Displaying items by tag: Philippines

Philippines: Holcim Philippines has recorded a profit of US$70.9m in 2019, up by 41% from US$50.3m in 2018. This was in spite of a 5.9% year-on-year sales fall to US$660m from US$701m in 2018. The Philippines Star newspaper has reported that a more favourable product mix and the steady contribution of its aggregates unit helped Holcim Philippines to offset the effects of slowing construction activity throughout the year. Holcim Philippines president and CEO John Stull said that the company is ‘well-positioned to deliver sustainable and healthy growth to shareholders and continue support to the country’s development.’

In 2019 Holcim Philippines brought its total production capacity to 10Mt/yr with the completion of upgrades at its integrated Bulacan, Davao and La Union plants. In March 2019 it launched Solido, a blended cement suited to use in road and infrastructure construction.

Philippines: Samuel O Manlosa has been appointed as the manager of Holcim Philippines’ Davao plant. He succeeded Xavier Arul Kennedy Savarimuthu in the post, who has been reassigned by the LafargeHolcim Group to lead plant operations in Nigeria.

Previously, Manlosa led a project to improve systems and processes to yield efficiency gains for Holcim Philippines' manufacturing operations. He has worked as a process and automation expert for LafargeHolcim's operations in Southeast Asia supporting plants in seven countries. Manlosa has also been sent to Holcim Switzerland for training on advanced process engineering and cement manufacturing. A native of Dipolog City, Zamboanga del Norte, he is a graduate from the Mindanao State University in Marawi City.

LafargeHolcim signed an agreement with San Miguel Corporation in mid-2019 for the divestment of its entire 85.7% shareholding in Holcim Philippines. The process is still ongoing.

Philippines: Phinma Corp.’s cement subsidiary Philcement has ramped up its return to production with the commissioning of a 2.0Mt/yr integrated cement plant with attached terminal facilities in the port of Bataan. The Philippine Star has reported that the company, whose six integrated plants had a majority market share in the country prior to the Asian Financial Crisis of 1997, has invested US$100m on its re-entry to production, including on the Bataan facility, since it announced the return of its Union cement brand to the market in 2018.

Phinma Corp. president and CEO Ramón del Rosario said, “We believe in this government’s ‘Build Build Build’ program and we want to help ensure the success of this program by augmenting supply and offering the highest quality cement to support critical projects.”

Phinma Corp. is among domestic producers awaiting the result of an appeal by the country’s importers against the legality of the government’s safeguard duty on imported cement.

It’s the end of the year so it’s time to look at trends in the sector news over the last 12 months. It’s also the end of a decade, so for a wider perspective check out the feature in the December 2019 issue of Global Cement Magazine. The map of shifting production capacity and the table of falling CO₂ emissions per tonne are awesome and inspiring in their own way. They also point towards the successes and dangers facing the industry in the next decade.

Back on 2019 here are some of the main themes of the year in the industry news. This is a selective list but if we missed anything crucial let us know.

European multinationals retreat

LafargeHolcim left the Philippines, Malaysia and Indonesia, HeidelbergCement sold up in Ukraine and reduced its stake in Morocco and CRH is reportedly making plans to leave the Philippines and India, if local media speculation can be believed. To be fair to HeidelbergCement it has also instigated some key acquisitions here and there, but there definitely has been a feel of the multinationals cutting their losses in certain places and retreating that bit closer to their heartlands.

CRH’s chief executive officer Albert Manifold summed it up an earnings meeting when he said, “…you're faced with a capital allocation decision of investing in Europe or North America where you've got stability, certainty, overlap, capability, versus going for something a bit more exotic. The returns you need to generate to justify that higher level of risk are extraordinary and we just don't see it.”

The battle for the European Green Deal

One battle that’s happening right now is the lobbying behind the scenes for so-called energy-intensive industries in Europe as part of the forthcoming European Green Deal. The cement industry is very aware that it is walking a tightrope on this one. The European Union (EU) Emissions Trading Scheme (ETS) CO₂ price started to bite in 2019, hitting a high of Euro28/t in August 2019 and plant closures have been blamed on it. The rhetoric from Ursula von der Leyen, the new president of the European Commission, has been bullish on climate legislation and the agitation of Greta Thunberg internationally and groups like Extinction Rebellion has kept the issue in the press. Cembureau, the European Cement Association, is keen to promote the industry’s sustainability credentials but it is concerned that aspects of the proposed deal will create ‘uncertainty and risks.’ Get it wrong and problems like the incoming ban on refuse-derived fuel (RDF) imports into the Netherlands may proliferate. What the Green Deal ends up as could influence the European cement industry for decades.

