PANAMA: Fornecimento maciço de cimento para o Metrô do Panamá

A Cemex anunciou em Monterrey, México, que irá fornecer cerca de 100.000 toneladas de cimento para a construção da Linha 1 do Metrô da Cidade do Panamá, a qual irá percorrer uma distância de quase 14 quilômetros e unirá dois importantes setores da capital.

“Prevemos que o Metrô do Panamá será a chave do crescimento do país de médio a longo prazo”, afirmou Ramón Pizá, presidente da Cemex naquele país.

A primeira etapa do metrô panamenho, primeira obra deste tipo na América Central, contará com partes subterrâneas e de superfície e exigirá a construção de túneis, viadutos e via principal. O Metrô atravessará a cidade e conectará a estação principal da Gran Terminal Nacional de Transporte em Albrook com o Centro Comercial dos Andes, na área metropolitana norte da Cidade do Panamá.

Espera-se que, em 2014, a linha do Metrô tenha capacidade inicial de 15.000 passageiros por hora e que em 2035 beneficie 40.000 usuários, segundo as estimativas oficiais. O consórcio para a construção do metrô panamenho é formado pela brasileira Odebrecht e a espanhola Fomento de Construcciones y Contrata (FCC). O custo total do projeto é de US$ 1,45 bilhões. Foto cedida pela Secretaría do Metrô do Panamá.

INDIA: Too early to celebrate sales growth

Coming on the heels of an average (industry) year-on-year growth of 7.7% in March and 6.2% in April, the numbers are impressive 

Cement giants Ambuja Cements Ltd and UltraTech Cement Ltd surprised the street with a good 11.9% and 10.6% growth in sales respectively during the month of May, when compared to a year ago. Even though ACC Ltd’s sales grew by a sober 3.1%, cement dealers are confident the pan-India sales average growth for May is likely to touch 9-10%.

Coming on the heels of an average (industry) year-on-year growth of 7.7% in March and 6.2% in April, the numbers are impressive. More so, when debates on the abysmal March quarter growth of 5.3% in gross domestic product seem to highlight gloom and doom for the infrastructure and construction sector. Analysts believe the growing demand for cement is perhaps on account of demand from housing sector, where the demand is growing.

A month ago, a CRISIL Research report forecast a growth in cement volumes of around 8% for fiscal 2013, compared to the year before. However, it may be too early to predict a trend. Besides, fiscal 2011 and 2012 had seen growth rates in cement slide to lows of 5.1% and 6.5%, after growing at a steady pace of 8-9% for a little over a decade.

In the last two months –April and May- sales despatches seem to have grown on a lower base. Note that average despatches in April and May 2011 declined by 0.2% and 0.4% from the year-ago period (2010). Further, price volatility is often a lead indicator of volatile demand. Hence, given that cement prices have softened by around Rs. 5-12 a bag (50 kgs of cement) during May demand could be sluggish in the coming months. The onset of monsoons would also hamper construction activity and therefore pull down cement demand.

Controlled production by manufacturers to buoy prices is another indicator that suggests demand is not that strong. Capacity expansions and production control have kept utilization rates low- an average of 75% in fiscal 2012. According a report by Brics Securities Ltd, “the oversupply situation is likely to persist until fiscal 2014, preventing a secular uptrend in prices.”

In the final analysis, sales despatches of cement companies no doubt mirror market demand. But they offer comfort to companies and investors only when high volumes are backed by strong and stable cement prices. The March quarter performance, which came on the back of higher sales volumes, did not see realisations match up to expectation. No wonder the three leading large-cap stocks ACC, Ambuja and UltraTech lost ground after having outperformed the BSE Sensex from January till March 2012. From April 2012 till date, ACC’s stock fell by 17.8%, Ambuja by 12.4% and UltraTech by 7%.

This is more significant going forward, given that the increase in freight rates and energy costs, along with excise duty hikes, need to be offset for companies to maintain their profitability.

SRI LANKA: Sri Lanka Tokyo Cement profit flat amid higher taxes

Sri Lanka's Tokyo Cement (Lanka) Plc, the island’s biggest cement manufacturer said net profits for the March quarter rose just two percent to 130.24 million rupees from a year earlier, held back by a steep increase in taxes. 

The group, which includes a packing plant and biomass power subsidiary, reported earnings of 43 cents per share for the quarter.

