Global Cement News

Vietnam: Lafarge Vietnam Company has become a unit of Holcim Vietnam Company following the merger between their parent companies.

The merger between Lafarge Vietnam and Holcim Vietnam, which is scheduled for completion in 2015, will help LafargeHolcim optimise its production in the context of oversupply, which has put local cement producers in difficulties, a Holcim Vietnam official has said.

In Vietnam, LafargeHolcim has five cement plants and eight ready-mixed concrete batching plants, with a capacity of 5.2Mt/yr of cement and 1Mm3/yr of concrete. LafargeHolcim will retain its brands of Lafarge and Holcim's products such as Lavilla (Lafarge) and Holcim Power-S (Holcim), according to Nguyen Cong Minh Bao, Head of Holcim Vietnam's Sustainable Development.

Holcim Vietnam presently holds a 26% market share in Vietnam while Lafarge Vietnam takes a 12% share, with their main products being cement, concrete and aggregate.

Netherlands: LyondellBasell, one of the world's largest plastics, chemical and refining companies, has appointed Thomas Aebischer, former CFO at Holcim, has been appointed as Executive Vice President and Chief Financial Officer (CFO) effective from 1 January 2016.

"Thomas is a highly experienced and accomplished leader who brings a global perspective, deep knowledge of financial markets and significant experience at the executive level of large, multinational companies. Given his past experience and success in a variety of financial positions all over the world, I am very confident that he will be a tremendous asset as we continue to execute our long-term growth strategy," said Bob Patel, LyondellBasell's Chief Executive Officer.

Aebischer joins LyondellBasell after having served in a variety of positions, including CFO, over a nearly 20-year career with Holcim. In his role as Holcim's CFO, Aebischer's responsibilities included the company's information technology, accounting and administration, investor relations, risk management and procurement functions. Earlier in his career, Aebischer held positions with PricewaterhouseCoopers and the Bern cantonal tax authorities in Switzerland.

"LyondellBasell's transformation into one of the premier companies in the petrochemical industry is very impressive," said Aebischer. "It is truly an honour to join Bob and his team of leaders, who share a relentless focus on safety, operational excellence and the creation of shareholder value."

As LyondellBasell's CFO, Aebischer will be nominated to serve as a member of the company's management board and will be responsible for leading the company's treasury, information technology, tax, finance and accounting functions. Aebischer will report directly to Patel.

Germany: HeidelbergCement's revenue rose by 3% to Euro3.61bn in the third quarter of 2015. Excluding consolidation and exchange rate effects, revenue decreased by 1.9%. The weakening of the Euro against numerous currencies had a Euro162m positive impact on revenue. Operating income before depreciation (OIBD) improved by 8% to Euro865m and operating income rose by 8% to Euro675m. Besides the price increases in key core markets and the successful implementation of the margin improvement programmes in the aggregates business line, in particular, the low cost of fuels also made a contribution to the positive development of results.

"Despite partly adverse market conditions, the third quarter saw us continue our successful development and further increase our results," said Chairman of the Managing Board, Bernd Scheifele. "This was largely due to our advantageous geographical positioning and our good overall cost management. Consequently, we were able to considerably improve our operating margins once again. From our perspective, the weaker development of sales volumes compared with the previous quarters is temporary. The acquisition of Italcementi is making good progress and we significantly increased the synergy target to Euro300m."

In the third quarter of 2015, HeidelbergCement's cement and clinker sales volumes fell by 3% year-on-year to 21.8Mt. Whereas Africa registered double-digit growth, volumes in the other group areas remained stable or declined slightly. In Asia, the delayed start of the infrastructure projects announced by the Indonesian government had a negative impact on sales volumes. Volumes decreased in the Eastern Europe-Central Asia group area and in Russia, in particular, due to a downturn in investments. In the Western and Northern Europe group area, especially the Netherlands and the Baltic States, a decline in sales volumes was reported. In North America, deliveries remained more or less at the same level as in 2014, despite the bad weather in Texas and the unfavourable timing of building projects in Florida. In the first nine months of 2015, cement and clinker sales volumes decreased by 1% to 60.6Mt.

At the start of September 2015, joint work teams from Italcementi and HeidelbergCement started preparing for the integration. In the first instance, they embarked on best-practice comparisons and carried out an assessment of potential synergies. Based on the initial findings, it was able to increase the post-closing synergy target from an original Euro175m to Euro300m. The positive effects of financing costs and taxes were taken into account for the first time in the new synergy target. The combination of Italcementi's export-oriented cement plants in the Mediterranean Basin with the global trading business of HeidelbergCement following completion of the transaction also gives rise to significant potential beyond the identified synergies, as does the optimal use of Italcementi's production facilities. Import demand, for example in North America or Africa, that used to be bought from third party sources in the past, can be covered by Italcementi's plants in the future, thus leading to a higher capacity utilisation there. A savings potential in current assets of Euo100m could be confirmed. The bridge financing could be reduced by Euro1.1bn to Euro3.3bn because the initial risk of a mandatory takeover offer to minority shareholders in Morocco could be excluded and some of Italcementi's creditor banks have agreed to waive their change of control clauses. In addition, HeidelbergCement has reduced its target for cash-relevant investments from Euro1.2bn to Euro900m in accordance with the capital expenditure savings announced in the context of the Italcementi takeover. All necessary filings or pre-filings were lodged with the competition authorities in October 2015 as planned. The competition authority in India has already given its approval. HeidelbergCement expects the acquisition of the 45% stake to be completed in the first half of 2016.

