Global Cement News

US: Vulcan Materials has appointed Stan Bass, Michael Mills, Jerry Perkins and Brock Lodge to its management team.

Stan Bass, aged 54 years, formerly Senior Vice President, West, with responsibility for Vulcan’s Western and Mountain West Divisions, has been named to the new position of Chief Growth Officer for the company. Michael Mills, aged 55 years, formerly Senior Vice President & General Counsel, has been named to the new role of Chief Administrative Officer. Jerry Perkins, aged 46 years, formerly Assistant General Counsel and Corporate Secretary, has been named General Counsel and Corporate Secretary, succeeding Michael Mills. Brock Lodge, aged 43 years, formerly Vice President & General Manager of Vulcan’s Western Division that includes all operations in California, has been promoted to President of that Division.

Bass, as Chief Growth Officer, will be responsible for leading the company’s business development, commercial excellence and strategic growth initiatives. Mills as Chief Administrative Officer will be responsible for the executive oversight of the non-financial, administrative functions of the company.

Cemex trumpeted last week that it had returned to positive net income for the first time in six years in its fourth quarter results for 2015. In effect the multinational building materials company was saying it is putting its house in order following taking on too much debt in the late 2000s. Similar reassuring noises have repeatedly been made as it has cut its debts down since that time.

The figure Cemex was shouting about this time was its controlling interest net income or the net income attributable to the controlling shareholder. It has risen to a gain of US$75m after being negative, or in loss, since 2010. In that year the sting from the financial crash in 2008 caused havoc and net sales for the company hit a low of US$14bn, having been at over US$20bn in the boom times of 2007 and 2008.

Meanwhile, the company has been steadily whittling away at its total debt reducing it down to just US$15.3bn in 2015. This is a massive figure given that its total equity was US$9.5bn in 2015.

By comparison, Lafarge was reporting a net debt of Euro9.3bn in 2014 compared to a total equity of Euro17.3bn. Its debt-to-equity ratio was far smaller than Cemex’s despite being perceived as the weaker partner financially going into the merger with Holcim in 2015. Unsurprisingly, it was news in August 2015 when Cemex refinanced a bank loan agreement for a US$15bn debt that was previously renegotiated in 2009. Everyone is watching Cemex’s debts keenly.

Against this financial backdrop Cemex’s cement business has been steadily producing fairly static levels of cement since 2009. It 2015 it has reported that it produced 66Mt. However, net sales fell in 2015 by 8% year-on-year to US$14bn, a disappointing result following sales growth since 2012. Fernando A Gonzalez, Cemex’s Chief Executive Officer, blamed it on a ‘challenging’ macroeconomic environment.

Notably overall net sales have been down in Mexico, Northern Europe and Central and South America in 2015. Although Cemex hasn’t released cement sales volumes, volumes fell by 3% in Northern Europe, 2% in its Mediterranean region and 4% in Central and South America in 2015. Thankfully, growth continued to pick up the US, bolstered by housing and infrastructure spending. The Philippines has remained a powerhouse in cement consumption in Asia.

Reviewing Cemex’s expansion projects in 2015 suggest muted capital expenditure with a focus on upgrades and side projects rather than clinker production growth. Such announcements included projects in Nicaragua, the Dominican Republic, Colombia and Mexico. The exception was in the Philippines where a full-on US$300m project including a new 1.5Mt/yr plant was announced in May 2015. Given the surging cement volume sales in the country this is likely a safe investment.

As discussed previously in this column and elsewhere Cemex has suffered from high debts at exactly the time its major international rivals have started to merge. At the same time its Chinese rivals in terms of production capacity have undergone similar capacity consolidation as part of state mandated capacity reduction initiatives. This has left Cemex between the mega-cement producers like LafargeHoclim and HeidelbergCement and the up-and-comers such as Eurocement or Votorantim.

Now, its reliance on markets in the Americas it hitting a roadblock from reducing growth south of the US as global commodity prices tumble and economies suffer. It couldn’t have happened at a worse time for the company. Bar the odd bright spot such as the US and the Philippines it seems that all Cemex can do is wait it out.

Saudi Arabia: Halla Waleed Al-Juffali has been appointed as a member of the Board of Directors (independent director) of the Saudi Cement Company. Her appointment is subject to shareholder approval. She replaces Waleed Ahmed Al-Juffali, who resigned with effect from 4 February 2016 due to health reasons.

Halla holds a Bachelor’s degree in Business administration degree, majoring in International Business, from the International University of America in London. She has been a director with Ebrahim Al-Juffali and Brothers and Walid Juaffali & Partners. Halla has previously worked as a business analyst for British, European and Chinese investment markets.

Romania: Sofiane Benmaghnia has been appointed as the Chief Executive Officer of Holcim Romania effective from 1 April 2016. He will replace François Petry, who has became the CEO of Aggregates Industries, the LafargeHolcim subsidiary in the UK, in December 2015.

Benmaghnia, aged 39 years, has been the general manager of Meftah Cement Operations, Aggregates & Concrete in Algeria since 2011. Previously, he was the Chief Financial Officer of Lafarge Betoane si Agregate in the Middle East for three years. He joined LafargeHolcim group in 1999 as financial analyst.

Switzerland: The LafargeHolcim Board of Directors has decided to propose Beat Hess as its new Chairman to its shareholders. The decision follows the announcement that the current chairman, Wolfgang Reitzle, has informed the Board that he will not stand for re-election at the Company’s May 2016 Annual General Meeting.

Reitzle cited other business commitments for his decision, including the Chairmanship of the Linde Supervisory Board. He was a key part of the successful merger between Lafarge and Holcim in 2015.

Hess, a Swiss national born in 1949, is currently Vice-Chairman of the Board, a Member of the Strategy & Sustainable Development Committee and a Member of the Finance & Audit Committee. He was elected to the Board of Directors of then Holcim in 2010. From 1977 to 2003, he was legal counsel and later General Counsel of the ABB Group. From 2004 until the end of 2010, he was Legal Director and a member of the Executive Committee of the Royal Dutch Shell Group, London and The Hague. He is also a member of the Board of Directors of Nestlé S.A. and of Sonova Holding AG.