The managed march of China

Last’s week article on a price spike in Henan province illustrated the tension in China between markets and government intervention. It looks like this was driven by an increase in infrastructure spending with cement sales starting to rise. Cement production growth has also picked up in most provinces in the first three quarters of 2019. This follows a slow fall in cement sales over the last five years as state measures such as consolidation and peak shifting have been implemented. The government dominates the Chinese market and this extends west, as waste importers have previously found out to their cost.

Meanwhile, the Chinese industry has continued to grow internationally. Rather than buying existing assets it has tended to build its own plants, often in joint ventures with junior local partners. LafargeHolcim may have left Indonesia in 2018 but perhaps the real story was Anhui Conch's becoming the country's third biggest producer by local capacity. Coupled with the Chinese dominance in the supplier market this has meant that most new plant projects around the world are either being built by a Chinese company or supplied by one.

India consolidates but watches dust levels

Consolidation has been the continued theme in the world's second largest cement industry, with the auction for Emami Cement and UltraTech Cement’s acquisition of Century Textiles and Industries. Notably, UltraTech Cement has decided to focus its attention on only India despite the overseas assets it acquired previously. Growth in cement sales in the second half of 2019 has slowed and capacity utilisation rates remain low. Indian press reports that CRH is considering selling up. Together with the country's low per capita cement consumption this suggests a continued trend for consolidation for the time being.

Environmental regulations may also play a part in rationalising the local industry, as has already happened in China. The Indian government considered banning petcoke imports in 2018 in an attempt to decrease air pollution. Later, in mid-2019, a pilot emissions trading scheme (ETS) for particulate matter (PM) was launched in Surat, Gujarat. At the same time the state pollution boards have been getting tough with producers for breaching their limits.

Steady growth in the US

The US market has been a dependable one over the last year, generally propping up the balance sheets of the multinational producers. Cement shipments grew in the first eight months of the year with increases reported in the North-Eastern and Southern regions. Imports also mounted as the US-China trade war benefitted Turkey and Mexico at the expense of China. Alongside this a modest trade in cement plants has been going on with upgrades also underway. Ed Sullivan at the Portland Cement Association forecasts slowing growth in the early 2020s but he doesn’t think a recession is coming anytime soon.

Mixed picture in Latin America

There have been winners and losers south of the Rio Grande in 2019. Mexico was struggling with lower government infrastructure spending hitting cement sales volumes in the first half of the year although US threats to block exports haven’t come to pass so far. Far to the south Argentina’s economy has been holding the cement industry back leading to a 7% fall in cement sales in the first 11 months of the year. Both of these countries’ travails pale in comparison to Venezuela’s estimated capacity utilisation of just 12.5%. There have been bright spots in the region though with Brazil’s gradual return to growth in 2019. The November 2019 figures suggest sales growth of just under 4% for the year. Peru, meanwhile, continues to shine with continued production and sales growth.

North and south divide in Africa and the Middle East

The divide between the Middle East and North African (MENA) and Sub-Saharan regions has grown starker as more MENA countries have become cement exporters, particularly in North Africa. The economy in Turkey has held back the industry there and the sector has pivoted to exports, Egypt remains beset by overcapacity and Saudi Arabian producers have continued to renew their clinker export licences.

South of the Sahara key countries, including Nigeria, Kenya and South Africa, have suffered from poor sales due to a variety of reasons, including competition and the local economies. Other countries with smaller cement industries have continued to propose and build new plants as the race to reduce the price of cement in the interior drives change.

Changes in shipping regulations

One of the warning signs that flashed up at the CemProspects conference this year was the uncertainty surrounding the new International Maritime Organistaion (IMO) 2020 environmental regulations for shipping. A meeting of commodity traders for fuels for the cement industry would be expected to be wary of this kind of thing. Their job is to minimise the risk of fluctuating fuel prices for their employers after all. Yet, given that the global cement industry produces too much cement, this has implications for the clinker and cement traders too. This could potentially affect the price of fuels, input materials and clinker if shipping patterns change. Ultimately, IMO 2020 comes down to enforcement but already ship operators have to decide whether and when to act.