In North America, HeidelbergCement expects a continuing economic recovery and a further increase in demand for building materials. Besides new residential building, commercial and infrastructure construction is also making an increasingly strong contribution to this growth. In Eastern Europe, markets should continue to stabilise and the first impetus is expected to stem from the EU's new infrastructure programme. In Western and Northern Europe, a stable overall market development is expected. This is based on the recovery in the UK, the stable development in Benelux and a slight slowdown in Germany as well as in Northern Europe, where exports are declining. In Asia, the delay in infrastructure projects in Indonesia is leading to a reduction in cement and ready-mixed concrete sales volumes. In Africa, the group is still counting on a sustained growth in demand. HeidelbergCement anticipates stable sales volumes for the core products of cement and ready-mixed concrete and an increase in the sales volumes of aggregates for the year.

As a result of the sustained fall in prices for crude oil and fuels, HeidelbergCement expects a moderately declining cost basis for energy in 2015. A modest rise in the cost of raw materials and personnel is still expected, partly owing to the devaluation of the Euro. It plans to offset this by means of suitable measures and to further improve the margins in the cement and aggregates business lines. Process optimisations are expected to achieve a sustainable improvement in results of at least Euro120m by the end of 2017. In addition, the optimisation of logistics activities in connection with the LEO programme will be pursued with the aim of reducing costs by Euro150m over a period of several years.

Based on the developments described in the first nine months, HeidelbergCement expects a moderate to significant growth in revenue and remains confident that the operating income and profit for the financial year before non-recurring items will increase significantly in 2015.

"We remain on track to significantly increase our results and substantially reduce our net debt in 2015," said Bernd Scheifele. "This provides us with a solid base for the acquisition of Italcementi. The acquisition process is on schedule and we expect the share purchase from Italmobiliare to be completed in the first half of 2016. Thereby, we significantly accelerate the growth of HeidelbergCement and create additional potential for higher returns for our shareholders. Following the acquisition, we want to reduce the leverage by the end of 2016 to a level that is in line with a solid investment grade rating."

India: JSW plans to invest US$610m to boost its port and cement capacity in the next two years. It plans to almost double its ability to handle cargo at its ports to 62Mt/yr, with a target to further increase it to 200Mt/yr by 2025, according to group CFO Seshagiri Rao. Cement capacity is estimated to increase to 17Mt/yr in the next 24 months from 6Mt/yr at present.

"Ports appear to be a very attractive investment as ports and inland waters have not at all been leveraged in India," said Rao to Bloomberg. "We feel that in each of the core infrastructure sectors there is a huge amount of change happening." Rao said that the group will build its own cement plants instead of acquiring an existing business.

Nigeria: The Edo State Government has began moves to recover US$31m that was fraudulently taken from government coffers during the administration of Lucky Igbinedion as Governor. This was part of the decisions reached at the end of the State Executive Council meeting, held on 5 November 2015.

"There is an issue of fraud that was discovered while turning our books. We found that US$31m was fraudulently taken from state coffers during the administration of Chief Lucky Ogbinedion. The governor has directed the Attorney-General to commence legal action in that direction," said Commissioner for Information, Louis Odion. "In the coming days, the state government will take legal action to ensure that what was stolen from Edo State Government is recovered."

Throwing light on the US$31m fraud, the Commissioner for Commerce and Industry, Honourable Abdul Oroh said: "The US$31m was stolen for a transaction that was designed clearly for criminal purposes. This project was called 'Abat Cement Company,' situated in Ekpe, Akoko. The company was supposed to produce cement to take advantage of the large deposit of limestone in that part of the state. The company was registered as Abat Cement Company Limited and had three shareholders. The Abat Cement Company had 75% of the shares, Edo State Government had 15% of the shares and 10% of the shares were reserved for 'other Nigerians.' Although Edo State government was given only a 15%, 100% of the revenue invested in the company, the US$31m, was taken from the account of Edo State Government. The shareholder agreement was signed by the Fashunu and Governor Igbinedion. As the money was withdrawn, construction of the company started and all the major structures were in place, 90% of the machines were installed, but there was no contribution from any other source for the construction and procurement of this equipment. Everything invested in that company came from Edo State Government.