BridgeGap Engineering Blog » FLSmidth

FLSmidth Carries India

Lehigh Ben — Wed, 14 Apr 2010 01:10:12 +0000

Sales in India are looking up for Danish equipment supplier FLSmidth, which was hit hard by the global credit crunch (sales plummeted and shares fell nearly seventy-three percent in value). FLSmidth has been dealing in India for over a century and the country is currently its biggest market as well as being its biggest center of employees. At a press conference earlier this month, CEO Joergen Rasmussen said, “In India there’s a boom in cement and most of our customers are very aggressive on expanding capacity. We’re estimating 10 percent growth in cement consumption in India, which is double the global rate.”

The growth in Indian demand is due to the plans of infrastructure improvement the local government has put in place. The Indian government plans to spend at least $1 trillion on infrastructure improvement between 2012 and 2017 in order economic growth and subsequent poverty reduction. FLSmidth already one contracts to install 9.45 million tons of cement capacity in 2009. This amount totaled to twenty-one percent of the global expansion outside of China. The 2009 performance in India stands in stark contrast to FLSmidth’s sales performance in other markets in recent years which saw the Danish giant fall to the number 2 slot behind Chinese competitor Sinoma in the global market outside China. India sales in 2009 allowed FLSmidth to regain the position of world’s largest kiln producer by a slim margin while the cement equipment market in the rest of the world remained relatively cool.

“FLSmidth contracted all new cement capacity in India during 2009 and can well be considered as the incumbent. It will be difficult to maintain that kind of track record going forward, but India will remain a key market and priority,” said Frederik Meinertsen, a Copenhagen analyst. Other analysts consider it a realistic notion that FLSmidth might again make a clean sweep in India in 2010. It now only remains to be seen how the Danish company fares against its rival Sinoma in the rest of the world as the global recovery slowly gains momentum.

Current Woes, Future Hopes

Lehigh Ben — Thu, 04 Mar 2010 22:37:27 +0000

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.

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experts@bridgegap — Sat, 30 May 2009 17:33:55 +0000

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