Do androids dream of working in cement plants?

There’s a been a steady drip of digitisation stories in the sector news this year, from LafargeHolcim’s Industry 4.0 plan to Cemex’s various initiatives and more. At present the question appears to be: how far can Industry 4.0 / internet of things style developments go in a heavy industrial setting like cement? Will it just manage discrete parts of the process such as logistics and mills or could it end up controlling larger parts of the process? Work by companies like Petuum show that autonomous plant operation is happening but it’s still very uncertain whether the machines will replace us all in the 2020s.

On that cheery note - enjoy the winter break if you have one.

Global Cement Weekly will return on 8 January 2020

Ireland: CRH’s sales revenue grew by 4% on a like-for-like basis to Euro21.8bn in the first nine months of 2019. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 7% to Euro3.2bn. Sales grew fastest in its European and American heavy materials divisions with earnings growth more pronounced in North America than in Europe. The group reported growth in ready-mixed concrete and cement sales in North America as it continued to consolidate Ash Grove into the business. Sales in Europe were generally good, although declining construction activity in the UK was noted due to market uncertainty related to the country’s attempt to leave the European Union. CRH also reported falling sales volumes in the Philippines due to a slowdown in infrastructure spending.

Philippines: The Philippine Competition Commission (PCC) is considering voluntary commitments submitted by First Stronghold Cement and related parties in connection to its proposed acquisition of Holcim Philippines. First Stronghold Cement, an indirect subsidiary of San Miguel Corporation, has agreed to buy an 85.7% stake in Holcim Philippines, according to the Philippine Star newspaper. Companies undertaking acquisitions can make behavioural or structural voluntary commitments during the process to alleviate competition concerns with the PCC. Behavioural commitments include market constraints imposed by the PCC whilst structural commitments cover divesting assets.

Initial findings by the PCC on the proposed purchase found it could affect the market concentration of relevant products in parts of Luzon, and Northern and Southern Mindanao. This would normally prompt a stage two review of the proposed acquisition. However, if the PCC accepts the suggested voluntary commitments it would bypass this step.

Philippines: Irish-based CRH has engaged JP Morgan, the bankers, for the sale of its entire Philippine unit. The company operates 3.1Mt/yr of integrated and 0.8Mt/yr clinker grinding capacity via its stake in Republic Cement’s three integrated plants and one grinding plant, inherited in 2015 from Lafarge and Holcim as a part of the pair’s merger.

The Irish Times has reported the estimated value of the divestment at between Euro1.82bn and Euro 2.73bn. The announcement caused CRH’s share price to rise to its highest level since May 2017.

Philippines: Holcim Philippines improved its profit in the third quarter of 2019 by 158% year-on year to US$9.00m from US$3.48m. Its sales in the quarter fell by 2.7% year-on-year to US$163m from US$167m in 2018. The company sustained price increases in spite of lower demand causing a fall in volumes. Nine-month sales fell by 13% to US$465m from US$536m in the corresponding period to 30 September 2018. Upgrades to its La Union and Davao cement plants in previous quarters dragged on nine-month profit, which rose by 7.9% year-on-year to US$36.9m from US$34.2m in the corresponding period of 2018, but paid dividends in the third quarter, bolstered by the resumption of government infrastructure spending.

Philippines: Cemex Holdings Philippines has recorded a profit of US$17.1m in the nine months to 30 September 2019, compared to US$13.0m losses in the corresponding period of 2018. The company attributed the turn-around to steadily growing sales, up by 1.7% year-on-year to US$0.36bn from US$0.35bn, foreign exchange gains and lower income tax expenses, in spite of falling domestic volumes. The Manila Times has reported that a drop in construction activity and delays to projects failed to prevent a 5% rise in domestic cement prices throughout the period.

Philippines: Cemex Philippines has ordered a MVR type mill for cement raw material grinding from Germany’s Gebr. Pfeiffer for a plant in Antipolo. The order also includes a MPS mill to grind coal. Gebr. Pfeiffer said that the order was received through a Chinese general contractor. No value for the order or timescale was disclosed.