase the plant is expected to supply cement to retail users in central Mexico. The plant's first deliveries are expected in February 2013. Cementos Fortaleza will have an estimated 3% market share to begin with. It will compete with companies such as market leader Cemex and Holcim Apasco, a unit of Switzerland's Holcim.

Elementia Chief Executive Eduardo Musalem said at a press conference that Slim, through his company Grupo Carso SAB owns 46% of the Elementia and Del Valle 54%. Del Valle is one of the principal shareholders and honourary chairman for life of chemicals company Mexichem SAB.

Mexico: Cemex has reduced its year-on-year net loss in the third quarter of 2012 due to steady sales and an increase in operating cash flow. However, the Mexican cement conglomerate has confirmed that over 1000 jobs will leave the company by December 2013.

The Mexican conglomerate reported a net loss for the quarter of US$203m, compared with a loss of US$730m in the third quarter of 2011. It noted a 13% increase in earnings before interest, taxes, depreciation and amortisation (EBITDA) to US$730m from US$671m in the same quarter in 2011. Sales fell by 2% in dollar terms to US$3.9bn as a result of weaker currencies but rose by 2% from 2011 when adjusted for currency fluctuations. Consolidated cement sales volumes fell by 2% to 17.1Mt. Operating profit rose by 35% to US$410m.

"An improvement in pricing and volume in several of our regions as well as the continued success of our transformation effort has led to the highest operating EBITDA margin in three years," said Fernando Gonzalez, executive vice president of finance and administration.

Cemex generated EBITDA of US$27m in the US, a second consecutive quarter of positive cash flow in that market as sales rose by 12% from 2011 to US$826m. In Mexico, sales were 2% higher at US$875m, and EBITDA rose by 9% to US$313m. Sales rose in Central and South America and in Asia, although they were lower in both northern and southern Europe.

Gonzalez also said that IBM will be hiring around 450 Cemex workers, or 1% of its global staff, in a previously announced outsourcing deal. Another 675 people, or 1.5% of its workforce, will be made redundant. The staff downsizing is expected to be completed by December of 2013.

South Africa: Pretoria Portland Cement (PPC), the biggest producer of cement products in South Africa, has appointed Ketso Gordhan as CEO from 1 January 2013. Gordhan will succeed current CEO Paul Stuiver, who will have completed his contract.

Gordhan will join the group's board as CEO-designate from 1 November 2012. His most recent role has been in the South African Presidency, where from 2009 he developed performance metrics and targets for government ministries. Before working for the Presidency, Gordhan was head of private equity at FirstRand Financial Services Group for almost a decade. He was also city manager of Johannesburg between 1999 and 2000.

Previously Gordhan was the campaigns manager for the African National Congress and policy co-ordinator between 1990 and 1994. He was also director-general of the Department of Transport between 1994 and 1999 and was involved in privatising Airports Company SA and setting up the first privately funded toll road to Maputo. The South African National Roads Agency was also created during this period.

"Ketso brings a wealth and blend of experience in business and in government, as well as knowledge of various industries," said PPC group chairman Bheki Sibiya.

Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has re-elected Aizaz Mansoor Sheikh unanimously as its at its Annual General Meeting held at APCMA Secretariat, Lahore. Names of the other elected office-bearers for the year 2012-13 were also announced at the meeting.

A statement issued by APCMA said that Sayeed Tariq Saigol of Maple Leaf Cement Factory and Muhammad Ali Tabba of Lucky Cement were also unanimously re-elected as Vice Chairmen of the Association.

Aizaz Mansoor Sheikh of Kohat Cement Company has served as Chairman of the APCMA for eight years since 1992. The current term 2012-13 is his second consecutive term as Chairman APCMA.

M Raza Mansha of DG Khan Cement, Amer Faruque of Cherat Cement, Rehmat Khan of Lafarge Cement Pakista, M Sabir of Fauji Cemen, Asmat Ullah Khan Niazi of Askari Cement, Syed Asif Shah of Bestway Cement, Babar Bashir Nawaz of Attock Cement Pakistan, Mazhar Iqbal of Pioneer Cement, M Tousif Paracha of Gharibwal Cement were elected as Members of the Executive Committee.

