Crisis, unemployment, debt, premium risk, It seems impossible to detach our country from these words. However, if we pay closer attention, we see Spain is a country full of opportunities. It´s just a matter of changing your perspective.
Thursday, November 8, 2012
ESPAÑA: Spanish cement industry hit by recession
CEMENT consumption in Spain is at its lowest level for almost half a century as the industry feels the effect of the financial crisis.
Spending on public works has been drastically reduced due to the recession, while the huge backlog of unsold properties has seen the house-building sector come to a standstill.
In the first nine months of the year, 11.6 million metric tonnes of cement were sold, down 34% on a year ago.
The total for this year is expected to be 13 million metric tonnes, the lowest since 1967 – in stark contrast to 2007 when 56 million tonnes were sold.
The sector has been forced to cut 28% of jobs since 2008, while a number of plants have closed.
HIMALAYA: Rolpa cement soon in market
TULSIPUR: Rolpa district, which is regarded as one of the remotest areas of the nation, is now becoming self-reliant in cement production.
The first and the only cement industry of the district, the Rolpa Cement Pvt. Ltd. is to bring out its product soon, making the district self-reliant in cement.
Company Manager Dinesh Dangi said the industry established three-year-ago plans to produce cement soon after Tihar festival.
The industry is facing trouble as the government did not provide electricity it pledged and has been making extra expenditures for diesel generator, said Dangi. The industry established in Budhaguan-3 has been producing 500 tons of clinker daily.
The industry established at a cost of Rs. 1.1 billion has a capacity of producing 200 tonnes of cement daily. It has given employment to 100 people and 150 will get jobs after its operation.
The industrial site is 38 kms from Tulsipur of Dang and 17 kms from Kapurkot of Salyan district.
UAE: UAE's oldest cement firm improves profits
nion Cement reported a turnaround in its profitability despite flat sales in the first half of the year.
The company said that net profit for the first nine months grew to $12.2m, compared with a loss of $7.3m during the same period last year.
This was achieved despite the fact that sales dipped slightly to $123.9m.
In a statement to the Abu Dhabi Securities Exchange, the company's general manager Yasir Ahmed bin Humaid Al Qassimi attributed the increase in profit to the improvement of selling prices for cement and clinker.
PAKISTAN: Lucky Cement
Lucky Cement Limited, touted as the largest producer and leading exporter of cement in Pakistan operates under the umbrella of Yunus Brothers (YB) Group. YB Group is an internationally recognised group having business concerns in varied sectors such as cement, textile and energy. The group not only caters to the local market but is also one of the chief export houses of Pakistan.
The company is also very vigorous in social activism, as it operates state-of-the-art, not-for-profit hospitals, Tabba Heart institute and Aziz-Tabba Kidney Centre. Lucky Cement Limited is an ISO 9001:2008 and 14001:2004 certified company which is listed on all the three stock exchanges of the country. The company has an annual production capacity of 7.75 million tons.
Over the years, the company has substantially grown its production operations with manufacturing facilities at strategic locations in Karachi to cater to the south region, Pezu and KPK to supply to the northern areas of the country. Lucky is the only cement manufacturer to have its own loading and storage terminal at Karachi Port. Another noteworthy factor that distinguishes Lucky from its competitors is its exclusive supply chain with specialised loose cement carriers and ship loaders.
Performance Snapshot FY12 FY12 concluded as the best performing year in the history of the Company. During the year, the Company achieved various milestones including sales revenue reaching Rs 33.3 billion; up by 28 percent compared to the previous year owing to an improvement of three percent in sales and 25 percent in the retention prices.
The phenomenal performance that began at the top, cascaded down to the floor, resulting in the highest ever bottom line figure of Rs 6.78 billion in FY12. This represents a robust growth of 71 percent over and above last year. During the period under review, the Company was able to dispatch 5.97 million tons of cement.
While domestic sales thrived strikingly by seven percent, export sales volume registered a downturn of four percent clocking in at 2.25 million tons as against 2.36 million tons, last year. However, overall sales volume surged by a respectable three percent compared to the previous accounting cycle.
