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Holcim blames 32% income drop in third quarter on strong franc 09 November 2011
Switzerland: Holcim has blamed a 32% fall in income for the third quarter on the strong Swiss franc.
Holcim's income fell by 32% to USD460m in the third quarter from USD680m in the second quarter of 2011. Over the nine months to 30 September 2011 its income fell by 18% year-on-year to USD1.1bn from USD1.4bn in 2010. Sales mirrored this decline, falling year-on-year by 6.1% to USD5.9bn over the nine months to 30 September 2011 compared to USD6.3bn in 2010. The decline in sales between the second and third quarters was similar at 6.7%.
Despite the fall in total group income and sales, sales of cement rose in both the nine-month and quarterly period. For the nine months to 30 September 2011 sales rose by 5.2% to 108Mt from 103Mt. For the quarter ending 30 September 2011 volume sales rose by 6.2% to 37.2Mt from 35Mt in the quarter ending 31 July 2011.
"The strong appreciation of the Swiss franc during the first half of 2011 continued to negatively impact the financial result during the quarter, albeit to a lesser extent than during the second quarter," said Chief Financial Officer Thomas Aebischer. Holcim's sales during the three months to 30 September 2011 were reduced by USD948m by the currency. Operating earnings before interest, taxes, depreciation and amortisation (EBITDA) were reduced by USD200m, according to Aebischer.
As expected, Holcim noted that many emerging markets enjoyed brisk construction activity. In the Eurozone and in North America growth mainly remained restrained. The Latin America cement sector achieved the strongest rise in sales volumes, followed by Asia Pacific and Europe. In particular, the group's companies in Russia, Singapore, Indonesia, Colombia and Australia made larger contributions in Swiss francs to the sales. Where other group companies improved their results in local currency terms these successes were cancelled out overall by the strong Swiss franc.
In its outlook Holcim has pinned its hopes for consistent growth in the emerging markets of Latin America and Asia whilst singling out Africa and the Middle East for continued poor trading. In Europe and North America Holcim's intends for its lean cost structure to enable it to benefit more than average from any economic recovery. Lastly, the group mentioned that the sharp global rise in energy, raw material and transportation costs call for further price adjustments.
Italcementi reports third quarter profit drop 08 November 2011
Italy: Italcementi has reported a 51.7% fall in third quarter net profits to Euro25m despite the sale of its assets in Turkey earlier in 2011.
The profit over the nine months to 30 September 2011 was up at Euro123.2m from Euro18.5m in 2010, with the group saying that cement sales were up in Belgium, France, North America and in the emerging markets of India, Morocco and Thailand. Total group sales remained almost unchanged at Euro3.6bn for the same period. Italcementi's cement sector reported Euro2.3bn for the first nine months of 2011, a drop of 8.4% from Euro2.5bn in the same period in 2010. Cement sales volumes remained steady at 38.9Mt. The group reported a contraction in Egypt due to the civil unrest there and said there was, "stagnation in some industrialised economies."
"The positive results seen on emerging markets where, with the exception of Egypt, sales volumes rose by around 3%, confirms their strategic importance," said Italcementi's chief executive Carlo Pesenti in a statement. "More than 60% of our production capacity is located in these regions and this will increase in the near future with the new development projects recently set up in India," Pesenti continued.
The group said the profit fall was due to 'the unfavourable dynamic of operating costs and exchange rate effects' Italcementi sold equity investments in Turkey for Euro133.4m earlier in 2011 and said it would continue with cost cutting.
"While the Egyptian market will still be affected by political instability and increased local competition, the rest of the group should generate improved operating results, also thanks to positive price trends in Italy," it said. "In the fourth quarter, the group should record a decline in operating results that will be less than those of the previous quarters," it said, adding that it expected a 'significant improvement' in net profit for 2011 overall.
Heidelberg leads interest in join venture with RINL 07 November 2011
India: Heidelberg and major Indian cement companies including UltraTech and Reliance Cements have shown interest as joint venture partners in state-run Rashtriya Ispat Nigam's (RINL) proposed USD204m cement plant at Vizag, in Andhra Pradesh.
"We are looking for a partner to set up a 3Mt/yr plant at Vizag. Heidelberg, Ultratech and Reliance Cements have shown interests to be our joint venture partner," RINL Chairman and Managing Director A P Choudhary said. Zuari Cements, Bhavya Cements, JP Cements and Binani Cements have also shown interests in the joint venture.
