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CRH forecasts earnings growth of 10% 07 May 2015
Ireland: CRH has forecast earnings growth of close to 10% for the first half of the year as it reported 'modest growth' in Ireland.
CRH said that group sales for the first four months of 2015 rose by 2.5% compared with the same period of 2014. The strong performance was largely driven by positive momentum in the Americas, where the economic and business environment remained upbeat. Sales in the US rose by 8% as CRH benefited from improving construction activity. In Europe, trends are improving across CRH's main markets, but sales fell by 2%. In Ukraine, CRH said that the markets were resilient despite the political instability, but that cement volumes were below the prior year. CRH reported a 'continued recovery in market conditions' in Ireland and said that it was 'well-positioned to benefit from modest growth.'
Looking to the first six months of 2015, CRH said that it expected earnings to be 'close to 10% ahead of last year on a constant currency basis' and predicted further progress in the second half of the year with earnings again ahead of 2014. These forecasts do not take into consideration the impact of CRH's proposed acquisition of certain assets from Lafarge and Holcim for Euro6.5bn.
CRH disposed of assets worth Euro540m in the first four months of 2015, bringing total proceeds from its divestment programme to Euro900m since its inception in August 2014. CRH said that its cost-reduction programme remained on track to deliver a further Euro75m of savings in 2015, which would bring cumulative (2007 - 2015) savings to Euro2.6bn.
Pakistan/Afghanistan: Pakistan's cement exports to Afghanistan fell by 24% during the first nine months of the 2015 fiscal year due to the exit of North Atlantic Treaty Organisation (NATO) forces and smuggling. Industry sources said that the withdrawal of NATO forces from Afghanistan is also affecting Pakistan's economy.
"Since the announcement of the exit of NATO forces, Pakistani cement exports to Afghanistan have been in decline as development work in Afghanistan has come to standstill after the exit of foreign forces, resulted in lower cement demand," according to the industry sources.
The set-up of a new cement plant in Tajikistan has also affected Pakistan's cement exports to Afghanistan. Previously, Pakistani cement was being exported to central Asian countries via Afghanistan, but the new plant in Tajikistan targets the same markets. The industry sources said that the smuggling of Iranian cement is another major factor behind the recent decline in exports to Afghanistan.
According to official statistics of All Pakistan Cement Manufacturers Association (APCMA), the cement export to Afghanistan notably fell by 24% during the first nine months of the current fiscal year. Pakistan exported 2.3Mt of cement to Afghanistan during July 2014 - April 2015 compared to 3.05Mt in corresponding period of the previous fiscal year.
"We are expecting a further fall in cement exports to Afghanistan in the coming years as NATO forces were the major consumer of Pakistani cement. As per industry estimates, by the end of this fiscal year, cement exports to Afghanistan will be some 2.7Mt," said the industry sources.
Germany: HeidelbergCement has posted a 29% rise in core earnings in the first quarter of 2015 as it has benefited from a construction industry recovery in North America and the UK as well as low energy prices and the weak Euro. Operating income before depreciation (OIBD) was Euro299m and sales rose by 4% on a like-for-like basis to Euro2.84bn.
"Business development in the first quarter has strengthened our conviction in our outlook for 2015," said chief executive Bernd Scheifele. HeidelbergCement has reiterated its aim for significant improvements in 2015 sales, operating income and adjusted net profit thanks to strong demand in its core markets, the weaker oil price and Euro and efficiency measures.
HeidelbergCement also anticipates a significant decrease in financing costs due to the decline of net debt to Euro6.1bn from Euro7.8bn, following the sale of its building products business.
Vote cement! UK election special
Written by David Perilli, Global Cement
06 May 2015
With the UK going to the polls on 7 May 2015 in a general election what does this all mean for the local cement industry? Some of the main issues for a buoyant cement industry are market demand, energy costs and government interference through issues like taxation or restrictions on international trading.
Probably the first big problem facing the UK cement industry would be construction market uncertainty following any prolonged post-electoral negotiations. At the time of writing the polls predict that neither of the main political parties will be able to form a legislative majority without the formation of some sort of coalition with a number of minority parties. This also has relevance for eventual policy, so more on this later. Additional political deadlock might also arise from the Scottish Nationalist Party (SNP), potentially the largest minority party, and their demands for further political devolution from the rest of the UK.
Following this, the main two political parties, the Conservatives and Labour, are fairly similar from their manifesto statements advocating deficit reduction, no major new taxes and a continuation of carbon emission targets. If either party gets in, general government should continue as before with major infrastructure projects carrying on as planned and an emphasis on the economy or public spending respectively.
Differences start to emerge with the Conservative Party, a centre-right group with a liberal economic agenda, promising a national referendum on continued membership of the European Union (EU) that could lead to Britain leaving the EU in a so-called Brexit. This could cause complications for businesses with strong European links such as the cement industry. However a 'Brexit' might not be all bad news for heavy energy users as they could potentially renegotiate their carbon emission targets.
Meanwhile, the Labour Party, a centre-left group, immediately takes a negative point since its current leader held a senior economic post in the Labour government in the build-up to the crash in 2008. Since that time three integrated cement plants in the UK have closed. Back to the current election, threats to reform the consumer energy markets might have knock-on effects for business consumers. However, traditionally the Labour Party encourages higher spending that might lead to more large-scale infrastructure projects like the much-maligned High Speed Two railway line from London to the north. These kinds of projects would need lots of cement.
If any of the other minority parties get to carry an influence in a coalition they may be able to influence certain policies as the price for their support. For example, a UKIP right-wing coalition would demand a EU referendum. A Green left-wing coalition would push for decarbonisation energy policies and/or anti-fracking measures. Both of these outcomes could have effects on cement production. The other issue that minority regional players in a coalition might have is concerning changes to cement plants in their part of the world. For example, threats to shut a cement plant in Scotland, Wales or Northern Ireland might then gain a higher profile to any administration that includes the SNP, the Democratic Unionist Party in Northern Ireland or Plaid Cymru in Wales.
In summary, it is easy to identify what the UK cement industry wants but far harder to determine what will happen after the election. Assuming there is a government that is! The country holds a mature cement industry with limited infrastructure opportunities. Barring real political change such as a Green surge it will be business as usual on 8 May 2015. Cement kilns will keep turning.
Vietnam: Vietnam produced 19.9Mt of cement in the first four months of 2015, up by 5.3% from the same period of 2014, including 5.9Mt in April 2015, according to the government-run General Statistics Office. The Ministry of Construction has predicted that Vietnam's sales of cement and clinker will rise by 1.5 - 4% to 72 - 74Mt in 2015, of which domestic sales will rise by 4.5 - 6.5% to 53 - 54Mt, while exports will be at 19 - 20Mt.