As of FY12, the Company accounts for 22.1 percent of the total market shares in the export market and 15.5 percent in the local market. Currently, the Company derives 62 percent of its sales revenue from the domestic market while export sales have a contribution of 38 percent to its sales mix.
During FY12, the cost of production surged by 15.9 percent on the back of high fuel and energy cost. Thanks to relatively stable coal prices, the Company was able to avoid any further escalation in its operating costs. The gross profit posted a remarkable growth of 38 percent as compared to 33.5 percent growth achieved in the same period last year.
Operating expenses soared by seven percent during the period, but as a percentage of sales revenue, the same dropped, thus buttressing the operating income by 77 percent. During FY12, the Company was able to trim its financial cost by 51 percent which also played a prominent role in propping up the net profit.
Keeping the financial performance aside, we cannot avert our minds from the momentous capital expenditure and investment projects that the Company has undertaken during the recently concluded fiscal year. These projects include installation of European origin packing plant at Karachi project to further modernise its bagging operations, an alternative fuel replacement plant and power project to supply electricity to Hesco.
Further, as a part of its diversification strategy, the Company has signed a share purchase agreement of 75.81 percent shareholding in ICI Pakistan at a bid value of 152.5 million dollars to be payable in the rupee equivalent of this amount.
Performance over the years A cursory glance at Company's performance over the years gives an insight of FY10 being the worst performing year for the company with top line turning down by seven percent while bottom line recording a whopping decline of 32 percent.
Whereas the sales volume of the Company touted a handsome growth of 12.3 percent during FY10, the downturn comes from the severe pressure on cement prices in both local and international market, owing to overcapacity and depressed demand. While the local cement prices plummeted by 26.6 percent, export prices declined by 8.7 percent, thus hitting the Company's performance hard, during the period.
A reason for optimism during FY10 was various cost reduction measures taken by the Company which reduced the per ton cement cost by 11 percent thus, slightly propelling the gloomy gross margins. Amid dwindling selling prices, another factor hammering Lucky's bottom line was soaring distribution cost on the back of increase in export sales, sea freight charges as well as increase in prices of oil consumed in transportation. Thus, the Company posted a meager return of 8.19 percent on assets as compared to 11.97 percent in FY09.
But Lucky recovered to a great extent in FY11 despite the shaky industry backdrop during the period. In FY11, albeit the industry posted a negative growth of 8.32 percent, Lucky's local sales volume during the year registered a growth of 11.07 percent from 3.12 million tons cement sold last year.
The export sales volume however, plunged sharply by 32.9 percent in FY11 from 3.51 million tons last year mainly due to sharp decline in clinker and loose cement sales in the Middle East; coupled with slack construction activities and oversupply of cement. However, bagged cement export sales volume of the company increased by 7.03 percent.
In FY11, company's bottom line bounced back by 27 percent. While cost of production gushed by five percent due to increase in the per ton cost of cement which corresponded to a rise of 19.6 percent. The factors that propped up the Company's bottom line during the year were dropped in distribution expense (due to fall in export sales volume) and plunged in finance costs. Hence, during the year the Company generated an EPS of Rs 12.28 per share, up from Rs 9.7 per share, last year.
Liquidity position Over the years, Lucky illustrated a negative working capital and a current ratio of less than one. Nevertheless, as of FY12, the Company's current ratio clocked in at 2.64 which boasts an impressive and improving liquidity position. This might be attributable to the fact that the Company has trimmed down its current liabilities by over 66 percent in FY12. However, current assets grew ostensibly by just one percent in FY12.
Unlike, the other cement units, which are leveraged, some heavily; Lucky has streamlined its capital structure from a D/E ratio of 0.65 in FY09 to 0.22 in FY12. This demonstrates that company is on the strong liquidity boulevard.
Future outlook The 1QFY13 results announced by Lucky Cement are much in line with remarkable performance exemplified throughout FY12. In 1QFY13, Lucky Cement Limited declared a profit after tax of Rs 2.014 billion, which is 33.79 percent higher than last year's first quarter net profit of Rs 1.506 billion.
