Global Cement News

Mexico: Cemex has announced that its consolidated net sales increased by 9% during the second quarter of 2011 to approximately USD4.1bn compared to the same period in 2010. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 7% during the quarter to USD615m compared to the same period of 2010.

The group attributed the increase in consolidated net sales due to higher volumes mainly from operations in Northern Europe, South/Central America, Mexico and the Caribbean, with infrastructure and residential sectors acting as the main drivers of demand in most markets.

The group's free cash flow (after maintenance capital expenditures) for the quarter was USD18m, compared with USD187m in the same quarter of 2010. Its operating income in the second quarter declined by 12% to USD258m.

Fernando González, Executive Vice President of Finance and Administration, said, "This is the third consecutive quarter of top-line growth in our results. We are pleased with the quarterly performance of our operations in Northern Europe, the South, Central American and Caribbean region and Mexico, which helped mitigate the challenging conditions of the construction sector in the US. We also remain focused on our transformation process, which will reach a run rate of USD400m in recurring improvement in our steady state EBITDA by the end of 2012."

Net sales in Mexico increased by 5% in the second quarter of 2011 to USD968m, compared with USD923m in the second quarter of 2010. Operating EBITDA declined by 4% to USD309m versus the same period of 2010. Cemex's operations in the US reported net sales of USD619m, down by 9% from the same period in 2010. Operating EBITDA was a loss of USD22m.

In Northern Europe, net sales for the second quarter of 2011 increased by a massive 24% to USD1.35bn, compared with USD1.10bn in the second quarter of 2010. Operating EBITDA for the region was USD152m, 52% higher than in 2010. Second-quarter net sales in the Mediterranean region were flat at USD477m. Operating EBITDA decreased 15% to USD125m for the quarter versus the comparable period in 2010.

The group's operations in South/Central America and the Caribbean reported net sales of USD442m, an increase of 23% over the same period of 2010. Operating EBITDA decreased by 3% to USD125m in the second quarter of 2011, from USD128m in the second quarter of 2010.

Conversely, Asia saw a surprise decrease reporting a 9% decrease in net sales for the second quarter of 2011 to USD129m. Operating EBITDA for the quarter was USD22m, down a gigantic 45% from the same period of 2010.

Saudi Arabia: Southern Province Cement Co., which is Saudi Arabia's biggest cement firm by market value, has announced that its second-quarter net operating profit rose by 29.2% compared with the year-earlier period, to USD63.7m. It attributed the increase to higher demand driving sales.

The result was marginally above the USD63.2m predicted earlier by the firm. First-half earnings per share were USD0.88, compared with USD0.71 in 2010.

Indonesia: The capacity of Indonesian cement industries will increase by 5Mt/yr in 2012 to 59Mt/yr. "The capacity hike is needed to respond to increasing demand in the domestic market," said the head of the Indonesia Cement Association (ASI), Urip Trimuryono.

Urip said the additional capacity would come from PT Semen Gresik and PT Semen Tonasa, which each plan expansions of 2.5Mt/yr. In 2013 the installed capacity will increase by 1.8Mt/yr following the completion of the construction of a plant owned by PT Holcim Indonesia.

Investment in the cement industry is excluded from the list of industries banned for foreign investment and Urip said that local cement producers were ready to face competition from foreign investors. "This means anyone may build a cement factory in Indonesia but must be ready for free competition," he said.

Three foreign companies plan to invest in the national cement sector, namely Lafarge Cement Indonesia, which will build a cement factory in Langkat, North Sumatra with a capacity of 1.5Mt/yr with an investment worth USD350-550m. The second company is China Anhui Conch Group, which is investing a massive USD2.35bn in cement factories in the four eastern provinces of South Kalimantan, East Kalimantan, West Kalimantan and West Papua. The third line with the company is China Triumph International Engineering Co., which will invest USD350m to build a 2-3Mt/yr cement plant in Grobogan, Central Java.

Taiwan/China: Taiwan Cement Corp. (TCC) has made rapid progress in the Chinese market so far in 2011, recently announcing a massive seven-fold increase in first half earnings compared to 2010. TCC took USD138.5m in earnings from operations in China in the first half, which it attributes to higher product prices and successful capacity expansions. TCC's subsidiary in China, TCC International Holding Ltd, registered USD43.3m and USD95.2m in earnings in the first and second quarters respectively.

According to analysts, China's cement industry normally improves in the second quarter. TCC International shipped 7Mt of cement in the first quarter, with investors forecasting the volume to exceed 9.2Mt in the second quarter. If realised, such figures would represent a 30% year-on-year increase.

Russia: HeidelbergCement has officially opened its new plant TulaCement in the presence of numerous prestigious guests. The plant, which is located approximately 150km south of Moscow in the city of Novogurovsky, Tula region, has a cement production capacity of 2Mt/yr. Construction of the plant began in April 2009. The investment costs for the new plant, which employs around 400 people amounted to approximately Euro300m.

"We are very pleased that we are today able to inaugurate our state-of-the-art cement plant, TulaCement, which is one of the largest in Russia," explained Dr Bernd Scheifele, Chairman of the Managing Board. "In the future, the new plant will primarily supply the rapidly growing market in Greater Moscow with high-quality cement. We have thus reached another milestone in the expansion of our cement capacities in attractive growth regions and have increased our capacity in Russia to around 5Mt/yr."

The cement will be produced in a dry process in the highly-automated plant, which is equipped with environmentally-friendly technology. The entire production site including the quarry spans over 100 hectares. To ensure optimum logistics for delivery and cement shipments, HeidelbergCement has constructed several kilometres of road and railway lines. Four modern apartment buildings have been erected so that the employees can live on site.

"Russia is an attractive market for HeidelbergCement," added Dr Scheifele. "The demand for cement is rapidly increasing. It is anticipated that cement consumption will rise from 50Mt/yr in 2010 to around 70-90Mt/yr in the next 10 years."

HeidelbergCement has been active in Russia since 2001. Amongst other activities, the Group operates a cement plant near St. Petersburg and is the majority shareholder of a building materials company in Bashkortostan, one of the richest republics in Russia. The cement is imported to important growth regions via import terminals in Murmansk, Archangelsk and Kaliningrad.