This week Aalborg Portland, owned by Cementir Holdings, reported a record turnover in 2018 of DKK8.895bn (US$1.37bn), the highest that the company has achieved, due to higher sales volumes following acquisitions in Belgium and the US.
Aalborg’s key role
Aalborg Portland's latest results highlight the importance of the Denmark-based company in supporting Cementir Holdings’ operations throughout the world. It is a key part of Cementir’s 3.3Mta white cement capacity and 20 per cent share of the global white cement market. Aalborg Portland’s performance offsets the impact on parent company results of lesser-performing markets. In Turkey, for instance, Cementir’s total cement sales volumes fell 17.5 per cent YoY, while in Egypt sales volumes dropped 24.9 per cent YoY in 2018 on the back of excess capacity and the Egyptian Army’s security operations in Sinai restricting cement sales and distribution from its Sinai White Portland Cement subsidiary.
Within the niche white cement business where Aalborg Portland is active, Cementir sees high returns in most of its end markets and the company expects an average growth of around 2.5 per cent between 2017-22. In China, the largest white cement market, white cement demand is expected to grow from 4.9Mt 2017 to 5.7Mt at a CAGR of 3.1 per cent in 2022 while in the rest of Asia white cement consumption is expected to increase by 5.3 per cent from 2.4Mt to 3.1Mt in the same period. With a 0.72Mta white production facility in Anqing, China, and a 0.35Mta white works in Ipoh, Malaysia, Aalborg Portland is building Cementir’s presence in these growth markets.
In addition, demand for the product in eastern Europe is forecast to rise by 3.4 per cent to 1.3Mt in 2022. Lower but significant rates of growth are expected in Africa (2.1 per cent), Latin America (1.6 per cent), North America (1.2 per cent) and western Europe (one per cent).
Expanding Cementir’s white footprint
With such positive expectations for the global white cement market, Aalborg Portland has enabled Cementir to expand its white cement footprint. In 2018 the company increased its stake in Lehigh White Cement Co, a step that enabled Cementir to reinforce its foothold in the US. With two white cement works in Waco (TX) and York (PA) the company now has a wider global reach.
"We are pleased to see the full effect of our increased shareholding in the Lehigh White Cement Company. With a market share of approximately 50 per cent of the US market for white cement, which is only surpassed by China in size, has consolidated our position as the global market leader in white cement,” said Aalborg Portland Holdings’ CFO, Henning Bæk.
Aalborg’s grey capacity
In addition to its white cement plants, Aalborg Portland Holding also owns several grey cement facilities that make up a considerable share of Cementir’s 9.8Mta of grey cement capacity. In addition to 2.1Mta of grey capacity at its Rørdal site in Denmark, Aalborg Portland operates, through its Turkish subsidiary Çimentas, around 5.4Mta of grey cement capacity at the Izmir, Trakya, Elazig and Kars plants.
With the majority of Cementir’s business carried out in Belgium and the Nordic countries – representing 73 per cent of EBITDA in 2018 – Aalborg’s acquisition of Compagnie des Ciments Belges (CCB) and its 2.3Mta grey cement works in Gaurain, Belgium, has proved a positive step in strengthening Cementir’s operations. "With the acquisition of CCB, we significantly strengthened our market-leading position in the Western European market, and in 2018 we achieved the full effect of the investment after successful integration into the Group,” said Mr Bæk.
Cementir's Interim Financial Report for 1Q19 is released on 9 May 2019.