Global Cement News

Lafarge's annual report summed up the European malaise this week: too much debt; too little growth.

The world's biggest cement company posted a Euro3m loss for the fourth quarter of 2011 compared to a Euro62m profit for the same quarter in 2010. Overall for the full year in 2011 its income fell by 28%. Yet all of this occurred in the same year that the group sold the bulk of its gypsum assets for over a quarter of a billion Euros! All of which went into the group's debt reduction of Euro2bn.

Compare this to 2010 when Lafarge recorded a 12% increase in net profit for the year and the group was expecting an increase in cement demand of 6%. Chief Executive Bruno Lafont's words were, "The steps we have taken in 2010, ranging from structural cost savings to strategic investments in growing markets such as Brazil will provide the foundation for further improvement and growth as we enter 2011."

6% growth did happen in 2011 but only in the emerging markets in the Middle East and Africa, Central and Eastern Europe, Latin America and Asia. Overall sales growth remained at 3%, dragged down by sales decreases in North America and western Europe. Understandably Lafarge's outlook for 2012 remains muted.

All this gloom was compounded by the UK Competition Commission raising its concerns about the joint-venture between Anglo-American and Lafarge. With Lafarge expecting 'higher pricing' for 2012 any move with even a whiff of anti-competitive behaviour will draw in the watchdogs. With western European sales down by 2% in 2011 the challenge remains for the group, and for all cement producers, to somehow find profit once more in the mature markets.

US: Doug Black, currently chief executive of CRH's Americas Materials Division, has been appointed to the newly created position of president and chief operating officer of Oldcastle Inc, the holding company for CRH's operations in the Americas. Black will report to Mark Towe, chief executive officer of Oldcastle. Aged 47, Black joined Oldcastle in 1995 and has held a series of key leadership positions at Oldcastle and in the Precast, Architectural Products (APG) and Materials operations.

CRH, the international building materials group, has announced a number of changes within its management team in the United States, effective from 20 February 2012. Commenting on these changes, Myles Lee, CRH chief executive said, "These appointments and subsequent follow-on changes strengthen our organisational structure and enhance our ability to execute our strategies and achieve long-term performance and growth."

Pakistan: Many Pakistani cement manufacturers have posted robust earnings during the first half of the 2012 financial year, which ended on 31 December 2011. Across the six major producers, representing 68% of the market, the overall profitability of the sector grew by a factor of 2.2 over the same period of 2010. Overall net sales of the sector grew by 32% to US$418m.

Separately most Pakistani cement producers posted profits for the six month period. DG Khan and Lucky Cement, which between them contribute around 25-28% of total cement sales, posted robust earnings per share growth. On the other hand, Fauji and Thatta Cement, despite better overall margins, posted losses. Fauji Cement posted losses due to lower utilisation of its new 2.1Mt/yr plant due to power outages and lower demand, while Thatta cement remained in the red due to extremely low sales, which were approximately 20% of those expected.

Denmark: The board of Danish cement plant producer FLSmidth has released financial results for the three months to 31 December 2011, which show that earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 57% to Euro133m compared to Euro89.1m in the final quarter of 2010. The company recorded a revenue of Euro979m, up by 32% year-on-year from Euro742m. Its order intake also increased by 32% to Euro787m for the quarter compared to Euro595m.

For the whole of 2011 the group's revenue increased by 9% to Euro2.95bn and its EBITDA increased by 11% to Euro356m. Its net profit was up by 12% to Euro193m compared to Euro180m in 2010.

FLSmidth said that its cement sector remained solid despite a difficult market. In 2012 the company expects a consolidated revenue of Euro3.2-3.5bn exclusive of acquisitions. In the cement sector it expects a slight increase in revenue over 2011's Euro592m.

Saudi Arabia: Saudi Cement Company has announced that it will re-start operation of its 4000t/day Kiln No. 6 by the start of May 2012 at the latest. It will have completed a large-scale environmental overhaul and conversion of the kiln from gas to crude-oil by this date.

The company will also recommence operation of three older kilns over a similar timescale. These have a combined capacity of 1325t/day. The total additional available capacity available in May 2012 will be 5325t/day, helping to meet rising demand in the country.