The autumn financial statements from the major cement producers tell a disparate tale of sales up and sales down, prices low and margins improving, emerging markets out and mature markets back in. The general feeling, however, is relatively positive – relatively being the key word here as, having experienced the crash, the cement industry (and indeed the global economy) has developed a new curve on which to grade ‘positive’.
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The US has been something of a millstone around the neck of many companies operating there over the last few years. A protracted recession with minimal construction spending put the dampeners on the country’s cement industry, but this year has seen a marked recovery, with companies such as TXI and Eagle Materials reporting double digit growth in profit. The future looks bright, though results in the next couple of quarters will no doubt be dependent on the winter weather and the government’s next round of debt ceiling debates.
Europe, meanwhile, continues to stagnate, with muted signs of recovery in parts of the West and stronger growth in countries such as Poland and Ukraine, where CRH has reported sales volumes up 5% and 8%, respectively. Spain recently reported a quarterly GDP gain of 0.1% for the July – September quarter after nine consecutive quarters of loss. It’s a step in the right direction, but it’s likely to be a bumpy road for the Mediterranean region, which must resign itself to defining a new normal.
India has long been considered a growth market, and undoubtedly will be again. However, in this round of results, Indian companies are reporting significant losses almost across the board. Low levels of demand and high input costs have put pressure on margins, and weighed down global giants such as Holcim, which reported declining sales and income in its interim financial statement, noting key construction markets such as India and Mexico as particularly disappointing.
In almost all the financial reports I have read in the last month or so, mention has been made of the company’s cost efficiency measures and how they are improving margins. Statements from HeidelbergCement’s Dr Bernd Schiefele and Italcementi’s Giovanni Ferrario make note of it in their respective 3Q13 reports, while Holcim’s Leadership Journey has contributed a noteworthy CHF531 million to consolidated operating profit so far this year. The Group is on track to achieve its targeted increase in operating profit of CHF1.5 billion by the end of next year.
In a recent conversation about measures to improve operations, I heard the observation ‘a rising tide lifts all boats’. With that in mind I would like to thank all of our authors for sharing their best practice over the last year and helping to raise the overall standard of efficiency in the cement industry. Thanks also to those plants that hosted World Cement for plant tours in 2013. Whatever you do to mark the end of the year, we wish you all the best. Here’s to a happy, profitable and safe 2014.