Displaying items by tag: UltraTech Cement
UltraTech Cement targets 12.8Mt/yr additional cement capacity
04 December 2020India: The board of directors of Aditya Birla subsidiary UltraTech Cement has approved a planned increase in cement production capacity of 12.87Mt/yr. This will increase its capacity to 136Mt/yr from 123Mt/yr, at a cost of US$743m. The company says that the expansion will consist of new plants and upgrades to existing plants in the ‘fast-growing markets of the east, central and north regions of the country.’ This includes the upcoming Pali integrated cement plant in Rajasthan and capacity expansions at plants in Bihar, Odisha, Uttar Pradesh and West Bengal, that are due for completion in the 2022 financial year (1 April 2021 - 31 March 2022).
The producer said, “Given the company’s history of setting up capacities in record time, commercial production from the new capacities is expected to go on stream in a phased manner, by early 2023. This capacity addition will not impact the on-going deleveraging programme, which is on track to make UltraTech debt-free by the time the expansion program is completed.”
Aditya Birla group chair Kumar Mangalam Birla said, “This significant investment in a core infrastructure sector will accelerate the wheels of economic activity and aid the kick-start of the private investment cycle. The capital outlay, given the current economic backdrop, is aligned with the government’s Atmanirbhar Bharat programme. It is also a marker of UltraTech’s ascent from being India’s No.1 cement player to a national champion. The cement industry has been witnessing healthy volumes post-relaxation of lockdown, on the back of the government’s thrust on infrastructure, underlying demand from the rural economy and individual home builders. Given its pan-India presence, which will be further strengthened by the capacity expansion, UltraTech will be well-positioned to support the rising demand for cement in the country.”
Indian police confiscate 1000 bags of counterfeit cement
04 December 2020India: Police have made arrests in Ujjain, Madhya Pradesh where cement was being bagged in falsely branded UltraTech Cement bags. The Free Press Journal has reported that the authorities confiscated over 1000 bags in the raid. They believe that the plant has been operative since 2018. Investigations continue, including a manhunt for suspected ringleader Jitendra Singh.
UltraTech Cement beats energy productivity target
18 November 2020India: UltraTech Cement says it has beaten its goal of doubling its energy productivity ahead of its deadline. It joined the EP100 initiative in 2018 and agreed to double its energy productivity from the base year of 2010 with the target year of 2035. It has achieved this by investing in energy efficiency measures such as upgrading clinker coolers, implementing variable frequency drives to manage electricity flow, and introducing new waste heat recovery systems. The company says it is focusing on new technologies, changes in product and energy mix, digitisation and carbon pricing. It foresees the digitisation of its energy performance as a key enabler for identifying the best opportunities to save energy.
"UltraTech firmly believes that companies in the building material sector can come together to step up climate action for meeting the global 1.5-degree ambition. Joining like-minded companies in EP100 gave us an opportunity to accelerate and scale-up levers to double energy productivity and also drive the decarbonisation agenda,” said Kailash Jhanwar, the managing director of UltraTech Cement.
EP100 is a global business initiative consisting of a group of companies committed to improving their energy productivity. EP100 is led by the Climate Group, an international non-profit organisation, in partnership with the Alliance to Save Energy.
Third quarter 2020 update for the major cement producers
11 November 20202020 has been a year like no other and this clearly shows in the financial results of the major cement producers so far.
The first jolt is that several major Chinese cement producers have seen their sales fall. Following a tough first quarter due to coronavirus, the Chinese industry then overcame floods in the summer, to eventually report a decrease in cement output of 1.1% year-on-year to 1.68Bnt in the first nine months of 2020. The world’s largest cement producer, CNBM, reported a slightly smaller drop in sales year-on-year in the first nine months of 2020. This relatively small fall, just below 1%, may be due to CNBM’s size and diversity of business interests. Other large Chinese producers have noted bigger losses, such as Huaxin Cement’s 9% sales decline to US$3.04bn and Jidong Cement’s 5% sales fall to US$3.8bn. However, Anhui Conch actually saw a 12% rise in sales to US$18.7bn.
Graph 1: Sales revenue from selected cement producers, Q1 - 3 2020. Source: Company reports.
Graph 2: Cement sales volumes from selected cement producers, Q1 - 3 2020. Source: Company reports.
LafargeHolcim’s sales look worse in Graph 1 than they really are because the group was busy divesting assets in 2019. Its net sales fell by 7.9% on a like-for-like basis to US$18.7bn in the first nine months of 2020, a rate of change similar to HeidelbergCement’s. Being a properly multinational building materials producer brings mixed benefits given that these companies have suffered from coronavirus-related lockdowns in different times in different places but they have also been able to hedge themselves from this effect through their many locations. In the third quarter of 2020, for example, LafargeHolcim was reporting recovering cement sales in its Asia-Pacific, Latin America and western/central parts of its Europe regions but problems in North America. Again, HeidelbergCement noted a similar picture with cement deliveries up in its Africa-Eastern Mediterranean Basin Group area, stable in Northern and Eastern Europe-Central Asia and down elsewhere. How the latest round of public health-related lockdowns in Europe round off a bad year remains to be seen.
