OMAN: Raysut Cement Q4 Net Rises 9.2%, Misses Forecasts

Oman’s Raysut Cement reported a 9.2 per cent increase in fourth-quarter profit after tax on Thursday that missed analysts’ estimates, according to Reuters calculations.

The company made a profit of OMR6.55 million($17.0 million) in the three months to Dec. 31, up from OMR6.00 million in the prior-year period, Reuters calculated based on the company’s financial statements and Reuters data.

Analysts polled by Reuters had on average forecast Raysut’s quarterly profit would be OMR7.55 million.

The firm made a profit of OMR27.43 million in 2014, versus a profit of OMR27.53 million in 2013, according to a statement to Muscat’s bourse.

BANGLADESH: Cement sales poised to rise if political turmoil ends

Cement consumption in Bangladesh is expected to grow 13-14 percent this year, riding on the development of roads and bridges and small rural housing projects, the managing director of Holcim Cement Bangladesh said yesterday.

“We are confident and positive about the scope of the cement market,” said Sumanta Pandit.

But growth will largely depend on the political situation, Pandit told The Daily Star in an interview at the company's office in Dhaka. “Sales will grow if the political situation improves in the coming days.”

The Swiss company has already witnessed 'a marginal decline of sales' in its Bangladesh operations due to the nonstop blockade that has disrupted the supply chain, he said.

Like other sectors, the cement industry was also affected in 2013 due to political unrest. “We were looking forward to a great 2015. But unfortunately, the political situation has again taken a negative turn. We only expect that a better situation will prevail.”

In 2014, cement consumption grew 12-13 percent, said Pandit, an Indian national, who took up his current assignment in October 2014.

The installed capacity of cement factories in Bangladesh is 33-35 million tonnes a year, while annual demand is 20-21 million tonnes as of 2014.

“Most plants operate at 50 to 60 percent efficiency, which is why we still have scope for cement growth. In spite of all these issues, companies are still staying afloat.”

More than 35 to 40 companies are operating actively in the market.

Pandit, 49, has nearly 25 years of experience in the cement industry and worked in different cement companies such Ambuja, Lafarge, and UltraTech.

Prior to Holcim, he was the country manager for Emirates Cement, a Bangladesh unit of India-based UltraTech Cement.

Holcim is bullish about the multinational's prospects in the country, thanks to the ongoing high-profile infrastructure projects, which will pave the way for more growth.

“We look at the Bangladesh market with great positivity,” he said, adding that the company recently invested Tk 3,000 million to expand its production capacity to two million tonnes a year.

Holcim is also upbeat on being a premium cement supplier to the ongoing Padma bridge project. 

“Considering our global and local expertise and experience in large and infrastructural projects, we are expecting the concerned authorities to allow us to participate in the Padma Bridge project, and the other projects centring it.”

“We are hopeful and enthusiastic about being a part of the growth process of Bangladesh, and we would like to be an important part of any development in this country, for which we are already in talks with consultants. Hopefully, we will be one of the premium suppliers for this project,” he said.

Holcim has contributed to building some of the longest bridges around the world.

In Bangladesh, the Bangabandhu Multipurpose Bridge and Syed Nazrul Islam Bridge (Bhairab bridge) have been built with Holcim cement, he said.

Pandit said Bangladesh will be able to earn a huge sum of foreign currency from cement exports, especially to north-eastern India, if the government provides export incentives and if bilateral cooperation between India and Bangladesh is further improved.

Bangladesh exports 40,000-50,000 tonnes of cement a month to the seven-sister market in India. Indian manufactures are now offering cement at lower rates than Bangladeshi companies due to tax benefits.

Currently, Bangladeshi cement makers cannot compete with Indian manufacturers as there is a price gap of Tk 50-Tk 70 a bag between Indian cement and Bangladeshi cement.

Pandit also called upon the government to arrange low-cost loans for the housing sector in a bid to boost apartment sales. Bangladeshi banks charge 15-16 percent on home loans at present.

The interest rate on housing loans in Bangladesh is still higher than in the Middle East and India. Currently, Indian banks charge 9- 9.25 percent on an average on long-term loans, while it is below 5 percent in the UAE, he said.

Founded in 1912, Holcim has operations in more than 70 countries and is the market leader in cement production in India, Australia, Azerbaijan, Slovakia, Switzerland and Latin America.

Holcim Bangladesh began its journey in September 2000 by acquiring Hyundai Cement Bangladesh. Gradually, Holcim solidified its interest in the country by acquiring two more plants: United Cement Industries at Meghnaghat and Saiham Cement Industries in Mongla. Its Bangladesh operation employs about 600 full-time and temporary employees.

EUROPE: CRH shares jump after €6.5bn asset deal

Shares in CRH jumped 6 per cent on Monday as investors applauded the Irish cement company’s decision to spend €6.5bn on assets of rivals Holcim and Lafarge, despite saying it would partially fund the deal through selling new shares.

The deal, agreed early on Sunday morning, will make it the third largest building materials business in the world by market value, having beat out a consortium led by Blackstone. It is by far the biggest deal CRH has agreed.

Ireland’s largest construction company, with a market capitalisation of €15.8bn, will sell 74m of stock, equal to just under 10 per cent of its share capital, and will also fund the deal with new debt and €2bn of cash from its balance sheet.

