
Displaying items by tag: HeidelbergCement
HeidelbergCement Ukraine appoints Thiede as Board Chairperson
12 January 2016Ukraine: Dnipropetrovsk-based HeidelbergCement Ukraine has appointed Silvio Thiede as the Board Chairperson, effective from 11 January 2016.
2015 in cement
16 December 2015Here are the major stories from the cement industry in 2015 as the year draws to a close. Remember this is just one view of the year's events. If you think we've missed anything important let us know via LinkedIn, Twitter or This email address is being protected from spambots. You need JavaScript enabled to view it..
Will the year of the mega-mergers pay off?
2015 showed a global cement industry that was consolidating. Amongst the multinational producers Lafarge and Holcim finished their merger and HeidelbergCement announced that it was buying Italcementi. Yet alongside this international trend the large Chinese cement producers, who represent over a quarter of the world's production capacity, have continued their own-government-favoured consolidation. The on-going boardroom scuffles at Shanshui have been a lively example of this.
Where this will leave the cement industry as a whole in 2016 is uncertain but mergers and consolidation are no 'magic bullet' for difficult market conditions. After the fanfare subsided from the launch of LafargeHolcim the first quarterly report emerged in late November 2015 reporting falling net sales, net volumes and profit markers.
BRICing it – growth stalls in Brazil, Russia, India and China
The economies of the BRIC nations – Brazil, Russia, India and China – have all suffered in 2015. Brazil and Russia are enduring recessions. Growth in China and India is slowing down. All of this has a knock on in their respective construction sectors.
Over in China, we report today that production capacity utilisation is estimated to be 65% and that cement companies lost US$2.63bn in the first nine months of 2015. The same source says that at least 500Mt/yr of production capacity needs to be eliminated. That represents nearly a third of Chinese total production capacity or about an eighth of global cement production capacity.
Multinationals African plans accelerate
One consequence of all these international mergers is the transformation of the situation in Africa. Suddenly LafargeHolcim has become the biggest cement producer on the continent, followed by HeidelbergCement, Dangote and PPC. Africa becomes the big hope for the multinationals as established markets continues to flounder and growth in Asian and South American markets slackens. Perversely though, should African development growth slow it may cast a poor light on the mega-mergers of 2015 in the coming years.
Dangote Cement is growing fast and it may overtake HeidlebergCement soon as the second largest cement producer in Africa. Yet it may not be plain sailing for the Nigerian company. As we report today, sources in Gambia say that Dangote's plans to open a cement plant are on hold in part to protect its domestic suppliers.
The Gambian government has denied a licence to Dangote to open a cement plant. Dangote has built its empire in recent years by forcing out cement importers from Nigeria. As it expands in other countries in Africa it may now be facing a backlash to playing the nationalist card at home as other countries too desire 'self-sufficiency' in cement production.
Iran shakes off the sanctions
In July 2015 Iran and the P5+1 countries agreed to lift trade sanctions from Iran. The implications for the local cement industry are immense given that the country was the joint-fourth largest producer in 2014, based on United States Geological Survey data. Remove the sanctions and, in theory, the local economy should boom leading to plenty of construction activity. Notably, at the launch of LafargeHolcim the new CEO Eric Olsen was asked for the new group's position on Iran. It didn't have one but this will change.
China expands along the Silk Road
China's cement industry may be suffering at home but it has been steadily expanding in Central Asia. Notably Huaxin Cement has plants in Kazakhstan and Tajikistan and it has new projects in the pipeline. Business may be down at home but steady advancement abroad may offer the Chinese cement industry the lifeline it needs.
Cop out at COP21?
And finally... The 2015 Paris Climate Conference announced a diplomatic coup d'etat in December 2015. However, it apparently forgot to include any binding targets. The Cement Sustainability Initiative (CSI) pre-empted the decision by announced its aim to reduce CO2 emissions by clinker producers by 20 - 25% by 2030... Provided the entire cement industry follows its lead. Cement plants burning vast swathes of dirty fossil fuels may not have to worry quite yet.
For more a more detailed look at trends in the cement industry check out the Global Cement Top 100 Report in the December 2015 issue of Global Cement Magazine.
Global Cement Weekly will return on 6 January 2016. Enjoy the holidays if you have them.