"The finalisation of the partner will not take more than 2-3 months from now. We will be able to establish the joint venture before the end of the current fiscal year," Choudhary said.
Asked how much of a stake the steel-maker would offer to its partner, Choudhary said that no decision has been taken yet. However RINL is willing to give up to 74% to the partner since cement making is not its core business. The proposed venture will use fly ash and slag generated from RINL's Vizag plant, where the capacity will shortly be increased from 3Mt/yr to 6.4Mt/yr.
Around USD204m in investment will be required to set up the cement plant, Choudhary said, adding that the cost would be borne by the two firms according to the shareholding pattern. Production at the plant is likely to commence two years from the start of construction.
Lafarge third quarter sales up but reliant on emerging markets 04 November 2011
France: Lafarge has released its financial results for the third quarter of 2011, which reveal an increasing reliance on emerging markets. Its sales were up by 1% in the third quarter to Euro4.21bn and were up by 6% in like-for-like sales. Its current operating income was down by 9% to Euro750m, a 7% drop like-for-like. The group's net income was down by 10% to Euro336m.
For the first nine months of 2011, its sales are up by 2% compared to 2010 (up by 4% like-for-like) and its current operating income was down by 12% to Euro1.64bn. Its net income fell by 22% to Euro596m.
Sales in Lafarge's cement sector increased by 1% in the quarter (up by 5% like-for-like) and increased by 2% for the year-to-date (up by 3% like-for-like), reflecting volume improvements in emerging markets partially offset by the negative impact of foreign exchange. Its cement volumes increased by 6% in the quarter (up by 5% like-for-like) and by 7% for the year-to-date (up by 5% like-for-like), with growth driven by emerging markets. Pricing moved marginally higher in the third quarter versus 2010 while slightly down on a year-to-date basis. Despite the group's cost reduction programme, higher cost inflation and foreign exchange weighed on results and margins.
The group achieved Euro50m of structural cost savings in the third quarter and Euro150m for the year-to-date, on pace with its Euro200m full-year target. Lafarge also announced a new cost savings programme of Euro500m for 2012. The group made the strategic decision to divest its gypsum activities in the early part of the quarter. In total, Lafarge has secured over Euro2bn of divestment proceeds for 2011 for debt reduction.
Bruno Lafont, Chairman and Chief Executive Officer of Lafarge, said, "In the current economic environment, the group continues to be proactive and already secured over Euro2bn of divestments as part of its actions to reduce debt. These efforts will continue and today the Group is announcing a new Euro500m cost reduction programme. These measures, including price actions in response to a high cost environment, are part of ongoing steps to strengthen profitability, reduce debt and maintain strong liquidity."
"Looking ahead, the fundamentals of our business are strong. The group, fully focused on its core businesses, foresees sustainable cash-generating growth led by high quality positions, a unique exposure to emerging markets and the advantages created by innovative products and solutions."
Overall, Lafarge continues to see cement demand moving higher and maintains its estimate of market growth of 2-5% in 2011 compared to 2010. Emerging markets continue to be the main driver of demand and growth and Lafarge benefits from its well balanced geographic spread of high quality assets.
Filipino producers seek standards for raw materials 03 November 2011
Philippines: Cement producers in the Philippines have asked the Department of Trade and Industry (DTI) to impose mandatory standards on the raw materials used to ensure that quality standards are being followed. These standards would also effect producers of finished products that make significant use of cement. DTI Undersecretary for consumer welfare, Zenaida C Maglaya, made the announcement following a recent meeting of Cement Manufacturers Association of the Philippines (CeMAP).
According to Maglaya, CeMAP would like raw materials such as fly ash and aggregates to be placed under mandatory standards following complaints from contractors working on infrastructure projects. CeMAP said it will take years to find out the impact of poor quality fly ash. "We are asking CeMAP to submit their study because this is a technical issue," Maglaya said.
Maglaya explained that the standards for raw materials for cement are voluntary under the Philippine law. Being voluntary, Maglaya said, the responsibility lies on the end manufacturer although this can still be raised before the DTI. The move to standardise raw materials of cement and end-products using cement has followed a crackdown by the Department of Public Works and Highways against contractors of government infrastructure projects.