The other more regional producers are noteworthy particularly due to their different geographical distribution. Cemex has seen a lower fall in sales revenue and cement sales volumes so far in 2020, possibly due to its greater presence in North America. What happens in the fourth quarter is uncertain at best, with US coronavirus cases rising and the Portland Cement Association (PCA) expecting a small decline in cement consumption overall in 2020. Along similar lines, Buzzi Unicem appears to have benefitted from its strong presence in Germany and the US, leading it to report a below 1% drop in sales revenue so far in 2020, the lowest of the decreases reported here for the western multinational cement companies.
Looking more widely, UltraTech Cement, India’s largest producer, had to contend with a near complete government-mandated plant shutdown in late March 2021. The figures presented here are calculated for comparison with other companies around the world due to the difference between the standard calendar financial year (January to December) and the Indian financial year (April to March). However, they suggest that Ultratech Cement suffered a 14% fall in sales to US$3.9bn and an 8% decline in sales volumes to 56Mt, among the worst decline of all the companies featured here. This is unsurprising given that UltraTech mostly operates in one country. Sure enough it bounced back in its second quarter (June – September 2020) with jumps in revenue, earnings and volumes.
Finally, for a view of a region that hasn’t had to face coronavirus-related economic disruption of anything like the same scale, Dangote Cement has reported solid growth so far in 2020, with rises in sales and volumes both above 5%. Economic problems at home in Nigeria have seen relatively higher growth elsewhere in Africa in recent years but now the pendulum has swung back home again. The big news has been that the company has pushed ahead with plans to turn Nigeria into a cement export hub, with a maiden shipment of clinker from Nigeria to Senegal in June 2020. The vision behind this has expanded from making Nigeria self-sufficient in cement from a few years ago into making the entirety of West and Central Africa cement and clinker ‘independent.’
The big news internationally this week was of the reported effectiveness of a Covid-19 vaccine in early trials by Pfizer and BioNTech. It might not yet make it into people’s arms at scale but it shows that the vaccine appears to work and that others in development and testing may do too. Building material manufacturer share prices didn’t rally as much as airlines or cinema chains on the news, construction has carried on after all, but this is a positive sign that normality for both health and wealth is on the way back at some point in 2021. One point to consider, given the wide regional variation with the economic effects of coronavirus, is what effect a disjointed global rollout of a vaccine or vaccines might have. A building material manufacturer dependent on a region that stamps out the virus later than other places might face an economic penalty. Recovery seems likely in 2021 but it isn’t guaranteed and the implications of the coronavirus crisis seem set to persist for a while yet. Here’s hoping for a different outlook at this point in 2021.
India: UltraTech Cement’s consolidated net sales grew by 8% year-on-year to US$1.39bn in the second quarter of its financial year to 30 September 2020 from US$1.29bn in the same period in 2019. Its profit after tax more than doubled to US$167m from US$78.5m. The group attributed its progress to, “strong quarterly performance on the back of operational efficiencies and its ability to serve all India markets.”
It added that it had focused on health and safety and ‘efficient working conditions’ as it had gradually resumed operations following coronavirus-related lockdown restrictions. Overall, the group’s revenue from operations fell by 14% year-on-year to US$2.44bn in the first half of its financial year from US$2.85bn in the same period in 2019.
Analyst forecasts 100% profit growth in second quarter of 2021 financial year for UltraTech Cement
20 October 2020India: Motilal Oswal Securities predicts that Aditya Birla subsidiary UltraTech Cement’s second-quarter profit is likely to rise by 100% year-on-year in the 2021 financial year, which began on 1 April 2020, to US$161m from US$80.5m in the second quarter of the 2020 financial year. The Economic Times newspaper has reported that the analysts expect an increase in sales of 3.5% to US$1.36bn from US$1.31bn, an increase in cement volumes of 3.9% to 19.4Mt from 18.7Mt, a price drop and a fall in costs in the quarter, which ended on 30 September 2020. The analysts added that cement makers may show volume growth in the seasonally weak quarter due to pent-up demand as the economy has reopened following coronavirus-related disruption.
Global Cement apologies to UltraTech Cement for the previous version of this article that wrongly suggested that the company had made the forecast
Hindalco secures UltraTech Cement bauxite residue contract
21 August 2020India: Metals producer Hindalco has won a contract to supply fellow Aditya Birla subsidiary UltraTech Cement with 1.2Mt/yr of bauxite residue from its aluminium operations, up by 180% from 250,000t in the 2020 financial year, which ended on 31 March 2020. The Economic Times newspaper has reported that UltraTech Cement will use the bauxite residue – or ‘red mud’ – in cement production at 14 of its plants across seven states. As a result of the deal, Hindalco, the world’s largest producer of rolled aluminium, will have full bauxite residue utilisation across three of its refineries. Managing director Satish Pai said, “We have been working with producers to develop high-grade inputs for the cement industry.”
