Displaying items by tag: VICAT

India: Kalburgi Cement has commissioned a 1.2Mt/yr bulk terminal at Khapoli near Mumbai. The unit had an investment of US$10m, according to the Hindu newspaper. The subsidiary of France’s Vicat plans to transport cement by train from its 2.25Mt/yr Gulbarga plant to the new terminal to supply the market in Mumbai. In 2010 Vicat purchased a majority stake in Bharati Cement, which has a production capacity of 5.5Mt/yr. It sells cement under Bharati brand name.

France: Vicat’s earnings rose in the first half of 2018 due to good performance in the US, Turkey, France and Kazakhstan. Its earnings before interest and taxation (EBIT) increased by 21.3% year-on-year to Euro104m from Euro86m. Its sales revenue rose by 2.7% to Euro1.28bn from Euro1.25bn. The company’s cement production increased by 5.3% to 11.4Mt from 10.8Mt.

“Excluding currency movements, which have a particularly large negative impact this year, the croup achieved notable progress in Turkey, the US, France and Kazakhstan,” said the group’s chairman and chief executive officer (CEO) Guy Sidos. He added that the group also benefitted from the start of work on new infrastructure projects in India.

However, the group reported a 21.9% fall in earnings before interest, taxation, depreciation and amortisation (EBITDA) to Euro22.7m in India due to falling prices and mounting energy costs. In West Africa EBITDA declined by 14.5% to Euro22.2m due to falling prices and rising production costs. In Europe EBITDA fell by 16.9% to Euro35m due to contacting sales in Switzerland as well as issues Italy. Finally, EBITDA fell to a loss of Euro3.9m in Egypt due to falling sales in the wake of military intervention in the Sinai region.

India: Bharathi Cement plans to build new plants in Vizag and Mumbai. The new units are intended to meet market demand in the east and west of the country respectively, according to the Economic Times newspaper. The company hopes to raise its national market share to 5% from 4% at present with the new plants and from new products.

France: Vicat’s sales in Turkey, the US and Kazakhstan have driven its growth in the first quarter of 2018. Its sales revenue for its cement business rose by 10.9% year-on-year at constant scope and exchange rates to Euro290m in the first quarter of 2018. Its cement sales volumes rose by 6.5% to 5.2Mt from 4.9Mt.

“We posted significant business growth in Turkey, the US and Kazakhstan, excluding currency effects. The gradual recovery continued in France and India was boosted by the start-up of new infrastructure projects. Conversely, we recorded a business contraction in Switzerland during the first quarter as a result of adverse weather conditions, especially in March 2018, and the completion of a number of major projects. The group’s business trends in Egypt were hampered by the military operations underway to restore security in its production area,” said group chairman and chief executive officer (CEO) Guy Sidos.

Egypt: France’s Vicat plans to invest Euro50m into its Sinai Cement subsidiary. Gianfranco Tantardini, the managing director of the local subsidiary, said that the cement producer wants to reduce the company’s losses by raising its stake in it, according to Mubasher. Vicat is waiting for the Egyptian government to approve a waiver to the 45% foreign ownership limits for the transaction to happen. In 2003 Vicat acquired a 40% stake in Sinai Cement.

India: France’s Vicat plans to spend Euro223m towards upgrading a cement plant and building a new one in India. Group chairman Guy Sidos signed two memoranda of understanding on a recent French business delegation to India, according to the Economic Times newspaper. Vicat’s local subsidiary, Kalburgi Cement, plans to spend Euro140 on an upgrade to its Karnataka cement plant. The upgrade will add 2.25Mt/yr of cement capacity and will be completed by the first quarter of 2023. It also plans to invest Euro60m towards building a new 1.75Mt/yr plant in the Vizianagaram district of Andhra Pradesh. The new plant is scheduled for completion in mid-2022. Once both projects are completed Kalburgi Cement will have a total cement production capacity of 6.75Mt/yr from two units.

HeidelbergCement’s acquisition of Italcementi really sticks out in a comparison of the major multinational cement producers in 2017. Both its sales revenue and cement sales volumes jumped up by more than 10% year-on-year from 2016 to 2017. It still puts HeidelbergCement behind LafargeHolcim and CRH in revenue terms but the gap is shortening. Although, as we reported at the time of its preliminary results in late February 2018, on a like-for-like basis its sales and volumes only rose by 2.1% and 1.1% respectively.