Lead up to the HeidelbergCement purchase of Italcementi
11 November 2015Both HeidelbergCement and Italcementi released their third quarter financial results for 2015 this week. The results are worth comparing given the impending acquisition of Italcementi by HeidelbergCement.
HeidelbergCement has reported a rise in revenue of 8% to Euro10.1bn for the first nine months of 2015. Its net profit rose by 27% to Euro762m from Euro599m. Its earnings before interest and income taxes (EBIT) rose by 17% to Euro1.4bn. By region, growth in revenue was reported everywhere except for the group's Eastern Europe-Central Asia region. Notably growth in the group's Asian region is slowing, growth is growing in Africa and markets are recovering in North America and the UK. It is also worth noting that the group's cement and clinker sales volumes fell by 1.1% to 60.6Mt in the first nine months of the year.
Italcementi has reported a rise in revenue of 3% to Euro3.2bn for the first nine months of 2015. It reported a loss of Euro8.1m, down from a loss of Euro63.8m in the previous period. Its EBIT fell slightly to Euro166m. By region the group reported that 'positive' trends in North America, India and Morocco, together with reducing operating expenses in Europe, would be insufficient to counteract revenue losses in France and Egypt. Overall cement and clinker sales fell by 1.4% to 32.1Mt.
Compared to its 2014 results, HeidelbergCement seems set to recover some of its revenue and profit growth after fluctuating income since 2008. Meanwhile, Italcementi has been continuing to cut costs, rebuild its business and profitability. So there are no obvious shocks to the apparent value of either company at this stage. It is also worth noting that the good geographical complementarity of each company's assets could make any potential renegotiation less likely. Everybody looks set to gain something should the purchase go through.
The deal in late July 2015 announced that HeidelbergCement would be purchasing 45% of Italcementi's shares at a price of Euro10.60 per Italcementi share for a total price of Euro1.67bn. The only clause mentioned so far has been 'subject to contractual purchase price reductions'. The deal is still expected to be completed in the first half of 2016 following approval from competition authorities. Approval from the Competition Commission of India was announced in September 2015.
The diverging values of Lafarge and Holcim before their merger in mid-2015 had consequences that led to haggling over the deal and the removal of Bruno Lafont as the proposed CEO of LafargeHolcim. The difference here is that HeidelbergCement is buying Italcementi as opposed to merging with it. However, the performances of both companies remain paramount. Now as then the question will be: is the cost worth it?
For more information read Global Cement's article on the HeidelbergCement purchase of Italcementi in our September 2015 issue.
HeidelbergCement appoints three new management board members
21 October 2015Germany: HeidelbergCement has appointed three new Managers to its board with effect from 1 February 2016.
A new executive position will be created for the African / Eastern Mediterranean region. Hakan Gurdal from Turkish Sabancı Holding, previously responsible for the Turkish company's jointly-operated business with HeidelbergCement, will step into this new role. Jon Morrish will head HeidelbergCement's North American business. The third newcomer is Kevin Gluskie, who will lead the HeidelbergCement's business operations in the Asia-Pacific region.
Daniel Fritz resigns from HeidelbergCement India
30 September 2015India: HeidelbergCement India has reported that Daniel R Fritz has tendered his resignation from the position of Director of the company with effect from close of business on 29 September 2015.
Mergers and acquisitions aplenty… but what about Cemex?
19 August 2015In early 2014 the top of the global cement producer charts looked very different to how it does today. The big four multinationals, Lafarge, Holcim, HeidelbergCement and Cemex, were clearly out in front and ahead of the rest of the global top 10. While there was discrepancy in their sizes, the largest, Lafarge (224Mt/yr) had just over twice the cement capacity of fourth-placed Cemex (95Mt/yr), with Holcim (218Mt/yr) and HeidelbergCement (122Mt/yr) between these extremes.1 With an impressive 659Mt/yr of capacity between them, these four accounted for just shy of half of global cement capacity outside of China.
However, as those with even a passing interest in the cement sector will know, this is no longer the case. The merger between Lafarge and Holcim and the subsequent acquisition of Italcementi by HeidelbergCement has stretched out the range of the top producers significantly. Today LafargeHolcim has around 340Mt/yr of installed capacity and HeidelbergCement 200Mt/yr. Meanwhile Cemex is still 'stuck in the 90s,' with a capacity of around 92Mt/yr following the sale of its Croatian cement assets last week. The Mexican 'giant' is now almost a quarter of the size of LafargeHolcim. What does this mean for the world's number three (excluding Chinese producers) and what might the future hold?
