Global Cement News

Cemex announced this week that it is preparing to divest its operations in the Dominican Republic for US$950m. At first this seems a little close to home for the Mexico-based company but it felt similar at the start of 2022 when it sold its businesses in Costa Rica and El Salvador to the same company, Cementos Progreso. Readers may also recall that the business press reported, correctly we now know, in mid-2023 that Cemex was seriously considering its options in the Dominican Republic.

The current agreement will see Cemex sell one cement plant in the Dominican Republic along with related cement, concrete, aggregates and marine terminal assets for US$950m. The deal is expected to close towards the end of 2024. Cemex says that it is making the transaction to reduce its exposure to emerging markets and refocus its capital upon priority markets, such as the US. This reasoning is very much in line with its international peers in the building materials sector, which have been doing likewise.

This is the potential biggest divestment Cemex will have made since 2009. It is bigger than the agreement to sell the share of its business in the Philippines, revealed earlier in 2024, for an enterprise value of US$660m. Back in 2000, Cemex sold its Australia-based subsidiary to Holcim for US$1.7bn. Holcim still operates in Australia today via Cement Australia, a joint-venture with Heidelberg Materials. Plus, CRH, one of Cemex’s competitors that has also shown a keen interest in the US market previously, concluded a deal to buy a stake in AdBri in July 2024. Infamously, Cemex took over building products company Rinker in 2007 just as the 2007 - 2008 financial crisis burst. It then spent the next decade-and-a-half reducing its debt levels. In April 2024 it was pleased to announce that it had been awarded full investment grade status by rating agency Fitch Ratings.

Selling up in the Dominican Republic seems curious at first but, as mentioned at the start, we’ve been here before with Cemex’s subsidiaries in Central America and the Caribbean, plus the company has been working on it for at least a year. It is worth noting though that Cemex reopened a second production line at its San Pedro de Macorís site in 2022 giving the plant a cement production capacity of 2.4Mt/yr. That gives the current deal a value of US$380/t based on capacity. Local competitor Domicem also started up a second line at its Sabana Grande de Palenque cement plant in late 2023, demonstrating that other cement companies have also been investing in the market. Cemex’s sales from its business in the country were reasonable in 2023 but its operating earnings were the fourth biggest in the group after Mexico, the US and the UK. In its results for the first half of 2024 the group noted that tourism projects were driving demand in the country.

Graph 1: Mix of sales by region for Cemex, 2019 - 2023. Source: Company reports.

Graph 1 above presents the general way Cemex has been directing its business internationally over the last five years. Sales were roughly half-and-half between Mexico & the US and the rest of the world in 2019. In 2023 the ratio was more like 60:40. Operating earnings have tracked the same way with an even greater emphasis on Mexico and the US. It should be noted though that despite sales revenue being higher in the US, operating earnings remain higher in Mexico.

Pretty much every western international cement company is watching the US market intently right now. So, Cemex’s decision to sell a profitable business in the Dominican Republic to fund further investment in the US makes sense. Although what it might actually want to buy at US prices right now might be a tough call. CRH, for example, paid US$2.1bn in late 2023 to buy the 2.1Mt/yr Hunter cement plant, a network of cement terminals and 20 ready-mix concrete batching plants in South Texas. This was arguably quite a high price. One last point to consider is that the financial press was reporting falls in the global stock markets this week amid fears over the outlook of the US economy. Whatever happens next, at least Cemex is selling rather than buying this time round.

Philippines: Holcim Philippines has appointed Nicolas George as its president and CEO. He succeeds Horia Adrian, who will assume the role of Head of Decarbonization for Holcim in the Asia, Middle East, and Africa region.

George previously worked as the CEO of Lafarge Algeria from 2021. Before this he was the CEO of Chip Mong Insee Cement in Cambodia. George joined Holcim in 2007 as a Strategy Manager in China and has also worked as the CEO of Myanmar and Uganda for the group. He holds a degree in Industry Management, Innovation, and Performance from the Institut National Agronomique Paris-Grignon.

China: Shanshui Cement has appointed Teng Yongjun as its chair.

Teng, aged 54 years, worked as the general manager of the Jinan Public Transportation Group from 2023 to July 2024 and he was a director for the Jinan Financial Investment Fund from 2020 to early 2023. Before this he spent his career working in government roles, mostly in the Huaiyin District of Jinan, Shandong Province. He is a graduate in county and rural economy management from the Shandong Economic Institute and holds a degree in economy management from the Shandong Province People’s Party University.

UK: Jon Prichard has resigned as the CEO of the Mineral Products Association (MPA) with immediate effect. He announced in late July 2024 that he was stepping down for personal reasons. He started in the post in October 2022. The MPA has established an executive management committee (EMC) as an interim measure to take responsibility for the ongoing and effective management of the organisation. This will be chaired by Lex Russell in his capacity as MPA chair, supported by MPA’s two executive directors, Diana Casey and Mark Russell, and MPA advisor Chris Leese.

Saudi Arabia: Eastern Province Cement Company raised its sales by 29% year-on-year to US$156m in the first half of 2024. Its net profit grew to US$34.1m, up by 20% year-on-year.