In the July issue of ICR, cement associations and producers reflect on the past three decades, highlight the industry’s achievements and look at the way ahead as climate change and other challenges drive changes in the industry. In this interview, ICR speaks with Francesco Caltagirone Jr, chairman & CEO, Cementir Holding SpA.

ICR How has your company evolved over the last 30 years and what has changed most, at a plant or company level, over that period?
Francesco Caltagirone Jr (FC) Cementir Holding is a multinational company operating in the manufacturing and distribution of grey and white cement, ready-mixed concrete, aggregates and concrete products. Cementir has been part of the Caltagirone Group since 1992. It has been listed on the Italian Stock Exchange since 1955 and is currently part of the STAR segment.

Over the past 30 years, Cementir has embarked on a significant geographic and product expansion, from a “one country-one product” company to a “multi-country-multi product” company, thereby growing from a mid-sized player in Italy into the largest manufacturer and exporter of white cement in the world.

We operate six production sites in Denmark, Egypt, China, Malaysia and the US, with a total production capacity of 3.3Mta and ship to over 60 countries across the world. We have also invested in green technologies and renewable resources by building a waste business to serve our energy needs.

Nowadays, through our subsidiaries Aalborg Portland, Cimentas, Compagnie des Ciments Belges (CCB) and Lehigh White Cement Company, the group operates in 18 countries across five continents. In 2017 we sold 10.3Mt of cement, 4.9Mm3 of ready-mixed concrete and 9.3Mt of aggregates.

This growth added significant organisational complexity to the group. A matrix organisation entails multiple interactions with plant, country and regional managers and central corporate offices. This organisational aspect and the interaction of different cultures has perhaps been the single largest transformation within our group. The fact that we have become truly international can be captured in one single event: the decision to divest our cement and ready-mix operations in Italy, our home country, in 2017. Today Cementir still has an Italian soul but also a truly international mind.

ICR What do you feel is the most significant achievement of your company in the last 30 years?
FC As mentioned before, our company has evolved tremendously in the past 30 years. We have successfully grown from achieving EBITDA of E11.2m in 1996 to E223m in 2017. This is a twenty-fold increase without any capital raising. All our growth has been generated by cash flow from operations.

We have successfully diversified our portfolio too, both from a geographical and a product standpoint. In fact, from a single-country and single-product business Cementir has become a multinational company operating globally with a broad product portfolio and 100 per cent of revenues outside Italy.

I think our shareholders should be happy, as total shareholders return on Cementir share over the same period can testify. This value creation has been the largest achievement of all.

ICR What are the main challenges facing you as a cement producer today, and what are you doing to overcome them?
FC I can identify three major challenges. Firstly, like many other multinational companies, the challenge is to be local but also global at the same time. This sometimes creates cultural challenges in our day-to-day business. We saw this challenge as an opportunity to improve by introducing five values into our daily way of working: dynamism, quality, people value, inclusion and sustainability - being concretely dynamic.

Having a balanced portfolio is another challenge – finding the right geographic and product mix in a cyclical business like ours. We strive to become unique by focusing on niche products such as white cement and special cements, where we can have a better grip on our end-customer and maintain a strong position in our markets.

The last challenge lies in how to reduce emissions not only in cement production, but also in the whole lifecycle of downstream products, namely concrete. In fact, concrete can contribute much more than cement production to achieve the CO2 emissions targets.

ICR What are the biggest changes you foresee taking place in the cement industry in your country over the next three decades?
FC In Italy the biggest change has been the significant decline of cement demand from nearly 47Mt in 2006 to an estimated 20Mt in 2018. The domestic market has been fragmenting until a few years ago when consolidation started with Sacci, Monselice and then with our exit via the sale to Italcementi.

We have a number of local  challenges in every market we operate in although we think that accurate and constant cost control helps us maintain the flexibility required to react to market changes. A broad portfolio of business also improves cash flow resiliency.

ICR How do you expect the technology of cement manufacturing to change over the next 30 years?
FC Cement technology does not evolve as fast as in other industries. However, our sector is constantly investigating ways to improve the whole value chain, from limestone extraction to ready-mix delivery.

I think there is a constant tension towards what we call “continuous improvement” in the manufacturing process and we have implemented some statistical-based tools such as Lean Six Sigma in order to improve decision making at all managerial levels.

In the future we expect cement technology to become more environmental friendly and more sustainable for local communities. A constant focus on low carbon emission cements is bringing the replacement of primary raw materials with waste, such as contaminated soils and fly ash, which help to reduce clinker ratios.

Investment in state-of-the-art technology also plays a role as it improves plant thermal energy efficiency. The increase in the use of waste as an alternative fuel is also important to save energy and costs.

One possible breakthrough in the future is represented by carbon capture and storage technology although its ultimate industrial usage is yet to be tested.

Read more about the special 30th anniversary issue of International Cement Review

Published under Cement News