Cement industry portrays a dazzling outlook to the fore. Higher PSDP spending has led to a revival in domestic cement demand in FY12. Moreover, with increased PSDP allocation for FY13 and General Elections due in February-March CY13, domestic demand is likely to remain robust over the next six to nine months.
Reportedly, in addition to public sector infrastructure projects, a boom in the privately funded real estate development activities is also imminent in all the major cities. Real estate giants such as Bahria Town and Habib Construction are developing both commercial and housing projects in Islamabad, Karachi and Lahore which may further bolster the domestic cement dispatches.
However, unlike domestic demand, the industry exports remained lackluster touting a decline of 20.5 percent YoY in the month of October. However, the dreary export position is likely more attributable to logistical hurdles than to lack of demand. Going forward, strong retail prices, lower input costs and lower cost of borrowing should bode well for the Company, especially if higher level of funds is allocated for large-scale infrastructure and development projects going forward.
INDONESIA: Indonesia in transition
Asean’s biggest economy has become an investment hot spot, but regulatory uncertainty, endemic corruption and skilled labour shortages are big challenges, say Thai companies.
Rapid economic growth but a sharp rise in income inequality. Well-connected industries thriving and the number of millionaires forecast to triple by 2015 — even as half of all households hover near the poverty line. Such are the contrasts in Indonesia today.
“Indonesia is in a huge transition period from being an inwardly focused, lower-end economy to one that’s evolving very quickly with average growth of about 6.5% per year,” says Somsak Pipoppinyo, director of the Finance, Industry and Infrastructure Directorate of the Asean Secretariat.
“Being a consumer market of 240 million people, with more than 10% of this number in the middle to upper-income class, the self-reliant economy has a lot to offer for new investors.
“That is really good news for Thailand, as we now have a number of big business players and consumers at our doorstep.”
He said big businesses from Thailand such as the coal producer Banpu Plc, Siam Cement Plc, Bangkok Bank and Thai Union Frozen Group have already responded to this huge opportunity. However, beneath the impressive headline figures seen in recent years, there is a darker side to doing business that all companies have experienced.
“Banpu ventured into Indonesia, where coal resources are abundant, in 1990. Over the last decade, we’ve become the fourth largest Indonesian coal producer with full production capacity of around 20.5 million tonnes per year,” said Pongsak Thongampai, president-director of the Thai company’s Jakarta-listed subsidiary PT Indo Tambangraya Megah.
“However, the problems that we’ve been through frequently involve dealing with the uncertainty of regulations and fees which are considered vague, conflicting and subject to interpretation, particularly to foreigners.”
AFRICA: Namibia: Cement Import Duty Remains in Force
THE cement import duty which is supposed to serve as an infant industry protection measure for Namibia's only cement manufacturer, Ohorongo Cement, remains in force after a ruling which was given in the High Court in Windhoek this week.
In the latest round of a legal battle over the cement import duty, a close corporation which is importing cement into Namibia, Jack's Trading CC, did not succeed with an attempt to give effect to a previous court order in which the import duty was declared invalid.
An application by Jack's Trading for the previous court order in its favour to be put into effect while an appeal against that judgement remains pending in the Supreme Court was dismissed by Judge Dave Smuts on Monday. Judge Smuts, not pleased with the way that important information had not been provided to the court by the Minister of Finance and the Commissioner for Customs and Excise before his first judgement in the matter was given, ordered the Finance Minister and Commissioner for Customs and Excise to carry the legal costs of Jack's Trading in this latest round in the litigation about the import duty.
Judge Smuts also dismissed an application in which Ohorongo Cement asked him to rescind his previous judgement, based on an argument that it had been erroneously granted.
It was argued on behalf of Ohorongo Cement that the company should have been cited in the case as an interested and affected party, and that it had been an error to ask for the initial court order declaring the import duty invalid because at the time that was done the government notice announcing the duty had not yet been published in the Government Gazette.
Jack's Trading relied on a copy of a government notice, signed by Finance Minister Saara Kuugongelwa-Amadhila and dated July 27, for its application to have the import duty imposed by the Finance Minister with effect from July 27 declared to be of no force and effect.
