Increasing demand for cement and concrete ­expected in Europe

“The dynamics of the economic growth in our important markets will be accelerated in 2011 and will also increasingly cover the building trade. This will have a positive effect on the demand for cement and concrete” – these are the expectations expressed by Wolfgang Bauer (Fig.), the CEO of Dyckerhoff AG, during this year’s presentation of the annual results in Frankfurt. In 2010 the group turnover of Dyckerhoff amounted to over 1.4 billion €. This is about 3 % more than last year’s turnover. 

 

Furthermore, Wolfgang Bauer stated that Dyckerhoff increased the total sales of cement by 5 % and those of concrete even by 8 % despite the hard winter with a lot of snow at the beginning and the end of 2010. The CEO of the Dyckerhoff AG thinks that these are “positive signs indicating an end of the crisis also in the building trade”. However, since the prices for cement and ready-mixed concrete were on the decline in almost all markets, the earnings before and after tax dropped in spite of the higher quantities sold. In addition, the results were affected by a necessary structural adjustment in the USA. Due to the poor market prospects and still existing excess capacities, the production facilities of the Oglesby works were mothballed indefinitely and the value was adjusted.

 

While no quick turn of the tide should be expected in the USA, a clear increase in demand for 2011 can be seen in important emerging markets, such as Russia and the Ukraine. With the commissioning of a new, energy saving kiln line in the Russian Sukhoy Log works and of two new coal mills in the two cement factories in the Ukraine, two trend-setting investments were completed in 2010. Therefore, in both countries Dycker­hoff “is better positioned than before the crisis and is ready for the upswing that is evolving there”, said Wolfgang Bauer. The financial position of the group is good. The equity was increased by 4% amounting to approximately 1.7 billion €, and the equity ratio was increased to 50%.

Growth in the ready-mixed concrete business

Despite increased capital expenditure for construction, cement consumption in Germany again dropped in 2010. In particular due to the early onset of winter it decreased by 2.5 % compared to 2009. Dyckerhoff’s sales of cement and other hydraulic binders amounted to about 4.8 million tons, which was the level of the previous year. However, the average price of cement from Dyckerhoff dropped by 3 % due to the very intensive competition.

 

The German consumption of ready-mixed concrete dropped by over 2 % amounting to 36.8 million m³ last year. However, the sales of Dyckerhoff ready-mixed concrete, amounting to 3.2 million m³, were over 20 % higher than those of the previous year. This growth is mainly due to the newly arranged partnership with the Sievert group. In this connection Dyckerhoff took over 13 sibo companies at 30 locations in Lower Saxony, North Rhine-Westphalia as well as in the north of Saxony-Anhalt. The prices for ready-mixed concrete dropped by close to 5 %. In particular due to the takeover of sibo, the turnover of Dyckerhoff increased by 21 million € to 549 million € in ­Germany in 2010. The turnover adjusted by the initial consolidations mentioned dropped by 13 million € due to the price decline as regards cement and concrete.           

 

In 2010 in Germany Dyckerhoff invested about 27 million €. The overwhelming portion of this was real investment amounting to 23 million €. Essentially this capital spending related to measures to further increase the use of secondary fuels in cement plants, to real estate, to new concrete plants as well as to the replacement and streamlining of existing cement and concrete plants.

 

Restrained, positive outlook for 2011

During 2011 Dyckerhoff expect a continued increase of the demand in almost all European countries. “Furthermore, we assume that the prices for our products will again increase”, said Wolfgang Bauer who, in this context, prognosticated a group turnover of 1.5 billion € as well as a clearly improved result before and after tax this year. As regards the costs, in particular, increased current and fuel costs should be expected. However, the CEO does not expect the effects of an electricity shortage due to the most recently decided shutdown of a few German nuclear power plants, because Dyckerhoff has already purchased the power requirement for this year. Nevertheless, they also want to respond to the unavoidable increase in costs by means of suitable measures in the future. As in the past, this should also be achieved in the future, in particular, by increasing the use of secondary fuels as well as by reducing the clinker factor due to an increased portion of secondary raw materials. The composite cements thus created, in which materials such as granulated blastfurnace slag, limestone, fly ash and trass replace clinker in the cement, will not only reduce the fuel consumption but also conserve resources and reduce CO2 emissions. Therefore, research and the development of new, innovative cements will be in the focus at Dyckerhoff also in the future.

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