Although CRH has expanded through acquisitions for the past several decades, these have tended to be smaller transactions. It has spent $24bn on roughly 650 acquisitions since 2000.

“Put simply, we saw this as the right deal, at the right time and at the right price. It was too good an opportunity to turn down,” said CRH chief executive Albert Manifold on Monday.

“This is not a shift in strategy for us — normally we do around €2bn worth of acquisitions per year. This is just compressing 2.5 years of those transactions into a single deal.”

Mr Manifold also responded to speculation about whether the group would consider partners after the deal closes, including with buyout group KKR.

“Not all of these assets are going to remain long term in our group, that’s for sure. Some of these assets, we will be required to take partners on,” he said.

“One of those areas is the United Kingdom and we will look at whether we feel it’s appropriate to allocate all of the capital at this moment of time or to take on some partners. We have had a number of discussions with people. We are in discussions with KKR about investing in the UK.”

The assets being acquired include all of Lafarge’s UK operations, which will leave CRH with a number one market position in the British market for cement, aggregates, ready-mix concrete, asphalt and construction.

Outside the Irish and UK markets, the deal will also allow CRH to significantly expand its business globally. It will comprise of assets producing cement, aggregates, ready-mixed concrete and asphalt in North America, western Europe, Central and eastern Europe and the emerging markets.

Analysts at Cantor Fitzgerald in Dublin echoed the broader investor enthusiasm seen in early market trading on Monday, saying: “While not the most straightforward of deals, we believe significant demand exists for the materials assets globally — shown by the existence of multiple serious buyers for Lafarge Holcim assets.”

“CRH has a history of acquisition and successfully integrating businesses into its operations,” they added.

Holcim and Lafarge are selling the assets to win regulatory approval to merge and become the world’s biggest cement maker. CRH said it expected the businesses it is buying to earn revenue of €5.1bn and adjusted earnings of €752m in 2014.

In a conference call on Monday, the chief executives of the merger partners said the CRH deal price included the assumption by the Irish company of about €1.3bn of debt. The sale ensured their merger was on track for completion in the first half of 2015 with the vast majority of the assets they needed to sell now placed with buyers, they said.

Lafarge CEO Bruno Lafont said the CRH offer “was the best, both on the contractual side and on price”.

The deal requires shareholder approval. The “newco” employs 15,000 people in 11 countries, and CRH expects net synergies of €90m by the third year.

IRAN: Production over 51.6m tons of cement in 9 months

Iran produced 51.645 million tons of cement in the first nine months of the current Iranian calendar year (March 21-Decemebr 21, 2014), the IRNA news agency reported on Sunday.

Moreover, 56.85 million tons of clinker -- lumps or nodules, usually 3–25 mm in diameter, produced by sintering limestone and clay during the cement kiln stage – were produced in the mentioned time span. 

Cement manufacturers purchasing clinker usually grind it as an addition to their own clinker at their cement plants. 

Iran exported over 7 million tons of cement in the first six months of the current Iranian calendar year (March 21-September 22, 2014).

The country exported around 18 million tons of cement in the previous Iranian calendar year.

Iran ranked first in the Middle East and third in the world in terms of cement exports.

The country’s annual cement output is currently about 80 million tons, of which 50 million tons is used by domestic industries.

Iranian Industry, Mining, and Trade Minister Mohammadreza Nematzadeh recently said Iran’s annual cement output is forecast to reach 120 million tons by 2025.

KENYA: SAP HANA helps Savannah Cement enhance operational efficiency

Continental winner: SAP East Africa Managing Director, Andrew Waititu (left) congratulates Savannah Cement Information Technology Manager, Brian Wamwenje (Centre) for winning the 2014 SAP Quality Award in the Innovation Category during the Awards presentation ceremony held in Johannesburg, South Africa as SAP Eastern Africa’s Flora Kangethe (right) look on. Savannah Cement was picked as the Africa Innovation Category winner for displaying excellence in the implementation of its SAP HANA Enterprise Resource Planning IT solution.

SAP has announced that the deployment of SAP’s ERP application powered by SAP HANA has helped Savannah Cement to improve its operational reporting and to run its business better. Customers using SAP HANA benefit from cost savings, simplification and acceleration of business processes.

Savannah Cement is one of the largest and newest entrants into the cement market in Kenya, with a state-of-the-art, eco-friendly cement grinding plant with a capacity of 1.5 million tons a year. The plant is strategically placed near Nairobi, which accounts for 50 percent of Kenya’s cement consumption.

“SAP HANA has changed our view of database management and greatly simplified tasks, giving our business a cutting-edge advantage and incomparable agility,” said Brian Wamwenje, IT manager, Savannah Cement Limited. “SAP HANA helps us keep our business running better.”

SAP HANA has helped Savannah Cement gain integrity and accuracy in its operational reporting as well as better manage high business volumes, which has resulted in higher customer satisfaction and staff efficiency.

The first company in East and Central Africa to deploy SAP ERP powered by SAP HANA, Savannah Cement is now well-placed in the cement industry because it is equipped with in-memory computing technology for real-time planning and forecasting.

SAP HANA, which is currently used by more than 4,100 customers, transforms customer landscapes through simplification, value to customers, driving revenue generation and time and resource savings. To further help customers and partners on their SAP HANA journeys, SAP recently launched a simple tool hosting the use case map for SAP HANA and 11 journey maps.