Graph 1: Sales revenue from multinational cement producers in 2016 and 2017 (Euro billions). Source: Company financial reports.

The European markets may be back on their feet but serious growth came from mergers and acquisitions. Along the same lines, India’s UltraTech Cement is set to reap the reward of its US$2.5bn acquisition of six integrated cement plants and five grinding plants from Jaiprakash Associates in mid-2017. Although as can be seen in graphs 1 and 2 it had been doing fairly well even before this.

Graph 2: Cement sales volumes from multinational cement producers in 2016 and 2017 (Mt). Source: Company financial reports.

We’ve included Ireland’s CRH this year to present the scale of the company. When it says that it is the world’s biggest building materials company, it means it! CRH doesn’t publish its cement sales volumes, which makes it hard to compare it to other cement producers. In part this may be due to the company’s regional-focused structure and its approach to the construction industry. In Global Cement Magazine’s Top 100 Report 2017 – 2018 feature, CRH was placed as the seventh largest cement producer by installed capacity with 50.5Mt/yr. The major story with CRH in recent years has been its steady stream of acquisitions, notably Ash Grove Cement in the US in 2017.

LafargeHolcim may remain the biggest cement producer in the world outside of China but it made an income loss of Euro1.46bn in 2017. At face value its cement sales volumes fell by 10.2% to 210Mt in 2017 from 233Mt in 2016 but this was mainly due to divestments in China, Vietnam and Chile. On a like-for-for-like basis its volumes rose by 3.3%. To this kind of mood music the emphasis on the release of its 2017 results this week was the announcement of a five-year plan to refocus the company. However, reports of overcapacity in Algeria that also emerged this week suggest the group may have its work cut out.

Cemex described 2017 as a ‘challenging year’ as its operating earnings fell due to a lower contribution from the US and South America despite growth in Mexico and Europe. Hurricanes in Florida had a negative impact in the US and the Colombian market suffered from falling production in 2017. UltraTech Cement uses a different financial year to the other companies detailed here, which makes comparisons a little harder. However, its profit after tax fell in the third quarter that ended on 31 December 2017 due to rising costs of petcoke and coal. Undeterred though, its expansion drive continues this week with its continued efforts to try and win the bid for Binani Cement. Vicat, meanwhile, reported falling earnings in part due to the poor market in Egypt. Yet overall its sales and volumes rose in 2017 aided by recovery in France. Finally, Buzzi Unicem rode out the Italian market with its acquisition of Zillo Group delivering a rise in sales and cement volumes.

Wider trends are hard to call given the differing geographical spreads of these cement producers. Europe has been recovering from a decade of stagnation and Asian markets are no longer reliable. South America is mixed with places like Brazil, and now Colombia, underperforming. Yet Argentina is proving one of the fastest growing construction markets at the moment with local plants unable to meet demand. Africa remains profitable and promising as ever but divided between the north and the Sub-Saharan region.

Once the effects from mergers and acquisition activity by the larger cement producers start to fade then the actual situation may become clearer. In the meantime, the effects of the recent cold snap in Europe on the first quarter results for 2018 could be pretty varied. The Financial Times newspaper, for example, quoted one pundit from the Construction Products Association who estimated the industry lost 1% of its annual output to the bad weather in the UK. This may not be great news for any company relying on the European market.

France: Vicat’s earnings have suffered from by falling cement sales volumes in Egypt and a ‘sharp’ increase in production costs caused by the devaluation of the Egyptian Pound in late 2016. Its earnings before interest, taxation, depreciation and amortisation (EBTIDA) fell by 5.9% at constant scope and exchange rates to Euro444m in 2017 from Euro458 in 2016. Despite this, its consolidated sales rose by 6.4% to Euro2.56bn from Euro2.45bn. The cement producer’s cement sales volumes rose by 4.9% to 22.9Mt from 21.9Mt.

“Vicat posted a healthy performance in 2017 amid a very mixed environment,” said group chairman and chief executive officer (CEO) Guy Sidos. He added that the group had faced ‘difficult’ weather conditions, currency trends and geopolitical tensions in some of its markets. “In spite of these headwinds, our businesses in France, Asia and the US made healthy progress and offset the contractions in the Africa and Middle East region.”

