Displaying items by tag: Ireland

Ireland/India: International building materials group CRH has confirmed its entry into negotiations to buy an equity stake in Indian producer Jaypee Cement Corporation. Jaypee Cement owns three cement facilities in the Indian state of Gujurat, in the west of the country, and another in Andhra Pradesh, in the south-east.

CRH said in a statement that the operations in Gujurat consist of clinker plants with a total capacity of 3.6Mt/yr. There are also two cement grinding plants with a total capacity of 2.8Mt/yr. Jaypee Cement is India's third-largest cement maker.

"The completion of any transaction would be subject to satisfactory due diligence, the approval of the respective boards of directors and the granting of regulatory approval," said CRH.

CRH chief executive Myles Lee said at the group's AGM in May 2012 that the company was focused on opportunities in China and India in order to drive long-term growth. CRH has spent close to Euro250m on bolt-on acquisitions in the first half of 2012. This included a further equity injection into its China associate Yatai Building Materials. CRH first entered the Indian market in 2008 through a joint venture with My Home Industries, a cement maker in Andhra Pradesh.

Spend, spend, spend has been the advice for CRH this week. The suggestion by an industry analyst this week that Irish building material conglomerate CRH should go on a shopping spree seems almost perverse! Or at least like stockbrokers trying to drum up excitement.

Just as all of the big multinational cement producers are selling assets and tightening management structures to cope with the ongoing financial turmoil, CRH is the only player that hasn't ruled out acquisitions in 2012. The analyst from Dublin stockbroking firm Davy predicted that CRH could spend up to Euro3.5bn on acquisitions while remaining within its banking agreements; a more level-headed figure was given as Euro1.5bn.

CRH broke down its revenue in 2011 to 55% to the European divisions and 45% to the American ones, with European Distribution, Americas Materials and European Materials being its top three sections. European Materials, the worldwide division containing cement assets generated Euro2.99bn, 16.5% of total group revenue.

With 85% of CRH's European Materials division concentrated on Switzerland, Finland, Benelux, Eastern Europe, Turkey and Asia its exposure to the Eurozone economic slowdown has been reduced compared to the competition. Yet what to buy next is fraught with risk. If Greece exits the Euro for example, then there may be some bargains going, but how long it would take these assets to become profitable is a big unknown.

Similarly, the over-indebted Mediterranean countries present opportunities and challenges. CRH's decision to transfer its 49% holding in Portuguese cement joint venture Secil to Semapa in May 2012 may indicate CRH's intention to stay well away from the Eurozone until the dust settles. Given the amount of cash that CRH could potentially throw around however, it seems odd that the company didn't try to disrupt the ongoing Cimpor takeover by two Brazilian firms. If anything happened to the bid by Camargo Corrêa and Votorantim then CRH would be in a prime position to benefit should it wish.

Whatever CRH decides to do with its money, it's a good problem to have! Lafarge, Cemex, HeidelbergCement and Holcim must all wish they had the same dilemma.

Ireland: CRH could benefit as some of its bigger European competitors sell assets to strengthen their balance sheets, according to one senior industry analyst.

Robert Gardiner of Dublin stockbroking firm Davy says that CRH could spend up to Euro3.5bn on acquisitions while remaining within its banking agreements. However, the group's commitments to ensuring that its earnings are over six times net interest payments means that a more realistic estimate of the amount it has to spend on buying up rival businesses is closer to Euro1.5bn.

Gardiner says that the Irish group is alone among European operators in saying it intends to continue spending money on acquiring businesses. Many of its rivals, including Holcim, HeidelbergCement and Lafarge, are preparing to sell off assets to boost their own balance sheets. Gardiner adds that CRH can hopefully 'cherry pick' some of these businesses as they come on the market.

Lafarge sold Euro2.1bn worth of businesses in Asia, Australia and the US in 2011. Gardiner points out that it has signalled that there is another Euro1bn to come in 2012. He says there is speculation that its South African cement business is likely to be put on the block soon. In addition, the British authorities want Lafarge and Tarmac to sell some businesses, including cement, asphalt and readymix concrete plants, and a number of quarries, in return for allowing them to pursue a joint venture in that market. Similarly Holcim's new chief executive, Bernard Fontana, has signalled it could 'selectively' dispose of some of its businesses in 2012 as it moves ahead with a cost-cutting programme, while the group will restrict spending on expansion.