Well... the old adage goes that you have to move forward to stand still. However, Cemex has not moved forward over the past two years, meaning that is hasn't kept up the pace with its immediate rivals. It hasn't been able to, hemmed in by the debt that it took on from its poorly-timed acquisition of Rinker in 2007. Indeed, Cemex is looking to contract further, with aims to shed a further Euro600 - 1100m of non-core assets in 2015.2 Against improved positions at LafargeHolcim and HeidelbergCement, Cemex increasingly looks like an 'Americas specialist' rather than a full-blown multinational. A stake in Cemex LatAm Holdings is up for sale, but the sale of more cement plants may also be on the way. This is all being done to improve Cemex's investment grade rating from B-plus, four grades below investment grade.
If Cemex does have to shed further physical assets on the ground, it is very unlikely that it would chose to do so in the Americas, where it is a very major player. It is number one in Mexico, third in the US and well-postitioned in numerous growth markets in Central America. If push comes to shove, it is far more likely that it would sell assets that are further from home. These are in Europe, the Middle East and the Far East.
Cemex has 43% of its production capacity outside the Americas. Certain assets, such as those in Thailand, Bangladesh and the Philippines, may be appealing to CRH, which is already set to acquire LafargeHolcim divestments there and is known to be considering other purchases in the region.3 Cemex also owns several cement plants in better-performing EU economies like Germany and the UK. In Germany, the company has already completed a small downsizing exercise by selling its Kollenbach plant to Holcim (LafargeHolcim). Meanwhile, Cemex UK is a major player in the UK, where the Competition Commission has recently been very keen to increase the number of producers. Elsewhere, Cemex's share in Assuit Cement in Egypt could provide much needed revenue, as could its small stake in the Emirati markets.
Thinking more radically, and in keeping with the current trend of mega-mergers and large-scale acquisitions, could Cemex find itself the target of the next global cement mega-merger / acquisition? Certainly, its strength in Central and South America completely complements HeidelbergCement's lack of coverage here, making a future 'HeidelbergCemex' a potential winner.
The other option, if/when Cemex regains its investment rating, would be for Cemex to acquire or merge with a company further down the list of global cement produers. Africa is an obvious target, with rapid growth and a lack of Cemex assets at present. A foreigner buying up Dangote is probably out of the question, but PPC would be an interesting target, as would increasingly isolated Brazilian producers that could help shore up Cemex's South American position.
If the past 18 months in the global cement industry have shown anything, it is that we should expect the unexpected. It will be very interesting to see how all players, both large and small, will react to the recent goings on in the rest of 2015 and beyond.
1. 1. Saunders A.; 'Top 75 Cement Producers,' in Global Cement Magazine – December 2013. Epsom, UK, December 2013.
1. 2. Reuters website, 'Mexico's Cemex could sell part of business to pay down debt: CEO,' 10 February 2015. http://www.reuters.com/article/2015/02/11/us-mexico-cemex-idUSKBN0LF05320150211.
1. 3. Global Cement website, 'CRH investment spend set to pass Euro7bn with South Korea cement deal,' 12 June 2015, http://www.globalcement.com/news/item/3721-crh-investment-spend-set-to-pass-euro7bn-with-south-korea-cement-deal.
Consolidation in the African cement market
05 August 2015A member of the Global Cement LinkedIn group recently posed a question about the relative sizes of LafargeHolcim and Nigeria's Dangote Cement in the African cement market. The correspondent wanted to get a handle on their relative sizes and how the situation would change as a result of the merger. Would Dangote lose its position as Africa's number one producer? If so, would its aggressive expansion allow it to regain its position at the number one spot?
As both one of the most rapidly-growing markets in the world for cement and the one with the most potential for future gains, Africa has been discussed in this column on many previous occasions. However, we have previously considered Africa's different regional markets, be it Dangote-dominated West Africa, North Africa, rapidly-growing East Africa or the far south, where PPC is looking to counter Dangote's growing strength.
