Displaying items by tag: Strategy

India: Dalmia Cement (Bharat) has commissioned a 14.7MW solar power plant at its 1.3Mt/yr Kapilas grinding plant in Odisha. The producer says that the new power plant multiplies its total solar power capacity in Cuttack District by six to 17.1MW from 2.4MW.

The company said "Furthering Dalmia Cement (Bharat)'s sustainability goal of becoming carbon negative by 2040, this initiative will enhance the plant's energy efficiencies."

India: Udaipur Cement Works plans to raise US$114m through an issuance of non-convertible debentures (NCDs). India Infoline News Service has reported that the company will use the money it raises to fund Phase 1 of its on-going expansion project.

Kazakhstan: Steppe Cement sold US$83.4m-worth of cement in 2021, up by 16% year-on-year from its US$71.7m-worth in 2020. Its sales volumes totalled 1.69Mt for the year, up by 2.4% from 1.65Mt in 2020. It exported 202,000t of cement, down by 57% from 86,500t. The company said that production limitations prevented it from fully meeting demand, and it concentrated on local markets. Regarding its outlook in 2022, Steppe Cement said “We have a healthy cash balance and are continuing our capital expenditure (CAPEX) programme to increase the production capacity of the company by 5% by mid-2022.”

Dow Jones Newswires has reported that Kazakhstan’s 2021 full-year cement consumption was 11.6Mt, up by 23% year-on-year from 9.4Mt in 2020. A rule change to pension withdrawals permitting allocations for home improvement and construction bolstered demand growth. Exports fell by 20% to 1.6Mt from 2Mt, while imports rose by 33% to 800,000t from 600,000t.

UK: Building materials group Ibstock has announced its commitment to achieving a 40% CO₂ emissions reduction by 2030 and carbon neutrality by 2040. The commitment covers scope 1 and 2 emissions, building on the company’s existing sustainability roadmap commitments to create a framework of targets and critical milestones. Ibstock says that these will include investment in more efficient production processes and in high quality environmental projects to offset residual carbon. Additionally, it plans to develop a strategy to reduce indirect scope 3 CO₂ emissions in 2022. It will publish full details of all targets in its 2021 full-year results in March 2022.

During 2021, Ibstock invested Euro138m in the construction of two net zero facilities in West Midlands and West Yorkshire and procured 100% of its electricity from renewable sources. Ibstock is the parent company of Ibstock Concrete, which produces concrete roofing, walling, flooring and lintels at 14 sites across the UK.

Costa Rica/El Salvador: Cementos Progreso has agreed to acquire Cemex’s Costa Rican and El Salvadorian assets for US$335m. The divested assets consist of an integrated cement plant, a cement grinding plant, seven ready-mix concrete plants, an aggregate quarry and one terminal in Costa Rica. An additional terminal is also being sold in El Salvador. The transaction is expected to be completed in the first half of 2022 subject to approval by the relevant competition authorities.

Cemex’s chief executive officer (CEO) Fernando Gonzalez said “This transaction allows us to progress in our portfolio rebalancing objectives, while redeploying resources to fund our growth investments and further deleveraging.”

Mexico: Cemex has joined the United Nations (UN) Global Compact’s Chief CFO Taskforce for the Sustainable Development Goals. The taskforce engages global chief finance officers (CFOs) in integrating the UN’s 10 sustainable development goals (SDG) into strategy, financing and investor relations in order to create a broad sustainable finance market. Its aims include providing the global development community with a modern view of how capital markets can contribute to financing the SDGs at scale, developing innovative financial instruments and contributing to a broad market of diversified investment opportunities, supporting companies in securing financial capital to transform their business and production models, connecting companies’ SDG investments with increasingly impact-orientated investors, developing internal tools and resources to embed sustainability in corporate finance, promoting partnerships between chief executive officers and CFOs and helping to translate sustainability strategies into financial language for investors and rating agencies.

Cemex’s CFO Maher Al-Haffar said “Climate change is perhaps the biggest challenge of our times, affecting lives and disrupting economies. Only by aligning our financial and climate action strategies will we be able to overcome this challenge.” He added “At Cemex, we share the beliefs embodied in the CFO principles and are honoured to join the UN Global Compact CFO Taskforce for the SDGs, through which we will actively contribute to the innovation of corporate finance that will enable the building of a more resilient future for all.”

Switzerland: Holcim has launched the DYNAMax range of high-performance concretes. The producer says that the range offers higher compressive strength, rigidity and durability than its other concrete products. In 2022, it plans to begin marketing DYNAMax in ten markets in its Asia Pacific, Europe, Latin America and North America regions.

Chief executive officer Jan Jenisch said “I’m excited by the launch of our DYNAMax high-performance concrete, advancing our global range of innovative and sustainable building solutions. With today’s population and urbanisation trends, DYNAMax is an ideal material to build smarter cities. It offers high performance to build more with less with no compromise on aesthetics and functionality.”