Mexican giant Cemex, which in is in the process of completing the takeover of the old Readymix plc in Ireland, wants to sell US$1bn worth of assets by the end of 2013, and intends to offload about US$500m in 2012. US operator Vulcan is looking at disposing of a similar level of assets.

CRH, which had revenues of Euro18m in 2011, spent Euro230m on acquisitions in the first four months of 2012. Much of the group's growth over the last 30 years has come through acquisition. In 2009, it raised Euro1.2bn through a rights issue in what was the largest such exercise in Irish corporate history. Its aim was to use the cash to buy businesses which it believed its rivals would be forced by to put on the market by high debts repayments. However, a fall in interest rates and other factors helped ease the burden on some of the industry's players and the opportunities that CRH foresaw did not materialise. Acquisition activity at the group has since picked up. In 2011 it spent over Euro600m on 45 purchases.

China: Irish building materials group CRH has said at its annual meeting that it planned to increase its stake in the Yatai cement business in China to 49% from 26% as part of a wider push into emerging markets.

Chief Executive Myles Lee said CRH was preparing to exercise an option, opening in January 2013, to raise the stake. "We are setting the scene at the moment for that and we are keen to increase that stake. Obviously in everything valuation is key, so it has to be at a valuation that makes sense for our shareholders," Lee said.

Ireland: Cement Roadstone Holdings plc (CRH) has released details of its trading in the first quarter of 2012. It reported that operations in the Americas had benefited from favourable early weather conditions and a firmer tone in construction markets in the US. In contrast, trading in its European operations in the first four months was affected by severe weather conditions in February 2012 and by the ongoing impact of volatility in Eurozone financial markets. Overall, cumulative like-for-like group sales to the end of April 2012 were 2% ahead of the same period of 2011, although earnings before interest, tax, depreciation and amortisation lagged behind 2011 due to the tough start in its European operations.

In Europe, poor weather conditions in February 2012, which saw an extended period of extremely low temperatures across continental Europe in contrast to a very mild 2011, impacted trading. This resulted in a like-for-like sales decline of approximately 6% for January and February 2012. The rate of decline moderated in subsequent months as weather improved to leave cumulative like-for-like sales at the end of April 2012 4% behind those of 2011.

Operations in Poland, Switzerland, Benelux, and Turkey were particularly impacted by the harsh conditions. Volumes in Poland have since recovered and were in line with 2011 by the end of April 2012, but volumes elsewhere have remained behind those a year earlier. In Ukraine volumes for the first four months were well ahead of 2011, while January-April 2012 volumes in Finland were somewhat behind 2011. Operations in those countries experiencing austerity measures (Ireland, Portugal and Spain) continued to face challenging market conditions. Overall, cumulative like-for-like sales for the Europe Materials division were slightly ahead of the first four months of 2011.

CRH's Europe Products division, which benefited to a substantial extent from the very mild winter in 2011, was in turn affected by conditions in 2012 with like-for-like sales down by 8% for the first two months. The subsequent recovery in March and April 2012 has been strong in Germany and Denmark but more muted in Benelux, France and Switzerland where weaker government expenditure and consumer confidence has dampened demand. Overall, underlying sales for the first four months of 2012 were 5% behind 2011.

CRH's businesses in the Americas benefited from unusually benign weather conditions in the early months of the year. Helped by this and by a firmer tone in overall economic activity in the US, the group's operations delivered a like-for-like increase of 11% in terms of sales for the first four months of 2012.

In the Americas Materials business division, favourable weather contributed to very strong like-for-like volume increases for the first four months. The Americas Products business operations also benefited from the good early weather with like-for-like sales some 12% ahead of the first four months of 2011. Within its portfolio, those businesses serving the repair, maintenance and improvement (RMI) sectors have shown the most strength to date in 2012.

CRH predicts that given normal seasonal weather in May and June 2012 it expects its overall EBITDA in the (less significant) first half of the year to be close to 2011, when EBITDA was Euro574m. With more positive US economic and construction prospects for 2012 mitigating a more cautious view on the outlook in Europe, CRH reports that, subject to no major financial or energy market dislocations, it expects overall like-for-like sales growth in 2012 and a year of progress for CRH.

