Displaying items by tag: Holcim
Europe: Holcim's cement and clinker sales fell by 10.5% in Croatia and by 5.4% in Serbia in 2014. In Croatia, sales prices rose by 0.5%, while in Serbia, they rose by 0.3%. In contrast, Holcim's cement and clinker sales rose by 7.8% in Romania and by 2.4% in Bulgaria. In Romania domestic prices fell by 1.2%, while they rose by 1.1% in Bulgaria.
Holcim reports better-than-expected 2014 results
23 February 2015Switzerland: Holcim has announced better-than-expected results for 2014, including higher cement sales volumes and higher net sales. It has also announced that its non-controlling interest of 27.5% in its joint venture Siam City Cement Public Company Limited is available for sale.
Cement sales volumes in 2014 exceeded those in 2013 due to a stronger economy in North America and growth momentum in some emerging markets such as India, the Philippines, Indonesia and Mexico, offsetting a challenging situation in Latin America. Consolidated cement sales were up by 1% year-on-year to 140Mt. In the fourth quarter of 2014, cement volumes decreased slightly by 0.6% to 34.4Mt.
Holcim's net sales grew by 3% on a like-for-like basis. Growth mostly resulted from price improvements in many regions, particularly in North America, against the backdrop of a favorable market environment and in Latin America in response to cost inflation. An unfavorable currency effect of 5.2% and negative changes in consolidation structure impacted the consolidated net sales performance in 2014, which was down by 3.1% to Euro17.8bn.
Like-for-like operating earnings before interest, taxes, depreciation and amortisation (EBITDA) adjusted for merger and restructuring costs of Euro128m increased by Euro200m or 5.5% in 2014. Consolidated operating EBITDA however was down by 3.8% to Euro3.49bn mainly as a result of negative currency effects and merger and restructuring related costs.
In 2014, operating profit adjusted for merger and restructuring costs of Euro139m went up by Euro232m or 10.6% year-on-year. Consolidated operating profit, however, was down by 1.7% at Euro2.16bn. Net income increased by 1.5% to Euro1.51bn. In 2014, net financial debt was Euro8.97bn, Euro170m up from Euro8.79bn mainly due to an unfavorable currency impact of Euro233m.
During the fourth quarter of 2014, Holcim's consolidated net sales increased year-on-year by 1.9% to Euro4.53bn. Operating EBITDA reached Euro935m, up by 6.5% year-on-year. Adjusted for merger and restructuring costs booked in the quarter of Euro52m, like-for-like operating EBITDA growth reached Euro103m or 11.8%. Operating profit increased by 6.9% to CHF 598 million. Excluding merger and restructuring costs of Euro53.9m, operating profit growth reached Euro101m or 19.2%. Net income was up markedly by 43.5% to Euro426m.
Holcim expects that the global economy will continue its gradual recovery in 2015. Key construction markets of Holcim in countries like the USA, India, Indonesia, Mexico, Colombia, the UK and the Philippines are expected to be the main growth drivers. Europe overall is expected to have 'flat' development. Latin America will continue to face uncertainties in countries such as Argentina and Brazil, but should show slight growth in 2015. The Asia Pacific region is expected to grow, although at a modest pace. Africa and the Middle East is expected gradually to improve. Cement volumes should increase in all group regions in 2015 with the exception of Europe.
Potential merger of Ambuja Cement, ACC and Lafarge India
19 February 2015India: Ambuja Cement, ACC and Lafarge India may merge as part of the proposed global merger of Lafarge and Holcim, according to local media. The plan is still at an early stage and LafargeHolcim have mandated investment bank Lazard to advise on the restructuring of their Indian operations. The most likely option is the merger of ACC, Ambuja and Lafarge India into one listed entity to create the largest cement company in India. The combined cement production capacity of the three subsidiaries would be some 70Mt/yr.
As part of the new restructuring proposal, LafargeHolcim may reassess Holcim's restructuring of ACC and Ambuja, which was announced in 2014 and is currently incomplete. As part of the plan, shareholders of Ambuja had approved ACC's stake acquisition from Holcim.
Cofece approves LafargeHolcim merger
16 February 2015Mexico: The National Competition Commission (Cofece) in Mexico has approved the merger between Holcim and Lafarge, as it does not see any risk to free competition in the country. Lafarge operates in Mexico via ELC Tenedora de Cementos, which it sold to Elementia on 16 December 2014.
Opportunity in Brazil?
11 February 2015Russian refractory manufacturer Magnezit Group has struck a deal this week with Vamtec to sell product in Brazil. What such a cooperation agreement will actually entail, as ever, remains vague but it is an interesting time for a cement equipment supplier to enter the market. The majority of refractories sales are to the iron and steel industries but cement and lime holds the biggest minority market. Industrial research analysts Roskill placed the cement and lime share at 13% in a recent market report.
