This week, the cement industry majors have been announcing their business results for the first half of 2020. The business results of Dangote Cement, Cemex, UltraTech, HeidelbergCement, Titan and Vicat give the first clear indications of how the cement sector has been impacted and responded to the COVID-19 pandemic in various regions of the world.

Africa
Dangote Cement was first to announce its 1H20 results and announced a two per cent growth in revenue to NGN476.9bn (US$1.23bn). April 2020 was a difficult month for the African cement producer, with lockdowns in many of its operating countries. However, it expanded sales in Nigeria, recouping losses by June to see domestic volumes rise by 1.8 per cent.

Dangote Cement 's pan-African sales were hit harder as they advanced barely at 0.7 per cent YoY to 4.73Mt. However, revenues were still up 3.5 per cent to NGN145bn compared to 1H19. Its best market was Senegal, where cement sales rose by seven per cent to 0.85Mt in the 1H20. This counterbalanced the shrinking market of South Africa, where the company’s cement sales fell by nine per cent YoY.

Vicat saw a 21.8 per cent rise in sales in Africa to EUR140m as the business environment remained largely positive despite the pandemic affecting large public projects in Senegal.

HeidelbergCement reported a three per cent uptick in sales volumes to 10.1Mt in the 1H20 for its Africa-eastern Mediterranean sales region. Revenue increased by two per cent YoY to EUR853m.

Europe
Titan’s total consolidated revenue for Greece and western Europe in the 1H20 contracted 7.8 per cent YoY to EUR113.7m. EBITDA reached EUR8.2m, down 16.4 per cent YoY. The  company had a good start to the year in Greece when compared with 2019, but this came to an abrupt halt when the COVID-19 pandemic struck and lockdown measures were imposed from mid-March. Its western European markets suffered declines. In southern Europe revenues fell 3.9 per cent YoY to EUR115.9m. However, a combination of a positive pricing environment and lower production costs resulted in a 19 per cent increase in EBITDA to EUR39.1m.

For HeidelbergCement, western and southern European cement sales volumes were down 14.5 per cent to 12.9Mt and revenues fell 10.9 per cent YoY to EUR2.287m. In northern and eastern Europe/central Asia volumes slipped 2.7 per cent to 10.9Mt of cement while revenues were down 1.8 per cent to EUR1.349m.

Vicat’s sales in France saw a sharp slowdown in late March and April, but the situation gradually improved with solid business growth in June. Consolidated sales in Italy fell 23.2 per cent with a total stop of activities. Meanwhile, in Switzerland the market was not significantly affected and sales rose 2.6 per cent YoY.

Eastern Mediterranean & Middle East
Titan recorded better results in the eastern Mediterranean where revenues increased by 16.4 per cent in the 1H20 to EUR81.1m from EUR69.7m in the 1H19. In Egypt, demand contracted sharply in the 2Q20 as the pandemic set in, affecting businesses and resulting in a 3.3 per cent drop in consumption when compared with the year-ago period.

Vicat’s sales in the Mediterranean edged up 0.3 per cent YoY to US$75m in the 1H20 with sales in Egypt up seven per cent to EUR21m. In Turkey the company reported an uptick in sales of six per cent to EUR54m.

Asia & Indian sub-continent
Vicat’s 1H20 sales in Asia dropped 22.8 per cent YoY to EUR149m as the region was affected by the pandemic.

Indications of how India's cement market has reacted to the pandemic could be seen by UltraTech’s (Aditya Birla) 1QFY21 results, where net sales reached INR75,630m (US$1.01bn), down from INR112,290 in 1QFY20. The group maintained that capacity utilisation of 60 per cent was met over the period and that lockdowns disrupted business between late-March and the end of April 2020. The company also stressed that rural areas have seen a faster pick-up in cement consumption.

Meanwhile, Vicat reported a 24 per cent decline in sales to EUR119m, driven by a contraction of sales volumes of 22 per cent as well as in average selling prices. However, in June the group noted an uptick in volumes, with average selling prices picking up in the second quarter.

HeidelbergCement reported a 12 per cent drop in cement volumes in Asia-Pacific to 15Mt. Its revenues declined by 13.3 per cent to EUR1.403m.

North America
Cemex saw strong sales in the USA of US$1bn, up one per cent when compared with the first half of 2019. In comparison, Titan America’s revenues rose by 0.8 per cent to EUR4.765bn. Titan said lockdown measures were more pronounced during April at the company’s import terminal Essex, which supplies the New York Metro area. By May-June, volumes in the company's US markets caught up with pent-up demand, ending on a solid note in June.

HeidelbergCement saw 4.9 per cent drop in North American sales volumes to 7.1Mt with revenues stable at EUR2.136bn in the 1H20 while Vicat saw its US sales advance by 11.2 per cent at constant scope and exchange rates, driven by a solid growth in volumes.

Latin America
Cemex saw net sales decline by 10 per cent YoY in Mexico to US$568m in the first half of 2020. In the Caribbean and the South and Central American sales region, the company posted a 30 per cent YoY drop in cement sales to US$279m.

For Cemex Latam Holdings, COVID-19’s impact could be seen in a 36 per cent sales decline in 2Q20, while cement volumes slipped 33 per cent in 2Q20. Volumes recovered in June doubling those sold in April, while cement prices rose by four per cent YoY in local terms.

Cemex Latam Holding’s Colombian cement also sales fell by 45 per cent in US dollars and by 36 per cent in local currency terms to US$67m in 2Q20. The biggest fall for the group in 2Q20 was seen in Panama where net sales only reached US$7m, down a considerable 86 per cent compared to 2Q19. Stronger results were achieved in Costa Rica where net sales reached US$20m, down 26 per cent in US dollar terms and 28 per cent in local currency.

In Brazil Titan saw a strong start to the year with increased sales volumes, but the strict lockdown measures saw growth falter. The company’s subsidiary, Apodi Cement reported a rebound in sales in May and June. Vicat reported an 8.2 per cent rise in sales in Brazil with cement operational sales at EUR52m.

Summary
While most regions saw some declines, there are signs that cement demand started to recover in May-June 2020 in some places. Dangote Cement had particularly good results in Nigeria in the 2Q20 and the Senegalese market offers cautious optimism. The US market is also showing signs of recovery with Cemex and Titan, in particular, seeing stronger revenues in May and June.
India is still in the grips of the pandemic with urban areas seeing significantly less cement demand, and UltraTech posted weak results. European and Middle Eastern cement sales are also well down, which impacted on Titan’s strong results elsewhere while Vicat was particularly affected in Europe.
In Latin America Cemex reported some of the biggest falls - eg, in Panama and Colombia. However, in Brazil a pick-up was noted in May and June.

Published under Cement News