Displaying items by tag: Votorantim Cimentos
Update on Argentina
15 November 2017Forget the news stories about poor markets in Colombia and Brazil. Argentina is riding a construction boom right now. Local producer Loma Negra recently ran an initial public offering and it picked a good time to do it. It aimed to generate up to US$800m from the flotation and in the end it raised over US$1bn. Good news for its Brazilian owner InterCement no doubt, which was last reported as aiming to sell a 32% stake in the company in order to cover its debts. More cheer must have followed from Loma Negra’s third quarter results this week. Its cement sales volumes rose by 9% in the latest quarter to 1.72Mt due to expanding local construction activity.
Graph 1: Cement production and consumption in Argentina Q1 – 3, 2008 – 2017. Source: Asociación de Fabricantes de Cemento Portland (AFCP).
As Graph 1 shows its experience mirrors the wider industry. Cement production rose by almost the same rate for the industry as whole, by 10% year-on-year to 3.19Mt for the quarter, according to Asociación de Fabricantes de Cemento Portland (AFCP) data. For the nine months as a whole production has also risen by 9% to 8.7Mt. This figure is the third highest in the last decade since 2008. Production peaked in 2015 before dropping a major 10Mt following a subdued construction industry in the wake of devaluation of the Argentinean Peso in late 2015 and early 2016. At the time LafargeHolcim, the operator of Holcim Argentina, also blamed the negative influence of neighbouring Brazil’s own financial woes. The economy has bounced back giving the country’s its highest nine month cement consumption figure, 8.8Mt, in the last decade.
Earlier in the year LafargeHolcim said it was importing 0.25Mt of cement into Argentina between May 2017 and April 2018 because it couldn’t meet local demand from its own plants. Given the over-abundance of clinker in the world one might be forgiven for being sceptical about this claim. Bolivia’s Itacamba announced it was also exporting cement to Argentina this week. However, the other point to note from the graph is that consumption has been about 90,500t higher than production so far in 2017. This is an envious position for local producers to be in. One more striking feature that sticks out from the graph above is the undulating curve than both production and consumption has. The Argentinean economy has been through the ringer in recent years and this shows in the ups and downs of the figures.
From the perspective of the three major domestic producers, Loma Negra’s sales revenue rose by 53.9% year-on-year to US$620m in the first nine months of 2017. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by a whopping 73% to US$157m. Cementos Avellaneda, owned by Spain Cementos Mollins and Brazil’s Votorantim, reported similar good news with its overall results boosted by the Argentine market. Its sales revenue in the country rose by 28.3% to Euro130m and its EBITDA rose by 59.5% to Euro32.4m. Although Mollins did make the point that inflation had been particular problem in Argentina, although its impact had been ‘greatly’ outweighed by price rises. LafargeHolcim has had its problems globally so far in 2017 but Argentina hasn’t been one of them. Its operations in the country have been propping up the group’s Latin American results each quarter so far in 2017. Despite being one of its smaller regions by sales revenues, its sales and earnings delivered some of the group’s highest growth in the third quarter of 2017.
In this kind of environment new production capacity can’t be far away. Sure enough Cementos Avellaneda plans to increases the capacity of its San Luís cement grinding plant by 0.7Mt to 1Mt/yr by the second quarter of 2019. US$200m has been earmarked for the project.
So, great news for Argentina and proof that poor markets can turn around. The Brazilian cement association SNIC reckoned in October 2017 that the rate decline of cement sales was slowing, suggesting that the bottom of the downturn was in sight. On the evidence of the current situation in Argentina once the market does revive, South America will be the place to watch.
Brazil: Votorantim Cimentos’ sales revenue has remained stable at US$968m in the third quarter of 2017, boosted by its performance in North America. At home in Brazil the cement producer benefitted from improved market conditions, including higher prices and higher revenues from mortars and agricultural lime. Despite this though its local revenue fell by 4.9% year-on-year in line with the national market. The cement producers adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 27% to US$157m but the company blamed this on a non-recurring tax adjustment.