Holcim’s investors’ event last week confirmed the changes the company has been making to its sales mix. At its Capital Markets Day it revealed its commitment to expand the net sales of its Solutions & Products division to 30% of the group total by 2025. This division covers products such as roofing, mortar, precast concrete and asphalt. At the same time it is reducing the proportion of sales from its cement division. Graph 1, below, from a presentation given by chief executive officer Jans Jenisch, hints at what group may be aiming for: roughly a third of its sales from cement; a third from aggregates and ready mixed concrete; and a third from the Solutions & Products division in 2025.

Graph 1: Forecast growth of sales by Holcim’s Solutions & Products division to 2025. Source: Holcim Capital Markets Day 2021 presentations on website.

To give readers an idea of the scale of change in Holcim’s cement business since the merger with Lafarge in 2015, just look at the figures. In 2015 LafargeHolcim sold 256Mt of cement and it had a cement production capacity of 374Mt/yr. In 2020 it sold 190Mt of cement and it had a cement production capacity of 288Mt/yr. However, the ratio of sales from cement has remained consistent at just below 60%.

This all changed in January 2021 when Holcim announced it was buying roofing and building envelope producer Firestone Building Products for US$3.4bn. Instead of trimming down the business to make synergistic changes as it had been for the previous five years the group significantly changed its sales mix. As noted in ‘2021 in Cement’ in the December 2021 issue of Global Cement Magazine, Holcim remains the world’s largest non-Chinese cement producer. Yet its acquisitions in 2021 have consisted of ready-mixed concrete and aggregate companies in mature markets, and Firestone. Its divestments have been cement subsidiaries. Since 2019, and including the agreed Brazilian sale, planned to complete in 2022, the group has generated US$4.1bn in these divestments. Almost as if to reinforce this change of direction the group also switched its name to Holcim in May 2021.

Aside from the focus on expanding the scope of the Solutions & Products division over the next few years, the group said at its recent investors’ event that it wants to lead in sustainability and innovation. It also reminded investors that growth remains in building materials markets. Once Jenisch had established the potential the construction market has in the coming years it was all about so-called ‘green’ growth. On the sustainability side this includes promoting the group’s Science Based Targets initiative net-zero targets by 2050, pushing sales of its low-carbon concrete products and working on increasing the uptake of construction and demolition waste in Europe. The group has a target of reaching 25% or higher for sales of its ECOPact ready-mixed concrete product by 2025. Holcim reported Scope 1 CEM specific CO₂ net emissions of 555kgCO₂/t in 2020 and it has target of 475kgCO₂/t by 2030. This is broadly in line with its peers. Cemex has also committed to 475kgCO₂/t or lower and HeidelbergCement is currently aiming for 500kgCO₂/t or lower by 2030.

Simultaneously promoting sustainability and growth in products that release CO₂ during their manufacture is quite the balancing act for all cement producers. The way Holcim appears to be squaring this particular circle is by heading elsewhere. Back in January 2021 we asked whether Holcim would leave it with the Firestone acquisition or go further. This question has now been answered with Holcim’s intent to increase the share of its Solutions & Products to 30% by 2025. Other large cement producers don’t seem to be diversifying their sales mix at the same speed but similar strategic thinking along supply chains can be seen from the proposed buyer of LafargeHolcim Brazil, Companhia Siderúrgica Nacional (CSN) Cimentos. CSN is a steel manufacturer and buying cement assets gives it somewhere to use its slag. Fittingly, Holcim’s investors’ day ended with a night out at a museum holding an exhibition on the history of concrete. For now at least concrete looks set to remain a key part of the business.

Chile: Cemento Polpaico has obtained a licence for the use of Canada-based CarbonCure’s CO₂ utilisation technology. The Diario Financiero newspaper has reported that the cement company plans to implement the technology in its concrete production.

Head of development and projects Matias Saenz said that Cemento Polpaico was among the first cement producers to commit to the UN’s Race to Zero decarbonisation initiative. It has also set out 20 sustainability goals to achieve before 2025. The company said that by implementing CarbonCure technology it is contributing to CarbonCure’s vision of eliminating 500Mt/yr of CO₂ emissions.

Switzerland: Holcim has launched its Strategy 2025 – Accelerating Green Growth plan to become a global innovative and sustainable building solutions leader. Under the plan, the group will expand its solutions and products sales to account for 30% of consolidated sales by 2025. During the three-year period, it aims to deliver continuous group sales growth of 3 – 5% and over-proportional recurring earnings before interest, taxation, depreciation and amortisation (EBIT) growth on a like-for-like basis. It is also targeting a 10% return on invested capital (ROIC), cash conversion of 45% and leverage below 1.5x.

As part of the new strategy, the group will aim to recycle 75Mt of materials, including 10Mt of construction waste, in its products in 2022 – 2024. It aims to invest Euro476m in green capital expenditure (CAPEX) and link 40% of its financing agreements to its sustainable performance.

Chief executive officer Jan Jenisch said “We delivered what we promised with our Strategy 2022 one year in advance, setting strong foundations for our next era of growth. With our new level of performance, we have the firepower to invest in solutions and products to make it 30% of our company, while leading the way in green building solutions from ECOPact green concrete to energy-efficient roofing.” He added “With our Accelerating Green Growth strategy, we are ready to seize the opportunities ahead on our way to becoming the global leader in innovative and sustainable building solutions.”