However, the formation of LafargeHolcim and the news that HeidelbergCement will acquire Italcementi (starting with an immediate 45% stake), has massively consolidated the African market. In conjunction with Dangote's rapid development, these deals have transformed the African cement sector from one with a large number of small national and regional markets into a far more homogeneous entity. A number of key players, namely LafargeHolcim, Dangote Cement, HeidelbergCement and PPC, are present in numerous important markets all over the continent.
In answer to the aforementioned LinkedIn group member, the Global Cement Lafarge-Holcim Merger Report, states that LafargeHolcim controls 47.1Mt/yr of capacity in Africa. The new group is present in markets as diverse as Egypt, Morocco, Nigeria, South Africa and Zimbabwe. It is currently Africa's largest cement producer.
The second-largest producer at the moment is Dangote Cement, the only African-based large multinational cement producer. According to its website, it has 31.2Mt/yr of capacity currently active in Africa. The group is rapidly expanding. "We hope to commission four other cement plants in Senegal, South Africa, Cameroon and Tanzania before the end of 2015," said Aiko Dangote, Dangote Group President this week.
The new Dangote capacity that we can identify adds 4Mt/yr. This takes Dangote's total to 35.2Mt/yr. This is close to the 37.1Mt/yr of African capacity that LafargeHolcim actually owns, but Dangote is always planning its next move. Indeed this week it was rumoured to have been looking at purchasing Italcementi itself, hence HeidelbergCement's rapid movement.
In its press-release, HeidelbergCement suggests that the purchase of Italcementi will give it a position as strong as Dangote in the African market at around 30Mt/yr. It will add strong positions in Morocco and Egypt to its existing strengths on the West African coast. For its part, South Africa-based PPC currently has around 8Mt/yr of capacity in South Africa (4Mt/yr), Botswana, Zimbabwe and Ethiopia. It is currently installing capacity in the Democratic Republic of Congo and as far afield as Algeria, where it is involved in a joint venture with a local group.
Between them, these 'Big Four' share approximately 116Mt/yr of capacity in Africa. According to the Global Cement Directory 2015, this is just over half of Africa's 225Mt/yr of cement production capacity. This proportion will only increase as Dangote and PPC enlarge their presences.
The multinational players will likely not expand as rapidly, even in Africa. At the launch of LafargeHolcim, Group CEO Eric Olsen was pretty clear that the company does not plan any 'capital-intensive' expansions in the coming years. HeidelbergCement's future actions are less predictable, especially as we are yet to hear about any divestments that may be required from HeidelbergCement and Italcementi in order to satisfy competition authorities around the world.
Whatever happens in the future, it is clear that the African cement industry has undergone a significant transformation in the past few weeks. With per-capita cement consumption far lower than on other continents, there will be plenty of room for growth as well as for more acquisitions, divestments, mergers and expansion projects from the 'Big Four' and others in the coming years.
CEMBUREAU welcomes new president and vice president
17 June 2015Belgium: Daniel Gauthier, CEO of Western Europe-Africa and member of the managing board of HeidelbergCement, has been elected as president of CEMBUREAU for a two-year term after having completed his mandate of vice president over the last two years. He takes over from Peter Hoddinott, executive vice president of performance and member of the executive committee at Lafarge. In addition, Gonçalo Salazar Leite, CEO of Secil, has been elected as vice president of CEMBUREAU for a two-year term.
"The industry must now build upon the accomplishments of 'The Concrete Initiative," said Gauthier. The initiative was launched one year ago. "Concrete is essential to Europe's future, providing the buildings and infrastructure that society needs, as well as growth and jobs. The circular economy, competitiveness and climate change will also remain at the forefront of CEMBUREAU's activities."
"With the election of Gauthier, CEMBUREAU and the priorities of the european cement sector are in excellent hands," said Hoddinott. "He will advance and reinforce the agendas of putting the cement industry forward as a solution provider, where concrete can fulfill both the aspirations of the end users of construction and act as a partner in fulfilling the needs of policymakers."
"I take this opportunity to thank Peter Hoddinott for his commitment to the Association over the last two years," said Koen Coppenholle, CEMBUREAU chief executive. "We are now at a turning point. After a protracted period of negative growth, Europe is getting back on its feet. Indeed, our 2014 activity report shows some glimmers of hope for our sector."