Competitor refractory producer RHI placed Magnezit in the same Euro0.5 – 1bn revenue bracket with producers such as a Magnesita, Inerys, Krosaki and Shinagawa. Magnesita is the most relevant company out of that list because it is headquartered in Belo Horizonte in Brazil. It is a global company but some of its major mines and production sites are based in Brazil. In 2013 its revenue grew by 8% to US$937m despite static refractory sales volumes led by falling steel production. In 2013 its refractory revenues came mainly from South America. So far in 2014 it appears to have increased its refractory sales volumes, despite a declining marking in Brazil and South America as a whole, by moving into new markets.
A similar situation has been reported by RHI in the region so far in 2014 with falling steel production hitting refractory revenue. RHI originally planned to build a refractory plant in Rio de Janeiro in 2011 but this was amended in late 2012. In this environment it seems that Magnezit may be testing the market rather than planning a full-scale incursion into Brazil.
For the first half of 2014 the Sindicato Nacional Da Indústria Do Cimento (SNIC) has reported that cement sales were 34.5Mt in Brazil, a rise of 2.8% compared to the same period in 2013. Despite this modest growth, Brazilian cement producers will see this as disappointing following years of higher growth prior to 2013.
However, events may not be that gloomy in Brazil after all. The prospect of CRH's impending purchase of three cement plants and two grinding plants from Lafarge and Holcim in Brazil with a cement production capacity of 3.6Mt/yr may stir up the market. For starters CRH may audit the suppliers the new plants are using and decide whether they want to continue using them. The acquisition will add a new player to compete with the existing producers in the high producing states of Minas Gerais and Rio De Janeiro. Competition authority Conselho Administrativo de Defesa Econômica (CADE) set up the terms for what Lafarge and Holcim would have to sell in December 2014, so now that a buyer has been found the move may go smoothly. Needless to say this presents an opening for any, say, Russian-based refractory producers looking for new clients!
CRH wins the race to the LafargeHolcim gold
04 February 2015CRH has made good on its intentions. This week it stumped up Euro6.5bn to buy assets from Lafarge and Holcim in four continents. The move follows preparation since at least May 2014 when the Irish building materials group announced a divestment programme. In October 2014 it announced that it would sell its brickwork division.
CRH is finding the cash through a mix of existing cash, debt and equity placing. Interestingly, back in 2012 an Irish stockbroking analyst who was interviewed reckoned that the company could spend up to Euro3.5bn on acquisitions whilst remaining within its banking agreements. Throw in the recent sales and planned divestments and the planned acquisition from LafargeHolcim doesn't seem like too much of a stretch for CRH.
If completed, the purchase will see CRH take on 24 cement plants with a production capacity of 36Mt/yr. As a back of the envelope calculation suggests the sale price of Euro6.5bn isn't far off the occasionally used price of US$200/t for western cement production. The deal also includes aggregates, ready mixed concrete and asphalt assets.
The purchase marks a change in CRH's buying strategy both in terms of scale and distribution. Much of CRH's previous acquisitions have been minority shareholdings that make it difficult to accurately report the company's position in the cement industry. For example, in our Top 100 Report CRH was reported to have a production capacity of 6.49Mt/yr for majority shareholdings with another 19.9Mt/yr for minority shareholdings. The new cement capacity being purchased blows this away because it more than doubles CRH's total capacity and it appears to be all majority owned. CRH thinks that this will propel it to become the world's third biggest building materials manufacturer after LafargeHolcim and Saint-Gobain, leapfrogging Cemex and HeidelbergCement in the process. Strangely there is no mention of the huge Chinese players in the top five manufacturers in CRH's acquisition presentation.
CRH has avoided buying plants in southern Europe but it is relying on the slowly improving growing UK market, where CRH will pick up four plants, to balance the risk. Elsewhere in Europe, the three Holcim plants in France have been suffering from continued low construction rates in that country and the two Lafarge cement plants in Romania are unlikely to have recovered from a production fall in 2013. Outside of Europe growth has been poor in Quebec in 2013 and 2014, where CRH is buying two plants from Holcim. Both Lafarge and Holcim have also seen a slowdown in Brazil. However, the Philippines does seem like a better bet for CRH, with solid cement volumes growth seen by Lafarge in 2013 and the first three quarters of 2014.
With CRH now looking like a company that wants to produce cement rather than one that owns parts of companies that produce cement, all eyes are on the construction markets. 14 of the 24 cement plants CRH are buying are in Europe. Buying at the bottom of a sustained production slump makes sense because the asking price will be low. However, has the bottom been reached yet?
Swiss prosecutor opens Holcim insider trading probe
02 February 2015Switzerland: The Swiss Attorney General's office has opened an investigation into possible insider trading in the securities of cement producer Holcim Ltd, the office has said in a statement.
The investigation was first reported by the NZZ am Sonntag newspaper, which said that suspected insider trading took place just before Holcim's announcement in April 2014 of a plan to merge with France's Lafarge. The investigation is probing a possible offence by a 'secondary insider,' not someone with authorised access to insider information, but who obtained such information in an unauthorised way, the Attorney General's office said. The statement gave no further details.
