Global Cement News

Germany: Jens Michael Wegmann is standing down as CEO of Thyssenkrupp’s Industrial Solutions division with immediate effect and leaving the company. Wegmann accepted a golden bracelet for his wife from a Pakistani business partner, according to Reuters.

“I made a mistake which I greatly regret and I am now paying the consequences. I realise that my conduct in my dealings with a sales partner was not in line with Thyssenkrupp’s values and that I can no longer credibly drive the necessary changes at Industrial solutions. For this reason I am standing down as CEO of Thyssenkrupp Industrial Solutions – irrespective of legal issues and the findings of the on-going internal investigation. I would like to wish all employees the very best for the future and every success in the continuing implementation of the transformation,” said Wegmann in a statement.

Stefan Gesing, chief financial officer of Industrial Solutions, will assume Jens Michael Wegmann’s duties and serve as chair of the business area board on an acting basis. The group will decide on a permanent successor in a structured process.

In June 2016, the polls said that the UK would remain in the European Union (EU), but now we have the prospect of Brexit. Democrat supporters in the US now know how the UK's 'Remainers' feel. The unthinkable has happened: the so-called 'Deplorables' have taken over the asylum. Donald Trump has won the US presidential election and he will be the 45th US president, after confounding all the polls, the media, the analysts and the commentators. He'll be able to appoint a swathe of right-leaning office-holders, including a crucial replacement for the late Antonin Scalia on the US Supreme Court. This will change the direction of US law-making for years, possibly decades, towards a less-liberal and more conservative outlook.

Trump will also be aided by having Republican majorities in both the Senate and the House of Representatives and will actually be able to get things done. President Obama had to fight hard for eight years to achieve anything, and finally had to fall back on enacting laws by presidential dictat or 'Executive Orders.' 'The Donald' will not have to stoop so low, and once he takes office will effectively be 'sweeping with the wind.'

Trump looks set to change US policy in a number of areas, including being less conciliatory towards America's foes ("I'm going to bomb the s••t out of ISIS"), taxing imports and tearing up trade agreements and rolling back US environmental efforts (he has promised to abolish the US Environmental Protection Agency, to cancel the Paris climate change deal, to sanction more drilling for oil and to approve the Keystone XL oil pipeline the fourth phase of which was recently rejected by President Obama). Who knows what else he has planned?

Well, one thing that we do know is that Trump's election is very probably great news for the US cement industry.

Early on in his victory speech, moments after receiving a telephone call from Hillary Clinton conceding defeat, Trump laid out the first step of his plan to 'Make America Great Again:' building US infrastructure. Trump said: "We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it." He didn't actually mention cement (nor did he mention a 'big beautiful wall'), but all of these projects will require plenty of cement and concrete. Whether they voted for him or not (and Trump noted that there are those 'who have chosen not to support me in the past, of which there were a few people'), workers in the cement industry will be celebrating the prospect of fuller order sheets, higher prices, better profitability and more overtime. From a current GDP growth rate of around 1%, some have suggested a surge past 3%/yr and beyond during a Trump presidency. The crucial question, often overlooked, is "How are we going to pay for all this investment?" With the US debt heading towards US$20Tn, perhaps Trump's history as a Democrat - and all the tax-raising territory that comes with that position - might come in handy after all.

Trump has indicated that he's already looking to a second term ("I look very much forward to being your president, and hopefully at the end of two years or three years or four years, or maybe even eight years...") based on what he might achieve in his first term. Well, let's see. Donald Trump's deeds now need to speak louder than Donald Trump's words.

Jamaica: Peter Donkersloot Ponce has been appointed as the general manager of Caribbean Cement Company with effect from 7 November 2016. He replaces Alejandro Varés Leal who was originally appointed in May 2015 subject to an agreement between Caribbean Cement’s owner Trinidad Cement and Cemex. However, Varés Leal has taken up a promotion with Cemex. In accordance with the Agreement, Ponce was proposed by Cemex to replace Varés Leal.

Two of Japan's largest cement producers have reported reduced domestic cement sales in the country this week. First, Taiheiyo Cement revised its forecast for its 2017 financial year, ending on 31 March 2017, bringing its estimated net sales down by 2.3%. Then, Ube Group reported that its cement sales had fallen by 7.2% year-on-year to US$1.05bn in the first half of its financial year. Both producers blamed poor weak demand locally, but Ube also cited a poor export market.

