Despite predictions that the global recession is beginning to slowly right itself, many cement companies are still experiencing tough financial situations. Many large producers have posted losses in the 2009 fourth quarter, but are holding high hopes for increased business throughout 2010.
French-based company Lafarge posted a loss of $51.76 million dollars (38 million Euros) after earning $54.5 million dollars (40 million Euros) last year. Their sales declined 22% in the fourth quarter alone. Following in the wake of this news, Lafarge announced that it would be selling three Beijing cement and concrete making facilities for $74.3 million dollars to Chinese BBMG Corporation. These new assets along with predicted increased demand in developing areas leave Lafarge expecting a stronger 2010.
Cemex, the world’s third largest producer and the US’s biggest producer, is still struggling with reducing the debt accumulated in its 2007 acquisition of Australia’s Rinker. The company is working to sell assets around the globe to reduce their $15 billion dollar tab. At the end of February, Cemex announced the sale of 12 ‘non-strategic’ quarries throughout the US through its joint venture Ready Mix USA LLC, of which is will see $100 million. A company statement said, “Cemex, which does not consolidate the results of Ready Mix USA LLC, expects to use its cash proceeds from this divestment to reduce outstanding debt and to enhance its liquidity position.” These sales and expected sales in Austria, Hungary and Britain started in 2008 will help solidify Cemex’s position in 2010.
Danish-based cement and mineral equipment supplier FLSmidth, Inc. also posted a profit drop in the fourth quarter; but was less harsh than predicted. Reuters predicted a profit of 539 million crowns ($98.7 million), but the company ended with an unexpected 764 million crowns ($138 million). Despite the extra profit, FLS stocks fell 1.2% over 2009. Chief Executive Jorgen Huno Rasmussen said, “We have bottomed out in both our markets, and that means that things will look slightly better in 2010.” Order intakes are expected to rise this year over 2009 values, though the total volume will be less than before the financial crisis.
Despite problems with debt and lack of business due to the recession, cement producers around the globe are taking positive steps to securing their future. They are taking advantage of the opportunities presented through this crisis to emerge stronger and more well-founded than ever before.