For the financial year ended March 31, 2012, Tokyo reported earnings of 3.22 rupees per share on profits of 978.90 million rupees, up 14 percent, interim accounts filed with the Colombo Stock Exchange showed.

The company's voting stock closed up 20 cents to 28.40 rupees, while the non-voting share slipped 40 cents to 19.00 rupees, on Tuesday.

The Japanese-Sri Lanka joint venture, said revenues rose sharply by 61 percent to 6.81 billion rupees in the March 2012 quarter, lifted by the post-war construction boom.

Gross profits also rose 36 percent to 832 million rupees, but steep increase in income tax to 177 million rupees in the March 2012 quarter from just 14 million rupees a year earlier, kept profits nearly flat.

Full-year revenues grew 41percent to 22.93 billion rupees, while gross profits grew at much slower 16 percent to 3.90 billion rupees.

Tokyo Cement, which marks 30-years of operations this year has it main manufacturing facility is situated at the eastern seaport town of Trincomalee.

Sri Lanka’s total cement usage in 2011, rose 21.6 percent to 4,588 metric tonnes, according to Central Bank of Sri Lanka figures.

Domestic production rose 13.6 percent to 1,974 metric tonnes, while cement imports was up 28.4 percent to 2,584 metric tonnes.

Much of the cement demand came from government-related projects, to build roads, bridges, a port in the south, an airport in the south and large-scale projects in the north and east.

Tokyo imports clinker, which is ground and mixed at the Trincomalee plant. It also has a packing plant. The company’s production costs have come under pressure from a weak rupee since late last year.

Sri Lanka also has price controls on cement, which is part of a series of restrictions placed on private business in recent years.

Analysts say the price controls are a threat both to producers of cement who are denied the right price that is available to their foreign counterparts and also the construction industry which faces delays when importers halt shipments to escape losses from state intervention.

SAUDI ARABIA: Saudi cement producers to maintain competitiveness

Backed by sizeable government funding of physical and social infrastructure, access to subsidized fuel and limestone, and the proximity to respective markets, the Saudi cement producers are likely to maintain their competitive advantage over global players in the coming two years, the National Commercial Bank said Monday in its latest “Saudi Cement Sector Review”.

On average, energy costs represent 30-40 percent of total production costs, and are the second largest consideration to be factored into the cost structure of producing cement. 

The local price of natural gas is set at $0.75 MMBtu, significantly lower than international spot market prices that average between $2.50-$5.50 MMBtu. 

Given the ongoing construction boom, the report forecast that by 2013, designed clinker capacity will reach 55 million tons, with cement consumption increasing to 53 million tons. On the supply side, it forecasts designed clinker capacity to continue at 51 million tons in 2012. While capacity was meant to increase by 4.5 million tons this year, the shortage in fuel allocation may affect output this year for both Yanbu Cement and Southern Cement. 

Cement demand will rise to 49 million tons and 52 million tons in 2012 and 2013, respectively. 

It estimates that construction gross fixed capital formation (GFCF) will increase to SR209 billion as the GDP will reach an estimated SR2.27 trillion next year, with a resulting increase in cement prices. These will fluctuate within the range of SR268-SR290/ ton in 2013. “However MOCI is likely to intervene to maintain a stable price,” it added.

The report projects local per capita cement consumption to be 1,730 kg. Oil prices are likely to remain elevated for the coming year, albeit at a lower level of $95/bbl strengthening the demand for construction. 

With an estimated total of SR472 billion worth of contracts in the execution and EPC (bid) phases, SR217 billion represent projects that will be completed within 2012, and SR255 represent those that will be completed within 2013. On a Kingdom-wide scale, the Western region will command the most construction activity, accounting for an upcoming 39 percent of projects, followed by the Eastern region at an estimated 26 percent. An additional 8 percent of projects will be dispersed Kingdom-wide.

As demand from the Western region is poised to grow, existing companies will continue to compete for market share. The region, encompassing Jeddah, Makkah and Madina, enjoys major infrastructure projects across a number of sectors. It is the hub for both local (Red Sea) and religious tourism (Haj pilgrimage) necessitating hospitality services.

Transport infrastructure projects will command the largest share until 2013. These encompass expansionary works for King Abdulaziz International Airport, as well as developing the Haramain high-speed rail network with an awarded contract value of SR42 billion.