Recent data from Cemsuisse, the Swiss Cement Industry Association, shows that cement shipments fell by 2.8% year-on-year to 4.3Mt in 2017. The local industry has fluctuated from a high of just below 4.7Mt in 2011 with various peaks and troughs since then as can be seen in Graph 1. The current drop has been blamed on a poor start and end to 2017 despite some rallying activity in the third quarter.

Graph 1: Cement deliveries in Switzerland, 2010 – 2017. Source: Cemsuisse.

The local industry tends to get overlooked somewhat due to its modest size, its geographically landlocked position and its exclusion from the European Union (EU) despite being surrounded by member states. This is a mistake though because the territory offers lessons on how a developed cement industry can function and co-exist with a large neighbour. In Switzerland’s case it has access to the EU market through a series of bilateral agreements that provide parity with EU legislation. After a potential crisis over immigration following a local referendum in 2014, Switzerland and the EU came to an agreement in 2016 that softened the labour rules for foreigners. Pertinent to the cement industry, the EU and Switzerland signed a deal to link emissions trading systems in 2017. It is currently anticipated to come into force in 2019. Trading in the EU may come at the price of free movement of labour but emissions trading parity will also help to protect Switzerland’s cement plants.

The country has a cement production capacity of 4.3Mt/yr according to Global Cement Directory 2017 data. This divides into three plants operated by LafargeHolcim, two by Ireland’s CRH’s local subsidiary Jura Cement and one by Vigier Cement, a subsidiary of France’s Vicat. Most of these plants are around the 0.8Mt/yr mark, with the exception of Jura’s smaller Cornaux plant.

After a strong performance in 2016 with growing cement sales volumes, LafargeHolcim started 2017 with continued positive cement sales but this failed to compensate for low aggregate sales and falling ready-mix (RMX) concrete sales. CRH reported a similar experience that it blamed on poor weather at the start of the year and a competitive environment. This then led to an 8% fall in cement sales in the first nine months of 2017 with RMX sales and operating profit down too. Vicat’s experience in the country followed that of its competitors, with cement sales rising slightly over the first three quarters but concrete and aggregate sales dropping. Among other reasons it blamed the situation on the completion of road and civil engineering projects.

Cembureau, the European Cement Association of which Cemsuisse is a member, forecast a stable year in 2017 following the wind-down of infrastructure projects with support from the housing sector. However, it then expected the market to soften as demographic trends saw slower growth in population reduce housing demand. This state appears to have arrived early. On the plus side though the industry’s sustainability credentials have grown as the split between truck and train transport of cement hit its highest ratio in favour of rail in 2017 at 53%. The trend switched from truck to train in 2013 and it hasn’t looked back since then.

As a mature economy in the heart of Europe, Switzerland generally pops up in the industry news as the home of the world’s largest non-Chinese cement multinational, LafargeHolcim. That company’s headquarters are in Jona and Holcim had its headquarters in Holderbank. LafargeHolcim’s single largest shareholder, with an 11% share, is the Swiss billionaire Thomas Schmidheiny, who inherited his portion of the family business. He notably called for a better deal for Holcim during the merger negotiations between Lafarge and Holcim in 2015 and boardroom struggles have dogged the combined company ever since. Consideration should also be granted to the country’s other engineering and construction industry related multinationals such as ABB, Sika and the like. By the numbers Switzerland has a case for being one of the world’s most important nations for the cement industry.

France: Vicat’s cement sales have grown by 4.3%, at constant scope and exchange rates, to Euro932m in the first nine months of 2017. Its cement sales volumes rose by 1.6% year-on-year to 16.9Mt from 16.6Mt. Overall, the construction materials company’s sales increased by 2.9% to Euro1.92bn from Euro1.87bn.

“In the first nine months of the year our sales grew at a healthy pace. This was achieved through further growth in the US, despite tough weather conditions in the South east, and a gradual improvement in the French, Indian and Kazakh markets. After very unfavourable weather conditions in the first half, our business in Turkey posted brisk growth again in the third quarter. Lastly, our sales were almost stable in the West Africa and Middle East region,” said group chairman and chief executive officer (CEO) Guy Sidos.