Cempor fights legal action from UNACEM over Lima plant project
31 October 2017Peru: UNACEM has filed a lawsuit alleging environmental violations against Cempor. Cempor, a joint venture between Chile’s Cementos Bío Bío and Brazil’s Votorantim, plans to build a cement plant in Lima, according to the La Tercera newspaper. The legal move is the latest action in a long running battle between the cement producers over the project. Cempor has responded by alleging to National Institute for the Defence of Free Competition and the Protection of Intellectual Property (INDECOPI) that UNACEM’s conduct is contrary to the functioning of a free market.
Cementos Bío Bío and Votorantim originally formed Cempor in 2010 with each company holding a 29.5% stake. The other owners include IPSA and the World Cement Group with a 20.5% stake each. At this time Cempor planned to build a 07Mt/yr cement plant near Lima.
CRH linked to purchase of Suwannee American Cement
02 October 2017US: Ireland’s CRH is close to agreeing a purchase of Suwannee American Cement from Votorantim Cimentos and Anderson Columbia. The deal is valued at US$750m, according to sources quoted by Bloomberg. However, this is an extremely high value for a single cement plant sale in the US. Suwannee American Cement operates a 1Mt/yr plant at Branford in Florida.
Votorantim Cimentos to sell stake in Suwannee American Cement
27 September 2017US: Votorantim Cimentos is selling its 50% stake in Suwannee American Cement based in Florida. The sale is intended to focus Votorantim’s portfolio and reduce its debts according to the Valor Econômico newspaper. The effects of Hurricane Irma are expected to increase the selling time. Votorantim operates the 1Mt/yr Suwannee cement plant in Branford with Anderson Columbia. The cement producer supplies markets in Florida and Georgia.
Cementos Avellaneda to spend US$230m on upgrade to plants in Argentina
25 September 2017Argentina: Cementos Avellaneda plans to spend US$230m towards upgrading its La Calera and Olavarría cement plants. The company is a joint venture between Spain's Cementos Molins and Brazil’s Votorantim. US$200m will be used to increase the production capacity of the La Calera plant in San Luis to 1Mt/yr from 0.7Mt/yr by the second half of 2019. US$30m has been targeted to increase the Olavarría plant’s capacity by 0.3Mt/yr. Commissioning is planned for the end of 2017.
Local council approves extension to St Marys Cement’s Charlevoix plant construction period
19 September 2017US: The Charlevoix Township Board of Trustees has approved a request from St Marys Cement to extend a certificate allowing St Marys Cement more time to complete expansion work at its Charlevoix plant in Michigan. Votorantim Cimentos North America asked the local government body to extend its industrial facilities exemption certificate abatement by one year, as construction at the site is not expected to be completed until the end of 2018, according to the Charlevoix Courier newspaper. The cement producer plans to have the new systems at the plant running by mid-May 2018.
Upgrade work at the plant will increase its production capacity from 1.3Mt/yr to nearly 2Mt/yr. The cost has been budgeted at US$130m.
Brazil: The state government of Mato Grosso has reached an agreement with Votorantim to recover US$79m in tax from Votorantim. The payment refers to an under-payment of tax made in error by the company's cement plants in Corumbá and Nobres in 2015, according to Midia News. The state’s tax recovery unit absolved the cement producer of any blame, instead attributing the error to an interpretive issue.
Fire reported at Djebel El Ouest cement plant
17 July 2017Tunisia: Fire fighters have controlled a fire that broke out at the Djebel El Ouest cement plant. The fire started on the ground floor of the plant, according to Tunis Afrique Presse. It then damaged electrical cabling and equipment. It is suspected to have been caused by a short circuit in an electrical machine caused by rising temperatures. No casualties have been reported.
Turkey: Brazil’s Votorantim is set to inaugurate a Euro140m upgrade project at its Sivas cement plant. The project has been part of the cement producer’s strategy to increase its revenue outside of Brazil, according to the Valor Economico newspaper. The upgrade has seen the plant’s cement production capacity rise to 1.8Mt/yr from 0.6Mt/yr. Prior to the investment the plant accounted for around 19% of Votorantim’s 3Mt/yr production in Turkey and once fully operational it will account for 42%. The plant will supply the market with CEM I and CEM II products.
Company president Walter Dissinger said that international sales account for 40% of group revenue. However it is hoped that this will recede to 30% once the Brazilian market starts to recover. The company is also building an upgrade at its Charlevoix plant in the US.