In the Eastern region, Saudi Aramco dominates the project market over the forecasted period, at an awarded contract value of SAR21 billion. This is followed by the aluminum project at Ras Al-Khair, which is owned by Ma’aden, at an estimated SR9 billion. Of the SR124 billion worth of awarded contracts in this area, SR50 billion worth of projects are set to be completed by 4Q 2012. 

The Central region’s importance as the political and business center of the Kingdom makes it an important target for cement companies. There are currently 114 ongoing projects, the largest of which is owned by Rayadah Investment Company (RIC). RIC is the Saudi Public Pension Agency’s company for investing in real estate in the Kingdom. In total, it is undertaking 14 projects in the Central region, with a total contract value of SAR27 billion. 

In the Southern region, Jizan province is commanding the largest share, at 42 percent of total contract value. Overall, the construction category accounts for SR7 billion of the total, with residential construction commanding the bulk, at 82 percent share. In the North, Prince Abdulaziz Bin Mousaed Economic City is a sizeable project. Its construction commenced in 2006, with a total outlay of SR30 billion over 10 years. 

Moving forward, Qatar will prove to be an important export destination for Saudi cement firms following its award of the 2022 World Cup. It is planning on spending an estimated $70 billion to develop the country’s infrastructure. With more favorable export conditions, the Kingdom has the potential for positioning itself as Qatar’s lead supplier. 

However, challenges faced the Kingdom’s cement sector, including the conditional export ban, which limits growth opportunities within the domestic market. Additionally, fuel shortages reported by some cement companies, and ongoing unresolved discussions with Aramco regarding fuel allocation, will cause delays in clinker production, affecting supply. 

Consequently, the tight demand-supply balance will continue to serve as another difficulty going forward, with the eight primary players competing to protect market share from new entrants. 

Despite the strong appetite and competitive pricing in funding the cement sector, the risk to Saudi banks remains in financing projects that are largely geared toward meeting transient demand.

“The ongoing export ban will serve to constrain growth for Saudi cement producers. In the almost four years since its introduction, neighboring and regional countries have developed their cement markets, becoming substitutes to the Saudi production. This will make it difficult for local producers to retain their high levels of exports should the export ban be removed,” the report said.

BOLIVIA:Nueva cementera proyecta producir 1.700 toneladas/día

La nueva fábrica será la segunda más grande del país, después de Soboce.

El proyecto de la Cooperativa Cementera Comunitaria Boliviana (Cocembol), que se edifica en la provincia Aroma, de La Paz, prevé producir 1.700 toneladas por día de cemento para ubicarse como la segunda proveedora más importante del país de este material de construcción, afirmó el presidente del Consejo de Administración, Eduardo Aban.

Las obras del nuevo complejo industrial se iniciarán en julio con una inversión de 145 millones de dólares aportados por la empresa sueca Energy Saving Solutions Scandinavian (ESS). “Los trabajos civiles empezarán el próximo mes y la fábrica de cemento entrará en operaciones en enero de 2014. Se utilizará tecnología de punta. Será la primera cementera comunitaria y la segunda en capacidad de producción en Bolivia”.

La cooperativa está formada por comunarios de las provincias Aroma y Loayza de La Paz. 

“Este proyecto generará empleo directo para 1.300 personas. También prevé mejorar las viviendas del sector, la implementación de centros médicos y mejoras en la educación, entre otros”.

Duración del proyecto y competencia. Las reservas de materia prima para la producción de cemento en la zona alcanzan a 25 millones de toneladas de piedra caliza.

El ejecutivo de Cocembol señaló que, de acuerdo con los cálculos, la empresa tendrá una vida útil de casi 50 años.

Actualmente, la Sociedad Boliviana del Cemento (Soboce) es la principal proveedora del mercado interno con 775.000 toneladas por año, seguida por la Fábrica Nacional del Cemento (Fancesa), que no abastecen el mercado interno. “En 2011, la producción de ambas empresas no cubrió el consumo nacional, por lo que se tuvo que importar cemento”. Fancesa incrementó su producción de 350 a 600 toneladas por día.

561 toneladas de cemento por año es la producción que proyecta la nueva empresa comunitaria.

"No se observa de manera objetiva los 600 millones de dólares que debía invertir y tampoco deja que se efectúen auditorías para verificar la inversión.Puede que la empresa tenga compromisos con los proveedores, pero eso también debe verificarse”.