Graph 1: Domestic and export cement sales in Japan, 2006 - 2015. Source: Japanese Cement Association.

This last point is interesting because it differs from the latest data released by the Japanese Cement Association (JCA). As can be seen in Graph 1 JCA figures show that exports of cement have been rising since 2013. So far this trend looks likely to continue in 2016. Ube's different experience may arise from its market mix and its distribution of cement plants and transport infrastructure. Both of its cement plants are based in the south of the country. Commentators have attributed the boost in exports to the devaluation of the Yen in 2015 as well as strong brand perception overseas. Unfortunately, this overall rise in exports has been matched by a fall in domestic sales at the same time and this is causing a headache for the major producers. Production too has started to drop since 2014 (Graph 2).

Graph 2: Cement production in Japan, 2006 - 2015. Source: Japanese Cement Association.

Japan's cement market is dominated by four producers - Taiheiyo Group, Mitsubishi Materials, Ube Industries and Sumitomo Osaka Cement - which hold nearly three quarters of the nation's production capacity between them. According to Global Cement Directory 2016 data, Taiheiyo Cement and its subsidiaries is the market leader with over 30% market share with the other three holding 10 - 20% each.

Graph 3: Cement production capacity share in Japan (Mt). Source: Global Cement Directory 2016.

Taiheiyo's downgraded forecast follows poor first quarter results, in which its net sales for its cement business fell by 16% to US$1.19bn. This follows a slight rise in net sales for its cement business in its 2016 financial year due to a boost in sales from its overseas subsidiaries, particularly in the US, that surpass a fall in domestic sales. Sales volumes were 14.7Mt domestically and 4Mt in exports in 2016. Mitsubishi Materials has posted a similar picture with cement sales and profits rising in 2016 before suffering in the first quarter of 2017. Mitsubishi Materials blamed the poor market on a delay in construction work mainly due to labour shortages and sluggish growth in demand from the public sector. Ditto Sumitomo Osaka Cement.

As highlighted by such decision as Tokyo Cement's move to resume exporting clinker to Sri Lanka in early 2015, Japan's cement industry is working hard to compensate for falling demand at home. Increasing exports in Asia Pacific among other massive exporters such as China, Vietnam and South Korea is impressive, although the prominent foothold by Japanese companies in the recovering US market may offer some advantage here. On-going weak demand in China though cuts out one major market for Chinese exporters. However, being a major exporter in a region of major cement producers must be a concern. Although commentators such as Ad Ligthart dismiss the chances of China flooding the world with cheap cement, if they are wrong and Japan continues its reliance on exports it may find itself in deep water. The other risk is if the US authorities decide to get tougher on foreign exports it may knock out one more market for Japanese exports. Too much reliance on exports is always dangerous. In this context, it’s no surprise that Japanese cement producers are blaming the government for insufficient infrastructure spending.

South Africa: PPC has appointed Peter Nelson as its permanent board chairman following his interim tenure in the role following the retirement of Bheki Sibiya. The appointment took affect from 24 October 2016. Other recent appointments include the proposal to elect Nicky Goldin as the third member of the audit committee following the retirement of Bridgette Modise and the appointment of Timothy Leaf-Wright as chairman of the risk and compliance committee with immediate effect

Nelson was appointed to the board as an independent non-executive director on 25 January 2015. His experience covers manufacturing, mining, telecommunications, healthcare, leisure, property, packaging and the motor industry in listed and private entities in South Africa, the UK, Zimbabwe and Nigeria. He has served as chief financial officer on several boards including Telkom, Netcare, Mondi and he was the financial director of PPC from 2000 to 2003.

Goldin was appointed to the board as an independent non-executive director in January 2015 and currently serves on the Remuneration and
Investment sub-committees of the board. She holds a B.Com (Hons) from the University of the Witwatersrand and obtained an MBA from the University of Illinois. She has held senior positions at Deloitte Consulting, BHP Billiton, Anglo American, Standard Bank and ANZ Bank (Australia).

Leaf-Wright is a chartered secretary and was appointed to the board as an independent non-executive director in January 2015. He currently serves as a member of the risk and compliance, social, ethics and transformation and investment committees. His career with Nampak Limited spanned 41 years prior to early retirement in 2014. During the last 11 years, he was seconded to Mozambique, Nigeria and Angola to spearhead negotiations and subsequently construction and managing of both brown and greenfield plants in those countries.