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CMS profit increases in third quarter 30 November 2017
Malaysia: Cahya Mata Sarawak’s (CMS) pre-tax profit rose to US$23.4m for the third quarter of 2017 from US$23.1m in the same quarter of 2016. The group said the better profit before tax was attributable to the cement division’s lower production costs. Its revenue, however, declined to US$85.0m from US$87.0m a year earlier. CMS said that the cement division’s clinker and cement operations’ combined profit before tax for the third quarter was 2% ahead of the corresponding quarter of 2016.
The company said that the operating environment was expected to remain challenging and the group’s healthy financial position would help weather the challenging environment. “We remain focused on growing our portfolio of businesses by taking advantage of the business opportunities in Sarawak,” said the company in a statement. “Our strong fundamentals and resilience will enable us to perform and to deliver a satisfactory financial performance for 2017. Coupled with other measures that the management is taking, we are positioning for long-term sustainable revenue and profitability growth.”
Melon struggling against Chilean headwinds 30 November 2017
Chile: Cementos Melon has recorded a 56.8% drop in its profit to US$7.8m in the three quarters to 30 September 2017. The company said that a drop in sales had been partly mitigated by greater focus on margins and operational efficiency gains. Its revenue fell by 13.6% to US$210m.
PPC turns the tables
Written by Peter Edwards
29 November 2017
There are two significant cement producers around the world up for sale at the moment. Last week we dealt with India’s Binani Cement, which has so far attracted 15 separate bids from a number of international and domestic players. Now, we turn our attention to South Africa, where PPC remains the target of approaches by LafargeHolcim and CRH.
This week PPC rejected a partial offer from Canada’s Fairfax Holdings, which it considered neither fair nor reasonable. Like a mutual friend at a party that insists two people ‘really are perfect for each other,’ Fairfax had stipulated in its terms that PPC should merge with AfriSam to create a South African super-producer. It does not appear that this idea went down well and that particular combination now seems further away than ever.
When the news broke that it had rejected Fairfax, we thought that PPC’s stance seemed a little ‘too cool.’ However, looking just at the oversized and import-addled South African market does not give the full picture of what’s happening for PPC at the moment. It has significant and growing activities in the rest of Africa too.
Later this week PPC released its results for the first half of its 2018 fiscal year. Suddenly, its handling of the Fairfax offer made more sense. Over the six months to 30 September 2017, PPC nearly tripled its profit to US$21.1m. Crucially, sales from outside South Africa grew far more rapidly than those at home. While domestic earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 4%, EBITDA from elsewhere increased by 25%. These results bode well for a potential bidding war that now favours PPC.
Even from this greatly enhanced position, PPC was not finished with its announcements for the week. Today it revealed that it plans to build a new ‘mega-factory’ in the Western Cape. Johan Claassen, the interim chief executive of PPC, said there would probably be a formal announcement about new capacity in the Western Cape in 2018. He said that PPC had decided to conduct a feasibility study into a possible replacement for its Riebeeck plant. An Environmental Impact Assessment (EIA) is in progress and the plant is reported to be ‘semi-brownfield.’ Claassen said that the new facility would use around 25% of the current Riebeeck equipment and cost US$200/t of installed capacity.
The news of its results and announcement of the new plant represent a good PR move by PPC given the difficulties faced by the wider South African market. The new information will certainly give cause for CRH and LafargeHolcim to think again about the values of their offers, should PPC also be of the view that these also undervalue the company.
PPC plans Western Cape ‘mega-plant’ 29 November 2017
South Africa: PPC is planning a ‘mega-plant’ in the Western Cape Province. Johan Claassen, PPC’s interim chief executive, stated that it was looking to replace its Reibeeck plant with a ‘semi-brownfield’ facility that used around 25% of the current plant’s equipment. The company has long planned to expand its Western Cape capacity but domestic demand has not yet been high enough to justify the investment. There has been overcapacity in the market as well as imports from other regions, both of which have depressed cement prices.
Claassen said that the plant would cost around US$200/t of installed capacity, without mentioning the intended capacity. He said that financing was already in place. He added that PPC had been able to increase its selling prices by 2% in the six months to 30 September 2017 and that, even with slow growth, South Africa would need the additional capacity supplied by the new plant by 2020.
Claassen said that a formal announcement would be likely in early 2018.
New CEO for Raysut Cement
Written by Global Cement staff
29 November 2017
Oman: Raysut Cement has appointed Joey Ghose as its new CEO, effective 1 December 2017. Ahmed bin Yousuf bin Alawi Al Ibrahim, the chairman of Raysut Cement’s board, said in a statement to the Muscat bourse that Ghose has extensive experience of managing cement industry companies.