Displaying items by tag: UltraTech Cement

India: Ultratech has reported a profit after tax in the three months to 30 September 2019 of US$81.8m, up by 62.6% from US$50.3m in the third quarter of 2018. The company made sales of US$1.34bn in the period, a year-on-year improvement of 4.4% from US$1.28 over the same three months of 2018. In spite of nationwide monsoon flooding, which was heaviest in Ultratech’s key operating areas of Eastern and Central India, and depressed demand, the company consolidated its 117Mt/yr capacity with the acquisition of Century Cement in September 2019. Ultratech’s reliance on renewable power grew to 10.5% from 8.4% in the previous three months to 30 June 2019, cutting energy costs by 9.0%. During the period, Ultratech carried out annual maintenance across its installed capacity, resulting in a relatively low capacity utilisation and raising variable costs by 3.0% in comparison to the previous quarter. The company said that it is ready to meet normalised cement demand going forward, with the government’s commitment to a thrust in infrastructure spending bolstering positive expectations. Ultratech, the World’s third biggest cement company, is the only one to have a capacity greater than 100Mt/yr in a single country outside of China.

India: UltraTech Cement has declared the scheme of arrangement between itself and Century Textiles and Industries as part of its merger process. It will issue one equity share worth US$0.14 each for every eight equity shares of the same value held by the shareholders of Century Textiles and Industries. UltraTech Cement received approval from the Competition Commission of India (CCI) for the acquisition of the cement business of Century Textiles and Industries in late August 2018 but it faced legal challenges subsequently.

The acquisition further strengthens UltraTech Cement’s lead in the Indian market. It says it is now the only company outside of China to have a production capacity of more than 100Mt/yr in a single country. It also claims that it is the third largest cement company in the world excluding those based in China.

Bangladesh: Germany’s HeidelbergCement will purchase Ultratech’s stake in Emirates Cement, the owner of the 0.5Mt/yr Emirates grinding plant in Dhaka. NewAge Business has reported that Ultratech, a subsidiary of India’s Aditya Birla Group, has set the price of the stake at US$32.1m.

Ultratech first produced cement in Bangladesh following Aditya Birla Group’s acquisition of ETA Star Cement in April 2010, when it bought into the latter’s Bangladeshi subsidiary Emirates Cement for an estimated investment of US$382m. The divestment of its sole Bangladeshi asset awaits bank approval.

Bangladesh produces 58Mt/yr of cement, exceeding a market demand of 31Mt/yr. Of the 75 producers in the country, only 35 are actively making cement.

India: UltraTech Cement has reported a 91% rise in its profit for the first quarter of the 2020 fiscal year, to US$170m from US$89m in the first quarter of the 2019 fiscal year. Its net sales were up by 15% to US$1.49bn, despite flat sales volumes. These were 2% higher at 17.86Mt, compared to 17.48Mt a year earlier.

India: UltraTech Cement’s net sales grew by 15% year-on-year to US$1.42bn in the quarter to 30 June 2019 from US$1.23bn in the same period in 2018. Its profit before interest, depreciation and tax rose by 61% to US$402m from US$250m. Its local sales volumes increased by 3% to 17.3Mt from 16.8Mt but exports fell by 7% to 0.6Mt from 0.65Mt.

It said that it had fully integrated its UltraTech Nathdwara Cement subsidiary with its systems and processes. The plants it acquired from Jaiprakash Associations in June 2017 were operating in line with its existing plants and had achieved break-even profit before tax during the reporting quarter. The commissioning of its 4Mt/yr Bara grinding plant in Madhya Pradesh has been delayed to late 2019.

With a good number of the financial results published by the non-Chinese multinational cement producers for the first half of 2019, it is now time for a roundup. Graphs 1 and 2 below lay some of the basics with the general sales revenue and cement production volume trends.

Graph 1: Sales revenues from large multinational cement producers in the first half of 2019 and 2018. Source: Company reports.

Graph 2: Cement sales volumes from large multinational cement producers in first half of 2019 and 2018. Source: Company reports.

This is only part of the picture as the larger companies had various complications. For example, LafargeHolcim’s apparent falling revenue and sales volumes is mainly due to its massive divestments in South-East Asia. On a like-for-like basis its sales and sales volumes of cement rose. Its recurring earnings before interest, taxation, depreciation and amortisation (EBITDA) better illustrated this with a rise of 7.2% year-on-year in real-terms to Euro2.41bn in the first half of 2019 from Euro2.25bn from 2018. The company didn’t have it all its own way though with falling cement sales volumes in Asia despite the divestment and poor growth in its Middle East Africa region.

