Displaying items by tag: Intercement

Argentina: Loma Negra has signed an agreement with the Asociación Obrera Minera Argentina (AOMA) union and the government to keep the Barker cement plant open. The deal follows three months of negotiations, according to La Nacion newspaper. The cement producer wanted to reduce the number of shifts at the grinding plant. It previously said it had started to close the plant in early-June 2019. The plant will continue to operate with 160 staff working a reduced workload amongst other concessions.

Argentina: Loma Negra is challenging a proposed US-based court case on behalf of US-based shareholders. The legal challenge alleges that the cement producer misled investors by misrepresenting its exposure to a corruption scandal and downplayed the potential impact of the economic crisis in 2018, according to the Ámbito Financiero newspaper. Loma Negra says that it was never involved in any bidding process related to the corruption case relating to its Brazilian owner Camargo Correa. The US lawsuit is also taking legal action against the banks involved with Loma Negra’s initial public offering (IPO) in late 2017.

Argentina: Loma Negra is planning to make 100 staff redundant at its Barker cement plant in Buenos Aires. It employs 230 direct employees and 90 others at the site, according to Infobae. The cement producer says it is reducing staffing levels in order to adjust the plant’s production capacity to the local market. It has also threatened to close the plant entirely if it is unable to reach an agreement over the redundancies with the union.

Mozambique: Cimentos de Mocambique has closed its Matola plant due to low demand. It made the decision following large losses, according to the O Pais newspaper. The subsidiary of Brazil’s Intercement said that the unit cost US$25m. It operates one integrated plant and four grinding plants in the country with a total production capacity of 2.9Mt/yr.

Argentina: Loma Negra has secured two loans to upgrade its L'Amalí cement plant. The loans are worth US$40.9m and US$12.5m respectively, according to the Bae Negocios newspaper. The cement producer will use the funds to import equipment to the plant as part of a project to build a new US$350m production line at the unit.

Brazil: InterCement has appointed Flavio Aidar as its chief executive officer (CEO). He succeeds Paul Nigo, who took the role in early 2018. Aidar has worked in the financial services sector including for Goldman Sachs, where he left as managing director in 2017. He then moved on to Mover Participações, formerly known as Camargo Corrêa and the controlling shareholder of InterCement, as a member of its advisory board.

Argentina: Loma Negra’s net revenue grew by 7.9% year-on-year to US$632m in 2018 from US$585m in 2017. However, its cement, masonry and lime sales volumes fell by 4.3% to 6.68Mt from 6.99Mt, mainly due to a decline in demand in Argentina. Despite this its concrete sales volumes increased by 30% to 1.07Mm³ from 0.82Mm³. The cement producer’s net profit decreased by 47% to US$46m from US$86.7m.

“We closed the year with another solid quarter, despite the challenging macro-economic environment in Argentina. Specifically, our core Argentine cement business, delivered both adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) growth and margin expansion, even with weaker volume demand in the country. We are also pleased to see that our concrete operations continued to deliver strong results, reaching record quarterly and annual volumes,” said chief executive officer (CEO) Sergio Faifman. He added that cement demand in Argentina fell by 2.6% in 2018 due to a weak second half of the year. This trend is expected to continue in the first half of 2019 before recovering.

Cementos Molins’ financial results took a tumble this week, in part due to the poorly performing Argentinian economy. A decrease in sales in Mexico was also to blame but rampant inflation in Argentina caused the Spanish cement producer problems.

Cementos Molins owns a 51% stake in Cementos Avellaneda, with Brazil’s Votorantim Cimentos owning the remainder. Molins took pains in its financial report to point out that the aggregate rate of inflation had been 109% in mid-2018. Accordingly, its income and earnings in 2018 would have been much better if the economy had been in a better state. As it was, its income fell by 24% year-on-year to Euro134m and its earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 30% to Euro30.3m. Adjusted for negative inflationary effects these should have risen by 43% and 31% in 2018.

Graph 1: Construction activity in Argentina (year-on-year growth, %). Source: El Instituto Nacional de Estadística y Censos de la República Argentina (INDEC).

