Displaying items by tag: Ube Industries

Japan: Ube Industries has revised its profit forecast downwards for the 2022 financial year. It now expects a net profit of US$171m in the year to March 2022, a 15% fall year-on-year, compared to its previous forecast of US$184m. It has also forecast full-year consolidated sales of US$5.57bn, a rise of 3.4% year-on-year. The Nikkei newspaper has reported that the group attributed the lower figure for profit to increased costs of cement production, transport and its on-going integration of its cement businesses.

Japan: Mitsubishi Materials and Ube Industries plan to merge their respective cement businesses and related businesses on 1 April 2022. The new successor company will be temporarily known as C Integration Arrangement before officially becoming known as Mitsubishi UBE Cement Corporation. However, the new name will be subject to input by shareholders.

The two cement producers first announced discussions in early 2020 about a potential merger of their cement businesses and related concerns. They decided to explore merging their cement operations following slowing demand and increased costs due to higher energy prices. They have worked together since 1998 in a joint venture called Ube-Mitsubishi Cement, which integrated their cement sales and logistics operations.

April 2020 data from the Japanese Cement Association (JCA) suggests that Japan has avoided the worst effects of the coronavirus outbreak. The industry’s total sales fell by 2.4% year-on-year to 16.4Mt in the first four months of 2020 from 16.8Mt in the same period in 2019. This is the kind of change associated with business as usual market trends, rather than the 20% declines seen elsewhere around the world in association to the coronavirus. In part this reflects the country’s case and mortality rate, which are far lower than other Group of Seven (G7) countries. The reasons for this may be due to lower levels of testing, less stringent lockdown measures and a more effective public health strategy. That last point is perhaps even more impressive given the population’s high median age (47.3). Whatever the reasons, the overall effect on the construction materials business seems low.

Graph 1: Cement production, sales, imports and exports in Japan. Source: Japanese Cement Association.

Graph 1 above shows the Japanese cement market in a historical context. Production peaked in the mid 1990s at a little below 100Mt/yr followed by a decline to above 40Mt/yr since 2010. This informs the current situation once one removes any effects from the health emergency. As Naoki Ono, the chairman of the JCA and the chief executive officer (CEO) of Mitsubishi Materials, described it in late May 2020, domestic demand for cement fell by 3.8% year-on-year to 41Mt in 2019. He blamed this on the completion of construction work for the 2020 Tokyo Olympic and Paralympic Games, the end of a period of rebuilding following natural disasters and a shortage of manpower.

All of this may explain why Taiheiyo Cement announced the acquisition of a 15% stake in state-owned Semen Indonesia subsidiary Solusi Bangun Indonesia in April 2020. At the time the producer said explicitly that the partnership with Semen Indonesia was part of Taiheiyo Cement’s response to a, “forecasted long-term decline in domestic cement demand in Japan.” Given the competiveness of the Indonesian market it seems like a brave move given the country’s overcapacity, the departure of LafargeHolcim and the arrival of China’s Anhui Conch. Meanwhile at home, Mitsubishi Materials and Ube Industries said in February 2020 that the companies were discussing a potential merger of their cement businesses. The letter of intent suggests a schedule of late September 2020 to sign a definitive agreement and a target of April 2022 to complete the integration. This follows the two companies working together since 1998 on a joint venture called Ube-Mitsubishi Cement, which integrated their cement sales and logistics operations. Mitsubishi Materials and Ube Industries are the third and fourth largest producers by production capacity in the country. A merger would potentially give the combined entity the same production base as the largest producer, Taiheiyo Cement.

Taiheiyo Cement’s experience in its 2020 financial year to 31 March 2020 was in line with Naoki Ono’s summary above, with both sales and profits down. Its domestic sales volumes decreased by 5% to 14.5Mt, although exports rose by 11% to 3.9Mt. In its financial report it highlighted its key foreign markets in the US, China, Vietnam and the Philippines. Despite increasing its sales in its 2020 financial year, Sumitomo Osaka Cement’s operating income and profits fell. It blamed this on energy costs, principally coal, and other raw material inputs. It has since published its next medium-term management plan. This includes a number of measures such as cutting costs and looking at overseas expansion. Both Mitsubishi Materials and Ube Industries reported similar reductions in their sales and profits. Mitsubishi Materials noted that it had observed a decrease in cement shipment due to the construction delay caused by the coronavirus.