Judge Smuts first heard arguments in the matter on August 15, and delivered his judgement on August 31. What emerged afterwards, and which he was not informed about with the first hearing of arguments, was that the notice in which the import duty was announced was promulgated in the Government Gazette on August 15, and that the import duty applied with effect from April 18.
In his judgement on Monday, Judge Smuts commented that the inference on the facts before him were inescapable - that the Finance Minister or Commissioner for Customs and Excise or their representatives had misled the court by not disclosing the further notice of August 15 to the court in circumstances where there was a duty on them to inform the court about it.
In view of the subsequent notice after the one signed by the minister on July 27, it would in his view not serve any purpose to grant the application to execute the court's order about the invalidity of the minister's July 27 notice, Judge Smuts added.
However, due to “the very unsatisfactory conduct” of the minister or Commissioner of Customs and Excise or their representatives in failing to disclose the publication of the August 15 notice to the court, the judge decided to order them to pay the legal costs of Jack's Trading.
The Finance Minister imposed an import duty of 60 percent on cement until 2014. In 2015, the import tariff would be lowered to 50 percent, while it would drop further to 42 percent in 2016, 24 percent in 2017, and 12 percent in 2018.
The court has been informed that Ohorongo Cement, which is providing direct employment to 316 people, has invested some N$2,25 billion in Namibia through setting up its cement manufacturing plant near Otavi, with an additional N$500 million invested in other infrastructure.
PAKISTAN: Cement exports to India decline by 15.67 percent
Cement exports to India have declined by15.67 percent in the first quarter of the current fiscal year, as it stood at 137,742 tons against 163,340 tons in the corresponding period last year, an official said on Tuesday.
Aizaz Mansoor Sheikh, chairman of Association of Pakistan Cement Manufacturers (APCMA), said that Pakistan’s cement was preferred by the Indians because of high quality and the sector is expecting a quantum jump of at least 0.5 million tons in the last fiscal year on easing of non-tariff barriers (NTBs) by India but it did not happen.
Exports to India, in fact, have been on constant decline ever since the two countries opened their borders for liberal bilateral trade.
The decline is not due to the lack of cement demand in India but because of very stringent non-tariff barriers, he said.
The installed and unutilised capacity of the cement industry in Pakistan could be effectively exploited through exports to India, which is being granted status of the most favoured nation (MFN), if the non-tariff barriers are removed, said Sheikh.
The APCMA chief said that the government of Pakistan must persuade the cement industry’s case, which is facing problems due to the non-tariff barriers in India, despite increase in the demand.
Cement is one of the industries having potential to help bridge the gap between the volumes of trade between the two countries in which Pakistan’s exports are far less, he said.
Hence, it will be a win-win situation for the two countries in the future if their exports are level and local industries are encouraged to meet the demand of each other’s market through their strong sectors, they added.
Sheikh urged the two governments to avail the opportunity and strengthen each other as Pakistan is best cement provider to India having lots of demand in the construction sector, while its production units are running on full capacity.
It is an irony that Pakistan liberalised its trade with India last year, short-listing a few items in the negative list but the Indian government has not fulfilled its promise to withdraw all non-tariff barriers, causing hurdles in the free flow of trade between the two countries, he said.
Cement exporters, having potential to export a big quantity to the Indian market, are facing a resistance by the Indian government as NTBs are not removed even after having been specifically mentioned during various rounds of official and unofficial talks between the two countries, said Sheikh.
Exporters’ issues, including a complex six to seven months process to obtain a certificate from the Indian authorities should be resolved on a priority basis because it was committed by the Indian government for having a status of the most favoured nation from Pakistan, said APCMA chairman.
The quality certificate for cement exporters is valid for one-year period, despite six to seven months procedural duration, he said, adding, but none of the exporters is allowed to continue their exports after expiry of certificate limit that is needed to get renewal in a brief period.
The complicated process of quality certificate holds on cement exports of many companies at a time, hence, the exports quantity shrinks gradually, he said.
