Displaying items by tag: inflation

Peru: Cementos Pacasmayo recorded consolidated sales of US$140m in the first quarter of 2022, up by 13% year-on-year from US$124m in the first quarter of 2021. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) also rose, by 21% year-on-year to US$128m from US$105m. The company said that its strong revenue generation enabled earnings growth despite cost increases. Its reliance on imported clinker to meet growing demand increased Cementos Pacasmayo’s exposure to the effects of inflation.

During the quarter, Cementos Pacasmayo produced 882,000t of cement across its three facilities, down by 4.4% year-on-year. The plants’ clinker production rose by 6.7% to 568Mt from 532Mt in the first quarter of 2021.

Colombia: Cementos Argos recorded sales of US$642m in the first quarter of 2022, up by 11% year-on-year from first-quarter 2021. The company’s earnings before interest, taxation, depreciation and amortisation (EBITDA) fell by 18% year-on-year to US$88.6m. Cement volumes remained level year-on-year at 3.9Mt. Cementos Argos said that higher inflationary pressures impacted costs associated with raw materials, energy, freight and maintenance, but noted its ‘very good price performance’ across all of its regions. It expects the rise in cement prices to a contribute to a reduction in inflationary cost impacts in the rest of 2022.

CEO Juan Esteban Calle said "Demand for our products and solutions remains very healthy and dynamic in all regions. We are operating at full capacity, despite a challenging environment due to global supply chain disruptions and inflation in energetics and raw material costs. In this environment, we are focused on maximising production at our integrated cement plants to meet our customers' growing needs and on executing a pricing strategy that mitigates the impact of inflation.”

Mexico: GCC recorded consolidated sales of US$207m in the first quarter of 2022, up by 16% year-on-year from first-quarter 2021 levels. US sales growth of 21% contributed to the increase, driven by regional cement volumes growth of 10%. The group's cement volumes in its native Mexico rose by 12%. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) in the quarter reached US$54.5m, up by 10% year-on-year. Following the results, the company plans to reactivate its on-going share buyback programme.

Chief executive officer (CEO) Enrique Escalante said "GCC is off to an excellent start this year. We are pleased with the results delivered during this quarter and of the way we are overcoming a high inflation environment amid global challenges. One of our top priorities is being extremely vigilant in offsetting cost pressures as we capitalise on market opportunities and focus our efforts in maximising production and terminal outputs. Market trends and full-year backlogs are encouraging for 2022; therefore, we expect to end the year in line with our high-single to double-digit EBITDA growth guidance."

Mexico: Increases in raw material prices and energy costs, as a result of high inflation levels, will affect the operating margins of cement companies listed on the Mexican Stock Exchange in the first quarter of 2022, according to analysts quoted by CE NoticiasFinancieras.

Jacobo Rodríguez, director of Economic Analysis at Black Wallstreet Capital, explained that, "Despite the fact that companies are slow to pass on the increase in their costs to their final products, we will see pressure on their margins in their results in the first quarter of the year and from now on.”

Heriberto Sandoval, investment advisor at Increase Kapital, said “The cement industry is strongly affected by the increase in energy costs and, considering that the high cost pressures worldwide will be longer lasting than originally thought, this will lead to a decrease in earnings before interest, tax, depreciation and amortisation (EBITDA) this year.”

Mexican cement companies recorded a decline in the price of their shares between January and March 2022. Market leader Cemex led the way, with a 23.59% drop in the value of its shares. The second largest drop was seen by GCC, which lost 9.5% of its value. Cementos Moctezuma’s shares also lost 3.05% of their value in the first quarter of 2022.

US: Lhoist North America and Mississippi Lime Company have announced price increases for their products subject to existing contractual obligations.

Lhoist North America increased its prices by 10% for lime, limestone and clay products from the start of April 2022. It blamed this on inflation upon the cost of chemical additives, electricity, explosives, diesel, mining equipment, spare parts, inbound transportation, mining services and other inputs.

Mississippi Lime Company has announced that it will increase its prices by 7% from the start of May 2022. It cited a combination of market demand, inflation and supply chain issues.

Pakistan: Maple Leaf Cement’s first-half standalone sales were US$121m in the 2022 financial year, down by 33% year-on-year from a first-half 2021 financial year figure of US$91.5m. Export sales fell by 46% to US$2.63m, 2.5% of total sales. Its main export markets were Afghanistan, the Seychelles, Oman and Tanzania. The company reported a 70% increase in its consolidated net profit to US$15.2m from US$8.97m in the first half of the 2021 financial year. The producer said that it expects the domestic cement market to remain ‘stagnant’ for numerous reasons, including high inflation, increased interest rates and decelerating implementation of projects under the Public Sector Development Programme.