Holcim and Lafarge announce assets sale to CRH
02 February 2015World: Lafarge and Holcim have entered exclusive negotiations to sell a number of assets to Ireland's CRH for Euro6.5bn as part of their planned merger. The assets include operations in Europe, Canada, Brazil and the Philippines. The combined assets, which include Lafarge Tarmac in the UK, generated Euro5.2bn of sales in 2014, with estimated 2014 operating earnings before interest, taxes, depreciation and amortisation (EBITDA) of Euro744m.
"The projected transaction is a key step towards the creation of LafargeHolcim and the value offered reflects the strong quality of the selected assets. With this announcement, we remain firmly on track to complete our proposed merger in the first half of 2015," said Wolfgang Reitzle, designated chairman of the Board of Directors of LafargeHolcim and Bruno Lafont, designated CEO of the future combined company.
The divestment process will be carried out in the framework of the relevant social processes and the ongoing dialogue with the employee representatives' bodies. It will be submitted to the relevant competition authorities and to the shareholders of CRH. The divestments are subject to the completion of the merger, including a successful public exchange offering and approval by Holcim's shareholders in the second quarter of 2015. The closing of the planned merger is expected in the first half of 2015.
CRH confirms interest in LafargeHolcim divestments
23 January 2015Europe: Responding to the recent press speculation, Ireland-based building materials group CRH plc has confirmed that it is in discussions with Lafarge and Holcim regarding the potential acquisition of certain assets being disposed of by Lafarge and Holcim in advance of their proposed merger.
In December 2014, The European Commission, the European Union's antitrust authority, said that it approved the proposed merger of French cement giant Lafarge SA with Swiss peer Holcim Ltd, subject to asset sales by both companies in regions where their activities overlap.
The European Commission or EC's approval of the merger was conditional upon the divestment of Lafarge's businesses in Germany, Romania and the UK. Holcim was required to divest its operations in France, Hungary, Slovakia, Spain and the Czech Republic.
What next? Expect the unexpected…
21 January 2015On 15 January 2015, the Swiss National Bank (SNB) abandoned the Euro1.20 cap on the Swiss Franc. The effects of the decision were immediate, with the value of a Franc dropping from Euro1.20 to just Euro0.99. The decision caused turmoil for currency brokers and big business in Switzerland's normally bullet-proof finance sector, with some brokers out of business by the end of the same day.
It is not hard to see why these brokers were caught out by the sudden change in the SNB's position. On 18 December 2014 Thomas Jordan, Chairman of the SNB's Governing Board, stated in no uncertain terms that, "The SNB remains committed to purchasing unlimited quantities of foreign currency to enforce the minimum exchange rate with the utmost determination." In research conducted by Bloomberg News on 9 - 14 January 2015, not one of 22 economists questioned expected the SNB to abandon the cap in 2015. That's quite an about-turn by the SNB in less than a month.
The decision to 'scrap-the-cap' shows the potential of outside influences to suddenly unseat even the most secure of businesses. Such companies include Holcim, the share-price of which went on a rollercoaster on the SIX Swiss Exchange in the immediate aftermath of the announcement. At one point on 15 January 2015 Holcim had lost 20% of its value before closing 11% down on the day. It has since recovered somewhat, although a whopping Euro3bn of its capital has been swallowed up due to the plummeting Franc.
Following the sudden changes to its circumstances, Holcim immediately reinforced its commitment to its merger with Lafarge. "Regarding a possible impact on the combination with Lafarge, what we can say is that we remain committed to the merger," said spokesman Eike-Christian Meuter. There was an almost simultaneous reciprocal statement from the French producer, also stating its commitment. No change there then.
The calmness of Holcim's statements was broadly in line with commentary from bankers, which stated that large deals were unlikely to be affected by the change. This is because Swiss firms can insure themselves against the effects of such moves. Another 'get-out of jail free card' could have been a material adverse change (MAC) clause. If in place a MAC would allow the merging parties to terminate a transaction if an external event significantly changes the outlines of the deal. It is not possible to know whether Lafarge and Holcim have such a clause due to confidentiality issues.
Despite the fundamentals of the LafargeHolcim merger appearing to be unaffected, the scrapping of the Franc cap is an excellent example of how external policy makers can have a direct and unexpected impact on the underlying conditions of the global cement industry. Another major external influence at present is the low oil price, mainly affected by the oil producing cartel OPEC. HeidelbergCement said this week that it expects the oil price fall to have a positive impact on its profit in 2015. It makes 80% of its revenue in oil-importing countries, which should see reduced transport and production costs. This will result in improved economic conditions, higher levels of construction and hence cement production. For HeidelbergCement 2015 could be a case of costs down, sales up.
That surely sounds like good news, for some stagnant 'old' developed economies at least. However, in the world of 'new normals' it is the IMF that has sounded the biggest warning this week. It dropped its 2015 global economic growth forecast from 3.8% to 3.5%. As fuel prices slump, so too has inflation. In the EU this has resulted in deflationary pressures that could yet stump the recovery. Consumers (and construction firms alike) may go from a position of not being able to afford things, to not wanting to buy them. In the longer term, this may be yet more bad news for the cement sector in established markets.