Ireland: The Irish cement group CRH, which has cement interests in many key growth markets, has released financial results for 2011 that show an improvement in all of its fiscal indicators. Sales came in at Euro18.08bn for the year, compared to Euro17.2bn in 2010, a 5% improvement. Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at Euro1.65bn, up by 3% compared to 2010 when its EBITDA was Euro1.61bn. CRH's operating profit for 2011 was Euro871m, a 25% improvement compared to 2010 and its pre-tax profit was Euro711m, up by a third compared to the Euro534m it made in 2010.

CRH's Chief Executive Myles Lee said, "The positive profit outcome for 2011 demonstrates the advantages of CRH's product and sectoral end-use balance and the benefits of the extensive reorganisation and restructuring measures implemented in response to the exceptionally difficult markets of recent years. Assuming no major economic or energy market dislocations, we expect to generate further like-for-like revenue growth in 2012 with the achievement of targeted price increases a key priority. This combined with benefits from acquisitions completed in 2011 leads us to expect further progress in the year ahead."

Ukraine/Ireland: Ukraine's Antimonopoly Committee (AMKU) has allowed Jura-Cement Fabriken AG, a subsidiary of Ireland's Cement Roadstone Holding (CRH), to acquire control of LLC Cement in Odessa. The AMKU committee said that this decision allows Jura-Cement-Fabriken to hold over 50% of the votes in the Odessa plant's management body.

The Odessa Cement Plant started operations in 1965 and its capacity is currently 550,000t/yr. The plant was acquired in May 2005 by the Portuguese company Cimento e Produtos Associados S.A., which is owned by Cimpor, Teixeira Duarte and Engenharia e Construcoes, amongst others. LLC Cement's general director, Miguel Machado, has stated that Euro40m has been invested in the Odessa plant since 1996. CRH currently owns OJSC Podolsk Cement and LLC Lviv Concrete in Ukraine.

Russia/Kazakhstan/Ireland: Russian businessman Oleg Deripaska is holding talks to discuss selling up to 75% of his cement production company BaselCement to Ireland's Cement Roadstone Holdings (CRH). BaselCement CEO Vyacheslav Shmatov and CRH's press office declined to comment.

At present, BaselCement only has two operating facilities, one in Russia and the other in Kazakhstan. The company's plant in the Krasnoyarsk city of Achinsk produced 436,500t of cement in January to July 2011, up from 150,400t that it produced in the same period of 2010. BaselCement's plant in Kazakhstan produced 400,000t of cement in the whole of 2010.

The proposed deal could also include two cement plants with a combined annual production capacity of 3.5Mt/yr that are currently being built in the Ryazan and Novgorod regions. CRH has preliminarily estimated BaselCement's value at Euro550-600m (excluding its subsidiary BaselCement-Pikalyovo). BaselCement is forecast to have a net profit of Euro45.8m in 2011.

Ireland: The Irish cement industry stands to make windfall profits of up to Euro50m 'at the taxpayers' expense,' according to sources familiar with the EU's emissions trading scheme (ETS). The sources estimate that companies such as CRH, Quinn Cement and Lagan Cement have made Euro26m over the past five years from the over-allocation of carbon credits by the government.

The sources estimate that the cement industry stands to make a further Euro25m when the next round of carbon credits is allocated under the ETS. The government allocates a certain amount of emission permits to companies for free. The idea is that polluting companies would buy credits in the market if they exceeded the permitted amount of emissions.

This system is known as 'cap-and-trade' but an initial over-allocation arose, partly because of the construction bust which meant that firms did not produce as much cement as expected. The sources said the transfer was a waste of public funds at a time when the exchequer was financially stressed. They also argued that the effect was to distort the market in favour of making cement.

The estimate of the scale of the subsidy comes after the Economic and Social Research Institute (ESRI) noted earlier in 2011 that the current EU ETS provided potentially large windfall gains for certain industries, such as electricity generation and cement production. The ESRI argued that such windfall gains should be recaptured by society through the tax system.

A spokesman for Cement Manufacturers Ireland did not dispute the figures, saying that the industry had invested millions of Euros in new technology upgrades to become one of the most efficient in Europe. "The current recession was not predicted when allowances were allocated under rules proposed by the Commission," he said.