By contrast HeidelbergCement reported growing sales but its earnings and profits were down. Its profit fell by 33% to Euro291m from Euro435m. This was blamed on the group’s sale of its Ukraine subsidiary in April 2019. The operations were sold to Overin Limited, part of Ukrainian investment company Concorde Capital Group, for Euro13m. HeidelbergCement said that the divestment resulted in a loss of Euro143m. Aside from this, as Bernd Scheifele, the chairman of the managing board of HeidelbergCement, explained, positives in markets in Asia, Western and Southern Europe compensated for weaker business in North America and the Africa-Eastern Mediterranean Basin Group area.

Cemex has a tougher time of it than its larger rivals due its greater reliance on American markets. Slow starts to infrastructure projects were blamed in Mexico, poor weather hit earnings in the US and problems occurred further south too. Luckily Europe was strong for the company with lots of good news areas. It wasn’t enough though as Cemex’s sales fell by 4% to US$6.72bn from US$7bn and its operating EBITDA dropped by 11% to US$1.21bn from US$1.36bn.

As for the other companies covered in the graphs, Buzzi Unicem and Titan Group prospered due to the US market. The former described its US activity as ‘lively.’ However, it admitted that its sales growth there was mainly caused by falling imports in the face of weak domestic demand and ‘considerable production and logistical difficulties’ in June 2019 caused by flooding of the Mississippi river. Titan, meanwhile, caught a well-deserved break after recent years with growth also in Greece and Southeastern Europe. Vicat managed to stave off a decline in sales due to poor markets in Turkey, Switzerland, Indian and West Africa through its acquisition of Brazil’s Ciplan in late 2018. Yet, its earnings and cement sales volumes fell anyway.

Dangote Cement once again suffered at home in Nigeria, while its Pan Africa business grew. Trouble at home was pinned on lower volumes, price discounting, higher input and distribution costs and higher fuel and power costs in the first half of 2019. Of more concern, earnings fell in Pan Africa too in the first half due to market conditions in South Africa and Zambia. As ever though Dangote Cement’s diversity in Sub-Saharan Africa should see it through. Finally, Semen Indonesia continued to ride high as its sales increased by 23% to US$1.17bn due to its absorption of LafargeHolcim’s assets. Unsurprisingly, its sales volumes grew at a similar rate, to just below 13Mt in the first five months of 2019. Yet trouble may be store ahead as its local sales fell by 7% in this period.

Other major producers omitted here include Ireland’s CRH and India’s UltraTech Cement. Both are set to release their results later in August 2019 and will make for essential reading as the market conditions so far in 2019 become clearer. The latter in particular will be worth watching if a report by Indian credit agency CARE Ratings out this week is correct. It has forecast production capacity growth of 120Mt by 2030 in India. UltraTech Cement is perfectly poised to benefit from this.

India: Kumar Mangalam Birla has been elected as the chairman of Century Textiles and Industries. The appointment follows the death of his grandfather Basant Kumar Birla early in July 2019. Kumar Mangalam Birla is the head of Aditya Birla Group, the owner of UltraTech Cement amongst other subsidiaries.

India: UltraTech Cement plans to complete its merger with Century Cement by September 2019. Chairman Kumar Mangalam Birla said the company has approval from shareholders, the Competition Commission and stock exchanges, according to the Mint newspaper. However, it still needs permission from the National Company Law Tribunal (NCLT).

The merger, which was first announced in May 2018, is a long running reorganisation of assets belonging to the Birla family. Once complete it is expected to give UltraTech Cement dominance in all regional markets with the addition of 13.4Mt/yr of production capacity in Madhya Pradesh, Chhattisgarh and Maharashtra.

India: The Jharkhand Industrial Area Development Authority (JIADA) has cancelled an allotment of land to UltraTech Cement for a project to build a 1.5Mt/yr plant. The cement producer was allotted 48 acres of land by JIADA in 2016, according to the Times of India. The industrial development body for the state government also sent notices to 20 other companies warning them that their allocations would be nullified. The action is being taken to free up land for development.

India: Emami Group has chosen Arpwood Capital and Credit Suisse to manage the sale of its cement business. It is seeking a sale value of around US$1bn according to sources quoted by the Business Standard newspaper. However, the company is still deciding the size of the stake it wants to sell. UltraTech Cement was reported to be in talks to buy a stake in Emami Cement in late June 2019.