Displaying items by tag: coronavirus

France: LafargeHolcim subsidiary Lafarge France says that it will continue to provide its regular service to customers as operations continue into a second national coronavirus lockdown in 2020. This was made possible by the government’s decision to permit the continuation of construction and industrial activities, according to the company.

It said, “The company has learned a lot since the containment last spring and is prepared to guarantee the best possible service for all of its markets, even under the specific conditions linked to the acceleration of the Covid-19 epidemic. All activities - cements, concretes and aggregates - will therefore operate normally throughout the country.” It added, “All our sites are now showing sufficient stock levels to deal calmly with the coming months.”

Eurocement changed owners this week when Sberbank took control of the company’s parent organisation. Due to a ‘difficult financial situation’ the state-owned bank said it had consolidated 100% of the shares of Eurocement’s parent company GFI Investment Limited. It’s uncertain quite how difficult this situation is but in 2016 the cement producer owed the bank Euro700m. Local media agency RosBiznesConsulting (RBC) reported in September 2020 that the ‘problem borrower’ that had caused a record increase in overdue debt at Sberbank in July 2020 was none other than Eurocement. Whilst Sberbank has said so far that it does not have operational control of the group, it is seeking a strategic investor for the asset.

This is a major story given that Eurocement is Russia’s largest cement producer and it operates 19 cement plants Russia, Ukraine and Uzbekistan. It said it produced 16.5Mt of cement domestically in 2019 but this compares to a production capacity of around 50Mt/yr suggesting a considerably low utilisation rate of just one third! The producer has embarked on a modernisation programme in recent years but many of its plants are old and use wet-process production lines.

2019 finally saw the Russian cement market turn around following decline since 2015. Unfortunately, CM Pro reports that cement production in Russia as a whole fell by 5% year-on-year to 25.1Mt in the first half of 2020. Cement shipments fell by a similar rate. This trend appears to have carried on through July and August 2020. Cement consumption has fallen fairly uniformly in most regions with the exception of the Northwestern Federal District, which has seen a modest increase. In the middle of the year, Soyuzcement - the Union of Russian Cement Producers, was expecting wildly different scenarios ranging from falls of up to 10% in a negative situation to rebound of up to 3% in a positive one. It was pinning its hopes on government support for the construction industry in various ways. With the trend to August 2020, record breaking numbers of new coronavirus cases in early November 2020 and the onset of winter, it seems unlikely that Soyuzcement’s positive thinking will come to pass.

With this in mind who might want to buy into Eurocement? No doubt various private equity firms and local producers are watching the oil price carefully while they plan their next move. Internationally, LafargeHolcim seems the obvious western multinational contender with a presence in the country. Yet it seems unlikely it would want to take the risk, following its departure from certain regions like South-East Asia in recent years and persistent rumours about other divestment targets. HeidelbergCement’s balance sheet, credit lines and appetite for risk might not yet withstand a major investment in Russia. Buzzi Unicem has actually been expanding recently with an acquisition in Brazil but whether it’s prepared to bet on another market disrupted by coronavirus is unknown. China National Building Materials Group Corporation (CNBM) was reportedly planning on becoming a shareholder of Eurocement Group in 2016 but this may have just been bluster surrounding geopolitical links between Russia and China, and general cooperation between the companies on upgrading Eurocement’s old production lines. However, Russia is the next location in China’s Belt and Road initiative so it’s not ridiculous. Whoever steps up can expect the Russian government to take a keen interest, depending on how much control Sberbank wants to offer up of Eurocement. The story continues.

France: Vicat recorded net sales of Euro2.07bn in the first nine months of 2020, up slightly from Euro2.06bn in the first nine months of 2019. Sales rose in Africa by 23% to Euro198m from Euro161m, in Europe (excluding France) by 8% to Euro317m from Euro294m and in the Americas by 7% to Euro471m from Euro442m.

Cement sales constituted 51% of sales at Euro1.05bn, up by 5% from Euro991m. Cement volumes rose by 8% to 18.0Mt from 16.7Mt, while concrete volumes fell by 2% to 6.65Mt from 6.78Mt.

Chair and chief executive officer (CEO) Guy Sidos said, “The impact of the Covid-19 outbreak on the group's operating profit was eliminated by the end of July 2020. The good momentum observed since then, particularly in the group's most recent operations in India and Brazil, leads us to envisage that operating profit may increase significantly at constant scope and exchange rates in 2020. Nevertheless, the group is continuing its efforts to reduce structural costs, signified by the relocation on 1 October 2020 of its head office to l’Isle d'Abeau in Isère.”

