Global Cement News

The larger cement producers in China have published their half-year financial results and the numbers are looking grim. Starting with data from the National Bureau of Statistics of China, cement output in the country fell by 14.5% year-on-year to 979Mt in the first half of 2022 from 1.14Bnt in the same period in 2021. This is the lowest first half output figure since 2012. The decline on a monthly basis started in May 2021 and has carried on consistently since then. Rolling cumulative annual output hit a low of 2.18Bnt in July 2022, the lowest figure since at least the start of 2019 and well before the coronavirus pandemic started.

Graph 1: Cement output in China, 2018 to 2022. Source: National Bureau of Statistics of China.

The financial figures from the cement producers have mostly followed this trend. Of the companies covered here, Anhui Conch’s drop in sales revenue was the most distinct at 30% year-on-year to US$8.14bn. However, Jidong Cement actually managed to increase its revenue and Huaxin Cement’s decrease was fairly small, possibly due to its growing stable of overseas projects. None of these companies could avoid falling cement and clinkers sales volumes though. Again, Anhui Conch is the outlier here with a larger fall in sales volumes proportionally at nearly 40% compared to around 20% for the rest. Chen Bolin, the deputy secretary-general of China Cement Association (CCA), told the 21st Century Business Herald newspaper that of the 20 or so listed cement companies that have published their half-year reports by the end of August 2022, more than half had reported falling sales revenue and net profit and only one company had managed to increase its net profit.

Graph 2: Sales revenue from selected Chinese cement producers. Source: Company financial reports. Note: Cement revenue shown only for CNBM & Taiwan Cement.

Graph 3: Sales volumes of cement and clinker from selected Chinese cement producers. Source: Company financial reports.

The financial reports from the Chinese cement companies detailed here have been fairly light on the reasons for the current state of the sector. Repeated coronavirus outbreaks, instability in the real estate market, a lack of funding for infrastructure projects, growing energy and raw materials costs, pressure on prices and a generally weak economy have all been blamed for the situation. Media channels outside of China have continued to scan the country’s real estate sector for signs of collapse following Evergrande’s problems in 2021. However Chen Bolin diplomatically held back by describing the real estate market as not yet stabilised and a drag on cement demand. Instead he hoped that large-scale infrastructure projects would offer some form of relief.

One last point to note, that both the CCA has made and could be seen in some of the company reports, is that some of the Chinese cement companies are already starting to diversify their businesses. This is in parallel to what some of the larger western-based multinational cement producers have also been doing in recent years with forays into concrete, light building materials and construction chemicals. CNBM already has large concrete, light building materials and engineering subsidiaries. However, Huaxin Cement and Anhui Conch have also started to branch out recently into aggregates, concrete and new energy generation, in the case of the latter company. Things may get worse before they get better, especially depending when or if the Chinese government decides to act on the real estate market. However, whatever kind of adjustment the cement sector may face, there are some signs present already of what some of the companies may do next.

Argentina: Holcim Argentina has appointed Gerardo Kemnitz as its Director of Operations. He will lead Holcim’s operations in the country, where it operates three integrated cement plants and one grinding unit.

Kemnitz started working for the group in 1988 and spent the next 20 years working in maintenance roles at different plants. He later became a Health and Safety consultant for the Americas, Europe and Asia before being appointed as the director of the Tecomán plant in Mexico in 2014. More recently he worked as the manager of the Malagueño plant in Argentina.

Belgium: Magotteaux has appointed Gonzalo Cavada as its chief executive officer with effect from 31 October 2022. He will succeed Sébastien Dossogne, who will stay in post until the end of October 2022 as part of a transition period. Cavada will be based in Vaux-sous-Chèvremont in Belgium, at Magotteaux’s headquarters.

Cavada currently works as the chief financial officer of Magotteaux’s parent company Sigdo Koppers (SK). He previously worked for SK’s acquisition team when the Chile-based conglomerate purchased Magotteaux in 2011. He is a trained civil engineer who attended the Pontifical Catholic University of Chile and he holds a master’s degree in Business Administration (MBA) from the University of Cambridge.

China: CNBM has blamed declining sales of cement on repeated coronavirus outbreaks, a decline in the real estate market, lack of funding for infrastructure projects and a generally weak economy. Its cement sales revenue fell by 10% year-on-year to US$7.80bn in the first half of 2022 from US$8.65bn in the same period in 2021. Its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped by 39% to US$1.72bn from US$2.82bn. Cement and clinker sales volumes decreased by 17.8% to 128Mt and 14.6% to 18Mt respectively. Sales volumes of concrete decreased by 24% to 39.5Mm³.

Overall, the group’s revenue fell by 11% to US$15.8bn in the first half of 2022 from US$17.6bn in the same period in 2021. Its adjusted EBITDA dropped by 23% to US$2.87bn from US$3.71bn.

China: Anhui Conch’s operating revenue fell by 30% year-on-year to US$8.14bn in the first half of 2022 from US$11.6bn in the same period in 2021. Its net profit dropped by 33% to US$1.44bn from US$2.17bn. Its overall sales volumes of cement and clinker decreased by 37% to 130Mt. By region the group reported its biggest drop in sales volumes in East China. Anhui Conch blamed its falling sales and profit on continued coronavirus control measures, falling market demand and rising energy prices.