The procedures have not been eased by the Indians and the certification cost is very high as the exporters have to bear heavy expenses for the visit.
Exporters said that Pakistani and Indian railways could exchange the same number of wagons for transportation of goods; however, the Pakistani wagons could not carry big cement orders due to restriction by the Indian government as a rule of reciprocal.
The railways wagons from the Indian side are limited for cement exporters, which increases their cost of cement transportation heavily, they said.
Cement manufacturers said that Pakistan should cement trade ties with India on equality basis rather than giving easy access to the Indian company in the exchange of nothing in the presence of the non-tariff barriers.
They demanded the government to raise the issues of NTBs with the Indian government for immediate solution and allow Pakistani cement makers to explore markets in all potential provinces on a priority basis.
AFRICA: Afrimat posts a profit
South African open pit mining company Afrimat on Thursday reported a 16.3% rise in diluted headline earnings per share for the six months ended August 2012 to 34.2 cents from the previous corresponding period’s 29.4 cents.
The miner said the main reason behind the rise in earnings was the acquisition of Clinker Supplies during the period‚ which had stimulated an increase in Afrimat’s key division‚ namely mining & aggregates.
“Tough market conditions continued to impact sales volumes in the other regions and high energy costs and a strike in KwaZulu-Natal also had a negative impact. All processing plants are fully commissioned and well placed to supply market demand and should sustain revenue going forward‚” the miner said on Thursday.
Revenue jumped 32.5% to R671m from the previous period’s R506m.
It also declared an interim dividend of 8 cents‚ up from the 6 cents declared in 2011.
The miner expects the recovery in the mining sector to remain slow and under pressure. However it feels it is well positioned to capitalise from its strategic initiatives such as its investment in industrial minerals through the Glen Douglas Dolomite operation and its acquisition of the Clinker Group.
“These initiatives‚ supported by ongoing product diversification in attractive growth sectors‚ such as industrial minerals and open cast mining‚ should see volumes increase‚” Afrimat said.
PERU:Cementos Pacasmayo invertirá US$88.4 millones en nueva Planta en Piura
Una nueva planta construirá Cementos Pacasmayo en la ciudad de Piura, proyecto en el cual realizará una inversión de US$ 88.4 millones, anunció la empresa al dar a conocer sus resultados al tercer trimestre del 2012.
Por lo pronto, firmó el contrato de suministro e ingeniería (básica/detalle) con las compañías internacionalesThyssenKrupp Polysius y Loesche para la construcción de la nueva planta.
Se estima que la capacidad de la planta serán de 1.6 millones de toneladas métricas de cemento y un millón de toneladas métricas de clinker, detalló la cementera.
A setiembre de 2012, Cementos Pacasmayo invirtió S/. 185.1 millones, de los cuales, destinó S/. 8.7 millones para la construcción de planta de ladrillos de diatomita, S/. 49.8 millones para la ampliación de planta de cemento de Rioja.
También, S/.11.15 millones para la ampliación de planta de cemento de Pacasmayo, S/. 6.8 para el proyecto de fosfatos, S/. 12 millones para el proyecto de salmueras, y S/. 96.3 millones en bienes de capital.
BRASIL: CSN plans 3Mt/yr expansion in Minas Gerais
Steel manufacturer CSN has announced plans to set up four cement assets in Minas Gerais state. The company wants to grow its current cement production capacity of 2.4Mt/yr to 5.4Mt/yr with an investment of US$491m.
CSN has proposed setting up three cement plants and a second clinker unit, adding to one at Arcos that began operations on May 2011. Currently the clinker unit at Arcos supplies 2500t/day the company's plant at Volta Redonda in Rio de Janeiro. The second clinker unit would expand this to 6500t/day, making it the largest clinker production site in Latin America.
Other cement companies investing in Minas Gerais state include Cimentos Liz's US$147m expansion to its capacity at plants in Vespasiano and Lagoa Santa. Holcim is growing the capacity of its plant in Barroso from 1.3Mt/yr to 3.5Mt.yr. Both Holcim and Cimentos Liz are receiving funding from the state development bank BDMG.
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