Pakistan: Lucky Cement chief executive officer (CEO) Muhammed Ali Tabba has praised the government’s decision to lift coronavirus lockdown restrictions on the export of products. As a result, he predicted that the rate of export growth would increase in 2020. The Balochistan Times newspaper has reported that Tabba also welcomed the end of restrictions on construction, and thanked the State Bank of Pakistan for subsidising payrolls during the on-going national coronavirus lockdown and the Ministry of Finance for releasing business refunds quickly.

Tabba said, “The country has benefited greatly from the way the Pakistan Tehreek-e-Insaf (PTI) government has won the war against a pandemic like Covid-19.”

India: Ramco Cements recorded sales of US$301m in the first half of the 2021 financial year, down by 15% year-on-year from US$354m in the first half of the 2020 financial year. Its profit was US$46.4m, down by 4% from US$48.4m.

The company said, “Business operations were severely disrupted during April 2020 in view of lockdown imposed by the government due to Covid-19. After relaxation of restrictions by the Government, business recovered gradually and is continuing with weak demand, especially in urban/semi-urban markets. The company continues to comply with the various operating guidelines issued by the relevant regulatory authorities from time to time. As per the current assessment of the company, there is no material impact on the carrying values of trade receivables, inventories and other financial/non-financial assets.”

Nigeria: LafargeHolcim subsidiary Lafarge Africa recorded sales worth US$471m in the first nine months of 2020, up by 10% year-on-year from US$427m in the corresponding period of 2019. Its recurring earnings before interest and taxation (EBIT) increased by 15.7% to US$108m from US$93m.

Chief executive officer (CEO) Khaled El Dokani said, “Our robust results for the first nine months reflect the strong recovery of the demand in the third quarter and the successful implementation of our ‘Health, Cost & Ccash' initiatives.” He added that this was despite the impact of coronavirus and negative local currency effects.

Denmark: FLSmidth has continued to report disruption to order intake, revenue and earnings due to the coronavirus pandemic. Its nine-month revenue from cement sector supply and service contracts were US$680m, down by 28% year-on-year from US$940m in the first nine months of 2020. The cement division’s loss before interest, taxation and amortisation (LBITA) was US$14.1m, compared to earnings before interest, taxation and amortisation (EBITA) of US$50.7. Its gross order intake fell by 39% to US$569m from US$932m. However, order intake in the third quarter of 2020 improved from the second quarter of the year.

The company said, “Across regions, around 95% of cement plants were back in operation at the end of the third quarter of 2020, but many plants continue to run at reduced capacity. As economic growth is one of the most important drivers for cement demand, our customers are highly sensitive to market fluctuations and typically respond through hesitation and cash preservation.” It added, “We are taking additional steps to simplify our cement business and adjust our cost structure. These activities include less in-house manufacturing and more sourcing from local suppliers as well as a reduction of the project organisation.”

US: Eagle Materials recorded sales of US$875m in the six months between 1 April 2020 and 30 September 2020, the first half of its 2020 financial year, up by 16% year-on-year from US$756m in the first half of the 2019 financial year. Net earnings were US$192m, up by 70% from US$113m. Total cement shipments rose by 28% to 4.27Mt from 3.33Mt.

President and chief executive officer (CEO) Michael Haack said, “We are pleased to have delivered another quarter of record revenue and net earnings growth while further strengthening our balance sheet. Our end markets remain resilient as Covid-19-related uncertainty persists: the housing market continued its strong rebound, cement demand remained robust, despite wet weather in the first half of September.” He added that the company shipped a record 2.2Mt of cement during the quarter.

India: Cement production fell by 18% year-on-year to 209Mt in the first nine months of 2020 from 255Mt in the same period in 2019. Data from the Ministry of Commerce and Industry shows that production in the third quarter of 2020 dropped by 11% year-on-year to 69Mt from 78Mt. Monthly production has consistently fallen year-on-year since March 2020 when coronavirus-related lockdown measures started.

Colombia: Cemex subsidiary Cemex Latam Holdings (CLH) recorded net sales of US$571m in the first nine months of 2020 were down by 24% year-on-year from US$752m in the corresponding period of 2019. Operating earnings fell by 14% to US$69.0m from US$87.0m, while consolidated cement volumes fell by 20% to 3.92Mt from 4.89Mt.

Jesus Gonzalez, chief executive officer (CEO) of CLH said, “Our operations could run relatively normally during the third quarter in Colombia, Guatemala, Nicaragua and El Salvador, while restrictions impacted in Panama and to a lesser degree in Costa Rica.” He added that the company improved its operating earnings before interest, taxation, depreciation and amortisation (EBITDA) by 19% on a like-for-like basis to US$51m in the third quarter of 2020.