Compared to 2013, 2014 cement production in the CEMBUREAU member countries saw a very moderate recovery, rising by 0.3% year-on-year to 235.5Mt after the drops recorded in 2013 and 2012 (1.4% and 8.2% respectively) and having fallen by 27% since 2007. Developments in cement demand were in line with the upturn in the general economic and construction environment, particularly over the second half of the year, reflecting somewhat improved sentiment and activity, despite tight budgetary conditions in many member states. Global cement production has been estimated at 4.3Bnt in 2014, translating into a 6.7% increase compared to the 4Bt recorded in 2013. The CEMBUREAU member countries accounted for 5.5% of global production, with China representing 56.5%, compared to 58.3% in 2013. Without taking into account China, global cement production increased year-on-year by 11.3%.
HeidelbergCement adds new deputy chairman
18 March 2015Germany: The Supervisory Board of HeidelbergCement AG has amended the structure of its managing board with the addition of a new deputy chairman position. Dominik von Achten, managing board member in charge of the North America group, group purchasing and the competence centre materials, assumed the role on 1 February 2015. It was also announced that Bernd Scheifele would continue as chairman of the managing board for the next five years.
"HeidelbergCement is very glad that both Scheifele and von Achten, together with the management and employees of the company, will continue their successful work of the past years. This step will guarantee continuity in the years to come as well as a trusting and constructive cooperation between supervisory board and managing board," said Fritz-Jürgen Heckmann, chairman of the supervisory board.
HeidelbergCement has been reportedly showing interest in South Africa and Mozambique this week following the opening of new production capacity in West Africa. The Germany-based cement producer has beefed up its presence in the region with the inauguration of a 1.5Mt/yr clinker plant in in Togo and a 0.7Mt/yr grinding plant in neighbouring Burkina Faso. An additional 0.25Mt/yr grinding plant in the north of Togo is also planned for commissioning in late 2016. Other new projects in Africa include a new 0.8Mt/yr grinding plant in Tanzania that was commissioned in October 2014 and a new 0.8Mt/yr grinding mill at the Takoradi grinding plant in Ghana.
HeidelbergCement has repeatedly stated that it is considering production capacity expansions in other African countries. It currently operates in Ghana, Benin, Liberia, Tanzania, Sierra Leone, Togo, Burkina Faso and the Democratic Republic of Congo. Mostly it's a network of grinding plants with actual clinker producing plants in Tanzania, the Democratic Republic of Congo, Gabon and Togo. Its presence covers a band across central sub-Saharan Africa. Moving out of this zone into southern Africa would start to give HeidelbergCement a truly continental presence. However, from Dangote to PPC to Lafarge Africa other players are hard at work building their own cement empires.
The wild card here is how involved Chinese firms are in this process. Chinese companies like Jidong Development are building their own cement plants like the Mamba Cement plant in South Africa or Gweru in Zimbabwe, where upgrades are currently taking place. More commonly though Chinese companies like Sinoma are building new African cement plants such as a new PPC cement plant in the Democratic Republic of Congo or a new United Cement Company of Nigeria Limited (Unicem) cement line in Nigeria or several Dangote projects.
As part of the commissioning process for HeidelbergCement's new clinker plant in Togo, the Chengdu Design and Research Institute of Building Materials Industry (CDI, part of Sinoma) has emphasised that it will transfer the maintenance responsibility to local Togolese workers. The fact that the CDI's chairman made a point of saying this underlines tensions about both existing and changing international business influences in the region. Contrast this with the more sympathetic way in which Dangote's expansions in Africa that are portrayed by local media. Or look at this week's announcement by Egypt's ASEC Engineering and Management to help run a cement plant in Ethiopia. There is no need for calming statements from ASEC.
Finally, after all the discussion of the effect of oil prices on alternative fuels usage by cement producers it is worth noting what HeidelbergCement stated in its February 2015 trading statement. Principally, a drop in the price of oil is expected to present a positive impact on costs and market demand for the group. HeidelbergCement generates 86% of group earnings before interest, taxes, depreciation and amortisation (EBITDA) in net oil importing countries. In these places lower oil prices means potentially faster GDP growth and greater infrastructure spending. It is also worth considering the impact lower oil prices might have on the group's total oil and diesel bull of Euro250m/yr.
HeidelbergCement's full annual results for 2014 are due to be published on 19 March 2015. Maybe they will be more forthcoming about its intentions in Africa then.