Graph 2: Monthly changes in cement despatches in Argentina (year-on-year growth, %). Source: Asociación de Fabricantes de Cemento Portland (AFCP).

The other major local producers, Loma Negra and LafargeHolcim Argentina, are owned by Brazil’s InterCement and Switzerland’s LafargeHolcim respectively. Both companies are due to present their financial results later this week but the signs were not looking good earlier in the financial year. In its third quarter results Loma Negra said that the general economy was dragging on cement demand. Construction activity data from El Instituto Nacional de Estadística y Censos de la República Argentina (INDEC) showed that growth nosedived in mid-2018. This corresponds roughly with falling year-on-year cement despatches. Loma Negra noted that the depreciation of the Argentine Peso was hitting its bottom line and that its cement sales volumes dropped by 6.2% to 1.61Mt in the third quarter of 2018 from 1.72Mt in the same period in 2017. Despite this, its net revenue grew by 42.3% in the nine months to the end of September 2018.

Understandably, much of the talk in Loma Negra’s third quarter earnings call was about the effects of local currency depreciation with questions about how the expenditure for its L’Amalí plant expansion project was split between different currencies or how fuel costs were being affected. More revealing though was information about Loma Negra’s plans to reduce production capacity as national demand falls. Chief executive officer (CEO) Sergio Faifman said that the production cost at L’Amalí would be US$15/t less than the national average and that its Olavarría and Barker integrated plants would be first in line for production cuts given their closeness to L’Amalí.

Holcim Argentina reported ‘significant’ growth until May 2018 in its third quarter report. From here its sales fell and it expected zero growth for the year as a whole. It blamed this on the state of the general economy, the lower attractiveness of mortgages in the residential sector and problems with infrastructure project financing. Its sales volumes of cement rose by 6.4% year-on-year to 2.54Mt in the first nine months of 2018 from 2.39Mt in the same period in 2017. Holcim Argentina also has an upgrade project underway, at its Malagueño cement plant near Córdoba. Once completed by the end of 2019, the project is expected to increase the unit’s production capacity by 0.73Mt to over 3Mt/yr.

The problems facing the Argentine cement producers are clearly due to the poor general economy. The government took a US$56bn loan from the International Monetary Fund (IMF) in mid-2018 to shore up the situation. Since then the Argentinean Peso seems to have stabilised against the US Dollar and inflation has settled. At this point the question is whether this is the bottom of the economic trough. The other thing to note is that Argentina has faced economic problems at the same time as Turkey. Although Turkey has a much bigger cement industry, both countries are prominent cement producers in their regions.

The sad thing though is that the local cement market was facing shortages in late 2017, producers were investing in new production capacity and Loma Negra launched an initial public offering (IPO). All of this growth in the cement industry has been jeopardised by the general economy. Let’s hope it rebounds soon.

Argentina: Loma Negra’s net revenue grew by 42.3% year-on-year to US$435m in the first nine months of 2018 from US$305m in the same period in 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 46.5% to US$113m from US$77.3m. Overall, its cement masonry and lime sales volumes remained stable at 5.1Mt but sales in Paraguay fell by 4.2% to 0.42Mt. Sales volumes fell in both Argentina and Paraguay in the third quarter of 2018.

Sergio Faifman, Loma Negra’s chief executive officer (CEO), said, “Our core Argentine Cement business, delivered both revenue growth and adjusted EBITDA margin expansion notwithstanding the challenging macro backdrop in the country in which our volume declined at a mid single-digit pace year-on-year in line with overall industry performance.”

The subsidiary of Brazil’s InterCement said that it is moving ahead with building a new US$350m production line at its L’Amalí plant. The new line will have a clinker production capacity of 5800t/day. The project is being built by China’s Sinoma International Engineering and it is expected to be completed by early 2020. Main equipment is expected to arrive at the site by the end of 2018 and the steel structure is under construction.

Portugal: Proença de Carvalho has resigned as the president of Cimpor. Three independent directors of the cement producer have also resigned, according to the Jornal de Negócios. The departures follow OYAK Cement’s acquisition of Cimpor’s assets in Portugal and Cape Verde from Brazil’s InterCement.