
Displaying items by tag: Thailand
Vietnam cement and clinker exports drop by 16.6% to 11.3Mt in first nine months of 2016
20 October 2016Vietnam: Vietnam’s exports of cement and clinker fell by 16.6% year-on-year to 11.3Mt in the first nine months of 2016. The value of the exports fell by 17.2% to US$429.3m. The Philippines, Bangladesh, Taiwan and Mozambique were among major importers of Vietnamese clinker and cement in the nine-month period, according to data from the Ministry of Industry and Trade. Local cement producers have faced competition from those in Thailand and China.
Colombia/Thailand: Cementos Argos has held its position in the Dow Jones Sustainability Index (DJSI) for the fourth consecutive year. Cementos Argos was featured as the most sustainable cement company in the world after obtaining the best score in the construction materials sector. The Colombia-based materials producer was listed along with Thailand’s Siam Cement.
"The permanence in this index confirms our business model, in which we start with sustainability and innovation as pillars of the strategy to create value for our customers, shareholders, communities, employees, and other stakeholders,” said Juan Esteban Calle, CEO of Cementos Argos.
Argos obtained the best score among the following variables: Biodiversity, Operational Eco efficiency, Water related risks, Social Reporting, Labour Practice Indicators and Human Rights, Tax Strategy, Corporate Citizenship and Philanthropy, Human Talent Development and Talent Attraction and retention. In addition to being included in the Global Index, Cementos Argos was recognised in Emerging Markets for the fourth consecutive year.
Each year about 2500 global companies, listed on the stock exchange, belonging to about 59 economic sectors, are invited to participate in the DJSI.
Thailand: Siam Cement Group’s sales revenue from its cement and building materials division fell by 4% year-on-year to US$2.54bn in the first half of 2016. Profit for the half-year period fell by 11% to US$165m. The cement producer reported that Thailand’s total domestic cement demand decreased by 3% year-on-year in the second quarter of 2016 due to soft demand from non-government sectors.
Overall, Siam Cement Group saw a 2% fall in revenue across all business lines to US$3.11bn and a rise in profit by 18% to US$843m. It attributed the rise in profits to the performance of its chemical business.
“We see a bright future for markets across the region, with steady growth rates. Especially in Vietnam, demand for building materials and packaging has risen, on the back of the boom of construction industry, with several infrastructure, residential and industrial projects, as the country has become a key production base of the world. Cambodia also continues to see steady growth of its industries while Indonesia has also begun to see improvements in the economy, with construction of several government mega-projects. At the same time, trade around the borders of Thailand and neighbouring countries is also doing well,” said Roongrote Rangsiyopash, President and CEO of Siam Cement Group.
Asia Cement chases missing mine money
21 June 2016Thailand: Asia Cement has arranged negotiations with the Ministry of Industry to retrieve a US$8.5m deposit placed as a guarantee for a limestone mine licence application. The cement producer was granted a licence to operate a limestone mine in Nakhon Si Thammarat province in 1997. However, an environmental order nullified the licence and allowed the government to keep the deposit, according to the Bangkok Post.
"The government and Asia Cement have set up legal teams to negotiate and seek solutions that are acceptable to both sides," said Chat Hongtiamchant, director-general of the ministry's Department of Primary Industries and Mines. The subsidiary of Italcementi also wants to drop the mine project due to a change in the market demand.
Sika opens second admixtures plant in Thailand
14 June 2016Thailand: Sika has inaugurated a new mortars and concrete admixtures plant in Saraburi. The plant has a production capacity of 100,000t/yr of mortars and 65,000t/yr of concrete admixtures. The unit also includes warehouse and an office. It is the additives and admixtures company’s second such plant in the country.
"After our existing plant in Chonburi reached its limits, we consequently invested in additional production capacities. The new plant will enable us to maintain our strong growth in Thailand in terms of production volume, sales and market share. South East Asia is one of the regions where Sika generates some of its highest growth rates and we are well positioned to continue this positive development," said Heinz Gisel, Regional Manager Asia-Pacific.
Mexico: Cemex has closed the sale of its operations in Bangladesh and Thailand to Siam City Cement for approximately US$53m. The proceeds obtained from this transaction will be used mainly for debt reduction and for general corporate purposes. The deal was announced in March 2016.
Thailand: Thailand will continue to be Italcementi Group's production base in the Association of Southeast Asian Nations (ASEAN) and as its springboard for expanding into Myanmar after HeidelbergCement acquires a 45% stake in the company in July 2016. Carlo Pesenti, the chief executive officer of Italcementi, made the comments about the future direction of the business in an interview with the Nation newspaper.
"HeidelbergCement, which will be the major shareholder of Italcementi when the deal is complete this July, has a policy to maintain the business in Thailand and its business plan to expand into Myanmar, because HeidelbergCement does not have a presence in Thailand,” said Pesenti. “Thailand is our production hub and business arm for expanding in ASEAN."