The UK construction market is in a funny situation right now. As the economy has started to grow in 2021, shortages of building materials have been reported following the relaxation of coronavirus-related restrictions. In April 2021, for example, the Construction Leadership Council (CLC) added cement, aggregates and certain plastics to its existing lists of products in short supply. These commodities joined a slew of other materials, including timber, steel, roof tiles, bricks and imported products such as screws, fixings, plumbing items, sanitaryware, shower enclosures, electrical products and appliances. The CLC advised all users to, “plan for increased demand and longer delays, keep open lines of communication with their suppliers and order early for future projects.”

Skip forward a month to May 2021 and these shortages are on more people’s minds with the announcement by the Office for National Statistics that UK monthly construction output grew by 5.8% month-on-month to around Euro16.5bn in March 2021 due to both new work and to repair and maintenance projects. Quarter-on-quarter output also rose by 2.6%, adding to the impression of a building sector emerging from the fog of lockdown. In the face of this good news Nigel Jackson, the chief executive of the UK mineral Products Association (MPA), was asked about reported shortages of cement. He told local press this week that “it would not be surprising if there were short-term issues of supply as the economy gathers momentum.” He added that the biggest issues had been observed in levels of bagged cement typically used in domestic projects.

The MPA followed this up with the results of a survey of building materials manufacturers that reported a slow but steady start to 2021 with mounting construction demand month-on-month. Sales volumes of aggregates and concrete were both up quarter-on-quarter but volumes of asphalt and mortar fell. Unfortunately that survey didn’t cover cement volumes but it did have more to say about concrete. In its view ready-mixed concrete sales had been subdued since 2017 due to the UK’s departure from the European Union (Brexit) and a general slowdown in residential building. The market recovery seen so far in 2021 was likely to be merely a return to growth from a subdued level of activity that pre-dates Covid-19.

At the time of writing the UK government faces a decision about whether to continue opening up the economy or exercise caution in the face of the as-yet unknown consequences of the Indian variant of coronavirus. This may delay talk of building materials shortages but it can’t avoid it forever. In the UK, cement shortages appear to be due to the self-build segment and will hopefully soon be resolved.

A shortage of cement in the UK may not mean much to people outside the country, with the exception of exporters. Yet the wider picture here is that the coronavirus pandemic has affected the production of building materials, changed end-user behaviour and distorted markets around the world. Other examples include the row over the price of cement in Nigeria, the boom in cement sales in Brazil in the second half of 2020 or reported shortages in Jamaica this week. A significant number of people, when forced to spend more time at home, appeared to save money and then decided to either move to a different house or make their current one better. Yet at the same time differing government restrictions and market fluctuations have seen building material output levels vary widely. Other reasons are at play both local and international. Brexit in the UK is one example of the former, as importers and exporters have been forced to grapple with new rules and costs. The temporary blockage of the Suez Canal in March 2021 is one example of the latter. No wonder supply chains are struggling. That last point goes wider than building materials though, for example, as anyone trying to buy semiconductors has discovered. One fear behind all of this though is whether these are temporary shortages or whether inflation is on the way for the global economy generally. In this is the case, then it signals the end of the low consumer inflation rate era since the financial crash in 2008 and may herald changes in behaviour from both producers and consumers.

Zimbabwe: LafargeHolcim subsidiary Lafarge Cement Zimbabwe has complained of implied year-on-year inflation of 350% in September 2019 having possible knock-on effects on its business. Company secretary Flora Chinhaire blamed a 19% year-on-year drop in domestic consumption on ‘declining demand from homeowners due to escalating mortgage financing costs’ and the effects of foreign currency constraints on payments to suppliers for capital expenditure projects. All Africa has reported that power supply issues and unplanned stoppages caused a 1% decline in productivity at Lafarge Cement Zimbabwe’s 0.5Mt/yr integrated cement plant, where it operates a single wet production line.

The International Monetary Fund (IMF) has forecasted a 5.3% contraction in Zimbabwe’s gross domestic product (GDP) in 2019.

Cuba: The Ministry of Finance and Prices has published a list of prices for a range of products, including cement, that are sold in state-run stores and agricultural markets. The ministry says that the initiative is intended to evaluate the local market at the municipal level in response to concerns about inflation following a government-mandated salary increases, according to 14ymedio. Shops that violate the regulated price lists may face sanctions.