Prominent industry issues discussed at the meeting included were the non-availability of railways wagons for export to India, high diesel rates and its consequential effects on the high input costs that the industry is confronted with.

US: Holcim (US) has announced that its Devil's Slide facility in Morgan, Utah, has completed eight years without a lost time injury (LTI). "We congratulate the employees of our Devil's Slide facility for their accomplishment and untiring attention to safety," said Bernard Terver, president and chief executive officer of Holcim (US) Inc. "Our employees have shown great commitment to implementing our universal safety measures. We're proud of what they have accomplished and look forward to continued excellence."

Mozambique: The Mozambican government's National Economic Activities Inspectorate (INAE) is investigating cement wholesalers and retailers in the northern province of Nampula, after recent dramatic increases in the price of cement. The move is attempting to halt the hoarding of cement and its subsequent resale at speculative prices on the informal market.

The investigation is examining why a 50kg sack of cement produced at a plant in Nacala is being resold at a 66% mark-up in the provincial capital of Nampula city. A government decree from November 2011 fixed the maximum profit margin at 12% for wholesalers and 25% for retailers.

However, wholesalers and retailers in Nampula have claimed that the prices cited by the INAE are unrealistic because of the high transport costs involved in moving cement from Nacala to Nampula. According to the wholesalers and retailers, waiting times in Nacala also contribute to the cost. Trucks sometimes wait outside the cement factory for seven days before they are loaded, suggesting that the plant in Nacala is unable to cope with the demand.

Nacala has two cement plants but only one supplies the market. The other sells its cement directly to the contractors building major public works in the Nampula province.

Pakistan: The Pakistan cement industry despatched 7.71Mt in the first three months of the Pakistan fiscal year that started on 1 July 2012, according to a statement from the All Pakistan Cement Manufacturers Association (APCMA). This compares to 7.50Mt in the same period in the 2011-2012 year.

Local demand increased during the quarter by 5.3% but a decline in exports by 2.68% reduced the overall gain in despatches to 2.81%. In September 2012 plants in north of the country despatched 1.50Mt of cement for the domestic market and exported 0.63Mt. Mills in the south despatched 0.29Mt of cement for the domestic market and exported 0.18Mt.

The statement went on to explain that the total production capacity of the Pakistan cement industry had increased to 44.8Mt but that low capacity utilisation is acutely more 'painful' for those units that have increased their capacity in recent years. Servicing debt has now become a major component of cost, even after three interest rates cuts since April 2012, as the effective bank mark-up for the industry remains above 12%. APCMA appealed to planners to provide some industry-specific interest rebate to the cement industry to keep it afloat.

With the Pakistan cement industry operating at 68.86% of its installed capacity, industry circles are worried by the stagnant domestic demand and continuously declining exports that is hurting the viability of the industry.

"Exports to India have been on constant decline ever since the two countries opened their borders for liberal bilateral trade. The decline is not due to lack of cement demand in India but because of very stringent non-tariff barriers erected by our neighbour," the statement said.

India: Heidelberg Cement India has reported an increase in its net profit for the third quarter of 2012, which ended on 30 September 2012, of US$1.42m, compared to a net loss of US$1.55m for the same period in 2011. Total income for the quarter increased by 23.1% to US$48.6m from US$39.5m.

HeidelbergCement India is a subsidiary of Cementrum IBV, a company incorporated under the laws of The Netherlands that is 100% controlled by HeidelbergCement AG.

Kazakhstan: Kazakhstan cement producer Steppe Cement has reported a 28% year-on-year increase in its third quarter revenue for 2012 to US$48m. The company sold 518,000t of cement in the quarter, a year-on-year increase of 16%.

For the nine-month period that ended on 30 September 2012, Steppe Cement recorded a year-on-year rise in revenue of 25% to US$99.4m compared with US$79.3m. Sales volume increased by 8% to 1.13Mt from 1.05Mt. During this period the cement market in Kazakhstan increased by 13% year-on-year. In light of this Steppe Cement has revised its estimate for national consumption of cement in 2012 from 6.8Mt to 7.0Mt.