India: Aditya Birla subsidiary UltraTech Cement said that it will spend US$200m in capital expenditure (CAPEX) during the 2021 financial year, which ends on 31 March 2021. The plans consist of a capacity expansion to 118Mt/yr from 115Mt/yr, including the completion of the 4.0Mt/yr Bara grinding plant in Uttar Pradesh and 1.2Mt/yr-worth of brownfield projects in Bihar and West Bengal. Solar and wind power capacity will increase to 350MW from 95MW, while waste heat recovery (WHR) capacity will increase to 185MW from 118MW.
Chair Kumar Birla said, “While 2021 will be a challenging year, Birla remains confident that the economy will revert to the 6 - 8% growth trajectory in 2022.”
Half-year cement producers update
05 August 2020Building materials manufacturer Saint-Gobain summed up the situation large companies face due to coronavirus in its second quarter results when it said that it faced, “very different situations from one country and market to the next.” Financial results are in from many of the largest multinational cement producers outside of China and the basic picture is as Saint-Gobain describes.
Sales revenue for LafargeHolcim, HeidelbergCement and Cemex are all down by around 10% year-on-year for the first half of the year. The variation between different geographical regions is large with some reporting sales declines of up to 20% and others noting rising sales, with one above 5%. Generally, recoveries were reported in June 2020 or when governments relaxed their lockdowns. There’s more variation with earnings figures although this may be down partly to the different figures each company likes to use. Around this is plenty of talk about liquidity and cost cutting programmes to sooth investors.
Figure 1: Sales of selected major multinational cement producers in first half of 2020. Source: Company financial reports.
Figure 2: Cement sales volumes of selected major multinational cement producers in first half of 2020. Source: Company financial reports.
Where it starts to become more interesting is when the companies talk about what they think will happen next. As Robert McCaffrey picked up upon in last week’s Global Cement Live there was a divergence between LafargeHolcim’s optimism for the second half of the year and HeidelbergCement’s caution. LafargeHolcim said it expected a, “Fast demand recovery with an encouraging outlook for the second half of 2020.” Instead, HeidelbergCement said, “A further wave of infections may occur at any time, which would have an impact on construction projects already started or announced in the individual countries. Against this backdrop, it is still not possible to estimate the full effect of the corona crisis on the company results for 2020.” Cemex sat on the fence with, “We expect that Covid-19 will continue to challenge our operations in new ways over the next few quarters.” Contrast this with Buzzi Unicem’s prediction, “Visibility for the second half of the year continues to be very limited and our forecasts are based on a scenario of gradual mitigation of the infections and related restrictions on economic activity.”
This difference in outlook may be subjective. Both LafargeHolcim and HeidelbergCement only had one geographical region each that reported growing sales in the first half of 2020 but LafargeHolcim’s ‘positive’ region represented a larger share of the group’s revenue. Alternatively, it may just be that the companies have different characters and this is reflected in their forecasts. Humans can be either be pessimistic or optimistic and so too can companies.
Of the large regional players, most of the Chinese cement producers are yet to release results for the second quarter of 2020 so there is little to say. Data out this week from China’s Ministry of Industry and Information Technology shows that cement output fell by 4.8% year-on-year to 1Bnt in the first half of 2020. UltraTech Cement, India’s largest producer, saw its revenue fall by 22.5% year-on-year to US$2.34bn for the first half of 2020. The worst of this was in the first quarter of the Indian financial year to 30 June 2020 with revenue falling by 33% with consolidated sales volumes down by 22% year-on-year to 14.7Mt. This coincided with the country’s ‘total’ lockdown period from late-March 2020 to 1 May 2020. Dangote Cement, a large African producer, reported growth in both sales and earnings with full or partial lockdown implemented in South Africa, Congo and Ghana in April 2020 before reopening in May 2020.
This is just a snapshot of what’s been happening with mid-year results awaited from the likes of CRH, Votorantim and, as mentioned above, the Chinese producers. Blanket lockdowns clearly damage construction markets, so future government strategies in tackling the ongoing wave of the pandemic or future waves will have consequences for the financial performance of construction material companies. In the meantime, in Europe at least at the moment, targeted regional lockdowns seem to be the public health measure of choice when outbreaks get out of control. How this translates to balance sheets will be revealed later in the year. In the meantime, while the world works out how to cope with coronavirus, expect more uncertainty.
UltraTech Cement shares first quarter 2021 results
29 July 2020India: Aditya Birla subsidiary UltraTech Cement has recorded a net profit of US$122m in the three months to 30 June 2020, the first quarter of the 2021 fiscal year – down by 28% year-on-year from US$169m in the corresponding period of the 2020 fiscal year. Sales were US$975m, down by 33% from US$1.45bn.
The company said, “UltraTech has emerged stronger and well-prepared in the wake of the on-going Covid-19 pandemic. The total lockdown period from late-March 2020 to 1 May 2020 has been a huge challenge for all manufacturing industries. UltraTech has managed the crisis with a sharp focus on operational efficiencies. In the available 68 operating days during the quarter, the company kept a tight control on costs and cash flow and achieved an effective capacity utilisation of 60% across its network of 54 plants around the country.”
UltraTech said that it had already noted “better-than-expected pick-up in cement consumption in rural markets,” which it attributed to “measured steps towards economic recovery” by national and state governments.