For the 12 global cement companies that we follow closely the US remained the largest contributor by far to their EBITDA, significantly increasing its importance in 2019 to 30.4% (+8.2pp) of the total, reflecting both improvements in trading and changes in exchange rates. India remained the second largest country increasing to 8.1% (+1.0pp) of EBITDA. …read more →
The Chinese companies, who continue to operate mainly in China, again dominated the global cement company rankings in 2019. They account for three of the largest five and six of the largest nine companies when the latter are ranked by capacity. Higher Chinese volumes, and the increased environmental controls which limited production enabling further price …read more →
In our view, companies should be explicitly including for environmental costs in their development appraisals, and we expect the providers of new equity and debt for these projects to increasingly insist upon this. A new cement plant typically has a cash cost of production of $30-40 per tonne. Adding $20-25 per tonne for carbon costs …read more →
Low capacity utilisation requires in our view that the global cement companies change their strategies and consolidate into stronger positions in a smaller number of countries, financing the required acquisitions by divesting weaker businesses.
Q3 generally in-line with lowered forecasts. Full-year guidance reduced. Volumes generally higher but margins lower. Semen Indonesia had the strongest EBITDA growth, with LafargeHolcim the highest amongst the more global companies. Ultratech had the most disappointing Q3.
Volumes still 12.8% below 2007 levels. With the subsequent growth in emerging markets this implies even more substantial recovery potential in developed countries, particularly in Europe. France key to recovery. France accounted for 25% of Saint-Gobain’s sales in 2016 when it was still one of the more depressed markets in Europe. However, 2017 has seen …read more →
The 11 aggregate and cement-based business where we are able to obtain the data had EBIT returns on total assets of between 1.8% and 14.4% in 2016. The previous levels of returns at Cemex and LafargeHolcim are unlikely to be achieved again due to the carrying value of their assets. The recovery in US aggregate …read more →
The Chinese companies rank highly on volumes based rankings: CNBM (291mt) and Anhui Conch (277mt) were the largest producers of cement in 2016. LafargeHolcim (233mt) was the third largest. CNBM (74 m3) was also the largest ready-mixed concrete company, with Lafarge Holcim (55 m3) the second largest. On a pro-forma basis, including Italcementi for a …read more →
Heidelberg achieved a higher Return on Capital employed than Cemex and LafargeHolcim in 2016, and covered its cost of capital for the second year running. LafargeHolcim had the highest operating EBITDA margin in 2016, but the lowest asset turn. The latter could be partly due to the revaluation of the Lafarge assets during the merger …read more →