PAKISTAN: Lucky Cement

Lucky Cement Limited, a company belonging to the Yunus Brothers Group, is the largest manufacturer and exporter of cement in Pakistan. With two production facilities in the country, one in Karachi and one at Pezu in NWFP, Lucky Cement is also Pakistan's only cement manufacturer to have a loading and storage terminal at the Karachi port. 

Thanks to location advantages of being in the South, it is not surprising to know that Lucky accounts for more than one-third of the total cement exports from Pakistan, and caters to the Asian, Middle Eastern and African markets. 

PROFITABILITY 

Sales and gross margins FY12 commenced on a good note for Lucky. During the first nine months, the company's revenues witnessed a year-on-year increase of about 29 percent, lead primarily by a surge in local sales as opposed to export sales. While local sales volumes registered a 7.5 percent year-on-year growth during the cumulative nine months of FY12, export sales volume decline by five percent. Overall, a marginal volumetric increase in net sales of two percent was seen, including both local and export sales. 

As for revenues from sales, local sales fetched a whopping 46.4 percent increase in revenues, thanks to an increase in domestic retention prices of cement, which went up by roughly 21 percent, year-on-year during 9MFY12. As for the export side, though export sales volumes declined vis-à-vis the previous year as discussed, better export prices helped generate 9.3 percent higher export sales revenues during the cumulative nine months of this fiscal year relative to the same period last year. 

The cost of sales for 9MFY12 also went up by about 19 percent, led by increases in prices of fuel, packing materials and other input costs. Gas and diesel prices were increased by 17 percent and 10 percent during the third quarter alone. Yet, as a percentage of sales, the cost of sales was 62 percent in 9MFY12 versus 67 percent in 9MFY11, indicating that better prices covered the higher cost of goods well. Overall, gross margins increased by about five percentage points in 9MFY12 against 9MFY11. 

Lucky has initiated an alternate fuel facility using used tyres and agricultural and municipal waste called the RDF. The project has been made operational in 3QFY12, and 20 percent fuel replacement has been achieved so far. This initiative will further help reduce Lucky's cost of production in the days to come, and help improve margins further. 

Distribution costs On the operating side, distribution costs are a key component because of the nature of the business which warrants distribution across local as well as export markets. Though distribution costs had stayed under 10 percent of sales in FY08 and FY09, they saw an upsurge in FY10, declining marginally in FY11 to 12.4 percent of sales. 

For 9MFY12, distribution costs were nearly 11 percent of sales, versus 14 percent during 9MFY11. The decline in distribution costs as a percentage of sales in 9MFY12 against the same period last year is attributable to the volumetric decline in export sales during FY12. 

On the whole, operating margins were higher by about eight percentage points in 9MFY12 relative to the same period last year. 

Net margins Net profits have grown at a cumulative average growth rate (CAGR) of about 10 percent between FY08 and FY11. In 9MFY12, profit after tax increased by a whopping 89 percent, year-on-year, to Rs 4.7 billion. The improvement in profitability was reflected in an improvement of about six percentage points in net margins for 9MFY12 relative to the first nine months of the previous fiscal year. 

LEVERAGE Lucky's debt to equity ratio is relatively stable at a lower proportion of debt relative to equity. In particular, the debt to equity ratio for FY11 was contained at 0.02:1. The debt-to-equity ratio depicted a consistent decline for the past five years, with interest coverage ratio in FY11 also depicting an improvement since FY09. 

In 9MFY12, the company's long-term finances increased marginally, from Rs 658 million at the end of the last fiscal year to Rs 725 million at the end of 9MFY12. Current liabilities, on the other hand, decreased by roughly rupees four billion from the end of the previous fiscal year to Rs 6.8 billion at the end of 9MFY12. The company's financial charges declined from 2.2 percent of sales in 9MFY11 to 1.2 percent of sales during 9MFY12. 

OPERATIONS Lucky's inventory management dwindled slightly in FY11, with the inventory turnover in days increasing by about 26 percent relative to that in FY10. Similarly, Lucky's accounts payable turnover - which shows how quickly the firm pays its creditors - increased by about 18 percent in FY11 to nearly 75 days against FY10. 

INVESTMENT & VALUATION According to JS Research, "Lucky is trading at FY12E and FY13F PE of 6.3x and 6.1x respectively." The house even raised the scrip's target price to Rs 135 from Rs 117.5 previously. Other brokerage houses are also optimistic about the scrip, with AKD securities having raised the target price to Rs 148.4 per share! 