Italcementi Group holds a 49% stake of Asia Cement in Thailand. Asia Cement and its subsidiary Jalaprathan Cement have cement production capacity of 5Mt/yr. Asia Cement has set aside an investment budget of up to US$14m to maintain its three clinker and cement plants in Thailand. However, the company it waiting for the acquisition of Italcementi by HeidelbergCement before it can decide about expansion plans in Cambodia and other territories.
Cemex takes charge of its debts
16 March 2016Cemex has taken action towards its debts over the course of the last week. First, it announced that it had amended its credit agreements in order to delay the looming effects of consolidated financial leverage and coverage ratio limits by one year to March 2017 with other similar deadlines also delayed. Then it announced the pricing of US$1bn of Senior Secured Notes due in 2026, a form of secured borrowing. This was followed by confirmation of asset sales in Bangladesh and Thailand. Finally, it announced that it was seeking regulatory permission to sell a minority stake in its subsidiary in the Philippines.
This column has discussed the on-going financial travails at Cemex a few times, notably recently when the group released its fourth quarter results for 2015 and in the wake of HeidelbergCement’s announcement to buy Italcementi. Basically, it all comes down to debt, as the following graph shows.
Figure 1 - Cemex assets, debt and equity, 2006 - 2015
Cemex took on large amounts of debt following its acquisition of Rinker in 2007. Since then the value of its assets have been falling faster than it has been able to reduce its debts. However, its equity (assets minus debts) is looking like it might dip below its debts in 2016. Hence, action needs to be taken. Cemex appears to have attempted to do this over the last week. Will it be enough?
The credit amendment was probably the most pressing issue for the Cemex management given that the terms have been reliant on maintaining a leverage ratio (debt divided by assets) below a set limit. Cemex has extended the terms of the borrowing in its favour so it can keep the leverage ratio higher for longer without penalty from its creditors. Note that the leverage ratio here means the ratio between debt and operating earnings before interest, taxation, depreciation and amortisation (EBIDTA).
Selling assets and shares in Asia is the next step in cutting debt in the window the group has negotiated for itself. It holds minor cement production assets in Thailand and Bangladesh that it is selling to Siam City Cement for US$53m. These include a 0.8Mt/yr integrated cement plant in Saraburi, Thailand and a 0.52Mt/yr cement grinding plant in Madangonj, Bangladesh. Unfortunately for Cemex it purchased the Saraburi plant for US$77m in 2001 from Saraburi Cement making it a loss of at least US$24m.
A minority sale of shares in its Philippines assets is more promising. The group runs two integrated cement plants in the country, the Solid Cement Plant in Rizal and the APO Cement Plant in Cebu with a combined cement production capacity of 6.23Mt/yr and a new 1.5Mt/yr production line on the way at Solid Cement also. Local media estimate that the sale could earn Cemex as much as US$850m from the booming market. The Cement Manufacturer's Association of the Philippines reported that cement sales volumes grew by 14.3% to 24.4Mt in 2015 with more growth predicted for 2016.
The credit amendment and asset sales of US$0.9bn may give Cemex the breathing room it requires to keep the creditors at bay for a while longer. It originally refinanced its debts in 2009 at the height of the financial crisis to keep the business running until the markets picked up again. They haven’t. A question that might be legitimately asked at Cemex’s analyst day later this week, on 17 March 2016, is this: when is Cemex going to seriously tackle its debts? As the situation continues the group may end up devoting more time to managing its debts than it will to actually making cement and other building products.
Mexico/Thailand/Bangladesh: Cemex has signed an agreement for the sale of its operations in Bangladesh and Thailand to Siam City Cement for US$53m. The proceeds obtained from this transaction will be used mainly for debt reduction and for general corporate purposes. The deal is expected to be finalised in the second quarter of 2016 subject to regulatory approval.
Cemex runs a 0.8Mt/yr integrated cement plant in Saraburi, Thailand. The plant was originally purchased from Saraburi Cement for US$77m in 2001. Cemex operates a 0.52Mt/yr cement grinding plant in Madangonj, Bangladesh.
SCG Cement profit drops 22% in 2015
27 January 2016Thailand: The cement business of Siam Cement Group (SCG) reported a 22% decrease in profit in 2015 to US$286m from US$368m in the 2014. Its revenue fell by 3% year-on-year to US$5bn from US$5.2bn. It blamed the performance on poor market recovery in Thailand. Overall, SCG reported increased profits due to its chemicals business.
"As for the progress of SCG's investments in the Association of Southeast Asian Nations (ASEAN), we are continuing as planned and are able to accommodate and meet the market demand dynamics. The cement plant in Indonesia commenced commercial operation in November 2015, while the cement plants in Myanmar and Laos are expected to begin operation in the middle of 2016 and 2017, respectively. These investments are integral to the ability to support our market expansions and serve our ASEAN customers' demands," said Roongrote Rangsiyopash, President and CEO of SCG.
SCG expects that the ASEAN Economic Community will advance its businesses in key export markets in Cambodia, Laos, Myanmar and Vietnam in 2016. Positive economic trends are also anticipated in Thailand due to government stimulus policies and projects.