TURKEY: Turkish cement group scans region for acquisition

The Sabancı Cement Group, which includes two leading cement producers in Turkey, is eyeing chances to acquire factories abroad. ‘Crazy growth’ before the global crisis and the shrinking that followed are today offering strong investors with opportunities to buy stagnant plants, says Mehmet Göçmen, the group’s chairman. The company is also looking for domestic acquisition chances, he says

The Sabancı Cement Group, a Sabancı Holding subsidiary, is searching for acquisitions in production facilities both in Turkey and abroad, Mehmet Göçmen, the group president said Thursday.

The world experienced “crazy growth” between 2003 and 2008, which increased capacity by 850 million tons annually. But the industry hit rock bottom during after the global recession, the president said.

The sector in Turkey did not grow in 2009 but expanded 17 percent last year, he said.

Significant global players fell into debt during the crisis and while they are reconfiguring their networks they are trying to sell cement plants, said the president.

"The international investment environment provides the companies that have strong balance sheets like ours with the chance to invest,” he said. “We hold the advantage of having a strong cash-inflow during a period when markets across the world are in bad shape.”

Sabancı Cement Group consists of two separate companies: Akçansa, a Sabancı Holding and Heidelberg Cement joint venture, and Çimsa, a Sabancı firm that has been in business since 1975.

"The annual activities of our two companies come to between 300 million and 400 million Turkish Liras. Sabancı has a borrowing capacity of up to 1.2 billion liras from the companies’ balance sheets, without adding any additional capital. This means we can invest between 1 billion and 1.2 billion liras without doing anything extra. We can raise our annual capacity of 15 million tons to 25 million tons depending on our internal dynamics.”

Göçmen said they would choose a country with low risk, suitable demographical structure and easy geographical access for their new investments.

Anti-trust regulations

Göçmen spoke about the anti-trust laws and regulations for the market in relation to many cement factories in bad financial condition. “Isn’t it a pity? Capacity is there but someone says: You cannot buy that firm. Some rules need flexibility for the sake of the country’s benefit,” he said, calling on economists and top business organizations to intervene in the issue.

World market

A total of 3 billion tons of cement is produced across the world, Göçmen said, adding that only a small portion, between 170 million and 200 million tons, is traded internationally. Generally, countries can produce the amount of cement they need to meet their domestic demands, said the president.

Growth in the cement industry is directly related to the development level of a country, said Göçmen. The amount of cement consumption in developing countries is much higher than developed countries. The highest consumption figures across the world stand between 800 and 1,000 kilograms per capita annually, he said.