Ratings company R&I is optimistic about the Japanese market following the start to 2020. In a recent news release it concluded that domestic cement demand is ‘solid’ for the next few years due to order backlog and anticipated infrastructure projects. In its assessment local producers have been improving their cost structures since 2010 in ways that should support ‘certain levels of profit’ provided domestic demand remains around 40Mt/yr. In the medium to longer term though it still expects domestic demand to decrease slowly. Hence, the overseas expansion, merger and acquisition activity and cost cutting plans of the larger producers. Long trends aside, the Japanese cement sector is coping well so far with the global health pandemic.

Japan: Mitsubishi Materials and Ube Industries have signed a letter of intent to start discussing a potential merger of their cement businesses and related concerns. If the discussions and a subsequent study are successful, the companies plan to sign a definitive agreement in late September 2020 ahead of an anticipated integration around April 2022. Any formal decision to merge the companies would be subject to approval from the Japan Fair Trade Commission.

The companies have decided to explore merging their cement operations following slowing demand and increased costs due to higher energy prices. They have worked together since 1998 in a joint venture called Ube-Mitsubishi Cement, which integrated their cement sales and logistics operations.

Japan: UBE Machinery Corporation has signed a license agreement for the design, manufacture and commissioning of vertical roller mills for cement plants and related applications on exclusive basis with India’s AMCL Machinery for markets in India, Nepal, Bangladesh and Bhutan. The deal was signed in late May 2019. This license agreement has been signed to explore ‘mutual cooperation and opportunities’ between UBE Machinery Corporation and AMCL Machinery.

AMCL Machinery is part of Hindusthan National Glass & Industries. It manufactures vertical roller pre-grinding mills for cement plants in India and the Middle East. It also produces rubber and tyre building machines for the local tyre industry.

Japan: Ube Industries has made changes to the personnel of its cement business. Yoshiaki Ito has been appointed as General Manager of Production and Technology Division with responsibility for Material Recycle Division, Cement and Construction Material Company. Previously he was the General Manager of the Isa Cement Plant. Tadashi Matsunamni has added responsibility for the company’s Technical Development Centre to his existing roles as Senior Managing Executive Officer, Company President of Cement and Construction Materials Company and General Manager of Cement Department. He takes over this duty from Masataka Ichikawa.

Japan: Ube Industries net sales have fallen by 5.8% year-on-year to US$1.49bn for the first nine months of 2016 from US$1.59bn in the same period in 2015. Its operating income fell by 21% to US$109m from US$139m. The cement producer blamed the declines on weak demand for cement, low prices and rising prices of coal in the third quarter despite a strong export market.

Sri Lanka: Tokyo Cement has started testing a new mill at its cement grinding plant in Trincomalee. It held a ‘soft’ opening ceremony to mark the event on 8 December 2016. The new mill is the company’s fourth. It will start commercial operation in February 2017, according to Lanka Business. Once operational it will add 1Mt/yr to the company’s production total capacity taking it to 2.8Mt/yr.

The ceremony was inaugurated by Tadashi Matsunami, Director & Senior Managing Executive Officer of Ube Industries Limited, Japan, the technology services partner of Tokyo Cement. Harsha Cabral PC, chairman and SR Gnanam, managing director of Tokyo Cement also presided at the event.

An additional US$50m expansion drive at the site will see the commissioning of an 8MW captive biomass power unit for the plant. Tokyo Cement will also develop the shipping facilities at the site to accommodate larger vessels and it plans to build cement storage silos.

Japan: Ube Group’s sales of cement have fallen by 7.2% year-on-year to US$1.05bn in the first half of its 2016 financial year that ended on 30 September 2016 from US$1.13bn in the same period in 2015. Its operating income fell by 24.5% to US$69.8m from US$93.8m. The company blamed this on sluggish demand for cement domestically and low market prices for exports despite buoyant volumes. Overall the group reported that its total new sales fell by 13.1% to US$2.69bn from US$3.09bn.

Sri Lanka: Tokyo Cement Group entered into a collaboration agreement with Ube Industries from 1 August 2016 for technical support services and to import raw materials from Japan, to manufacture ‘high quality’ cement.