ONGOING PROJECTS It's the expansion plans of Lucky Cement which are the company's highlight. The due diligence for establishing the cement project at DR Congo is making encouraging headways, while Lucky has also decided to set up an 870,000 tons Greenfield cement grinding plant in Iraq, estimated to cost dollars 30 million. 

The project in Iraq is to be established as a joint venture with a local partner, and is meant to be equity-financed with equal contributions from both partners. 

Lucky will also be investing in its newly incorporated associated company by the name 'Yunus Energy Limited'. The project, to be set up in Thatta, will be 50MW wind electricity project costing dollars 143 million, to be financed via debt and equity through a 20:80 ratio. 

OUTLOOK As far as local sales are concerned, Lucky's got a promising outlook ahead. While the increase in retention price of cement promises a year-on-year increase in the company's revenues for FY12, a volumetric increase is also expected because of a low-base effect and also due to reconstruction work in flood-affected areas in Sindh, together with an improved PSDP allocation for FY13 because of the run-up to the elections. 

On the export side, while volumes have depicted a fall in the first quarter of the current fiscal year, the company is hopeful that exports to Afghanistan will reach the five million ton level in FY12. Cement exports to Afghanistan were 4.7 million tons. Similarly, there are expectations of better exports to India in the wake of improving trade relations with the neighbour. However, exports to other destinations are expected to stay on the ebb. 

Overall, the company expects the total sales volume for the current fiscal year to reach a record by exceeding the highest ever domestic sales volume 23.55 million tons which was achieved in FY10.

MANILA:Cement buyers reminded

When buying cement products, it would be wise to check the labels of cement bags to ensure the quality and type of the product.

“This is to avoid problems in the future,” the Cement Manufacturers Association of the Philippines said Monday.

CeMAP president Ernesto Ordoñez said consumers should buy the type of cement suitable for their construction needs, adding that there are different types of cement for different types of structures.

“Our members are undertaking an information campaign to provide consumers a better understanding of cement labels. They continue to give full support and compliance to government-imposed standards,” Ordoñez said.

Ordoñez said knowing and understanding cement bag labels would assure consumers they were buying the product suitable for their requirements.

“It is important to look for the Product Quality and Safety mark for domestically produced cement or the Import Commodity Clearance mark for imported cement,” Ordoñez said.

PAKISTAN: A happy budget for the cement industry

Touted as one of the sectors to have taken home the positives from the budget, the overall cement industry has gotten the fairer share of the deal, indeed. Amongst the direct measures of the 2012-13 budget affecting the sector, federal excise duty on cement was the most discussed amongst analysts and professionals in the industry. Only a few days before the budget, expectations of a reduction of about Rs200-250 per ton were rampant in the industry. The APCMA had also proposed a Rs200 per ton reduction for the upcoming budget. However, the Finance Ministrys ultimate reduction of Rs100 per ton of FED was below market anticipations. After this measure, FED on cement stands at Rs400 per ton - Rs20 per bag. There were expectations that this levy will be phased out by the FY14 budget. But with a less-than-expected reduction in FED for FY13, the phasing out may take longer than anticipated. Further, the lower reduction in FED also put question marks on whether the benefit will be passed on to consumers or absorbed by manufacturers completely. Reduction in custom duty on rubber scrap and shredded tyres was another welcome development for the sector. With the duty brought down from 20 percent to 10 percent, this is a positive measure for cement manufacturers that use shredded rubber scrap as an alternate fuel. PSDP expenditures are another area on which cement players have a keen eye. At Rs873 billion, the increase in the size of PSDP rounds off to 19 percent more than what was expended in the previous years budget. Theres also a strong likelihood of these estimates to be met in actuality since FY13 will be an election year warranting steeper development efforts by the current government to lure voters. That the previous years PSDP outlay marginally exceeded its budgetary target also sets up a good precedence for the coming fiscal year. Other measures included in budget that will have a positive bearing for the sector is the reduction in minimum turnover tax from one percent to 0.5 percent - especially beneficial for loss-making cement manufacturers - and the reduction in withholding tax on exports from one percent to 0.5 percent. Increase in the gas infrastructural development cess for industries from Rs13 per mmbtu to Rs100 per mmbtu will impact the sector negatively, though the impact will be small. Overall, the post-budget scenario appears quite positive for the cement sector, even though the measures taken were not up to expectations. To what extent would the reduction in taxes benefit consumers remain to be seen, but cement manufacturers must be quite pleased.