Cement industry braces for post-2006 period
Management in Greece’s three cement companies – Heracles, Titan and Halyps – is bracing for the period following 2004, when the end of the construction of Olympic projects will hurt the market, and especially that after 2006, when the Third Community Support Framework (CSFIII) program, which provides significant amounts of EU funds for the construction of infrastructure projects, will end. Their plans focus on reducing operational costs and expanding into more dynamic sectors and foreign markets so as to compensate for the losses that the two aforementioned events will cause. For the time being, however, the domestic market is blossoming: Production is expected to reach record levels once again and, according to the firms’ own forecasts, sales will rise 3-4 percent this year and at an even faster pace in 2003. Consolidation for Heracles The Heracles group is currently undertaking a 38-million-euro investment program, which involves refurbishment and production rationalization at each of its three plants (one near Volos and two near Halkida). Begun in 2001, the program, besides plant restructuring, includes reductions in the work force and a retrenchment to core activities – the production of cement, concrete and metal constructions. To carry it out, Heracles has already sold off packaging subsidiary Aegis, is looking for a buyer for Alfamix and may also sell automation subsidiary Ampere SA. However, the arrival of a new managing director, Albert Corcos, a veteran of Heracles’ French parent company Lafarge, may also spark renewed interest for expanding activities into new sectors, such as gypsum products and roofing materials. These products are among Lafarge’s main products. The parent company’s know-how in their production is considerable and it is conceivable that Heracles could decide to enter these fields, if such a venture is deemed profitable. Recently, Heracles consolidated its inert materials and reinforced concrete production lines by merging five companies active in these fields. Heracles paid 15.85 million euros for the acquisition of Lafarge subsidiaries Hellamat and Beton SA. This was done even before Lafarge absorbed UK-based Blue Circle and, through it, Heracles. After the merger, it was decided to merge Hellamat and Beton SA with Heracles subsidiaries Astir Lato, Skyrodema and Robokas-Vafopoulos. According to Lafarge management plans, the five companies’ merger will be completed by the end of the year and the reinforced concrete sector will henceforth be called Lafarge Beton. During the merger, economies of scale will be achieved through cuts in the work force. Titan expands abroad The Titan group – Heracles’ only serious competitor in the domestic market – is focusing on foreign markets, where it has already established its presence and where it pins its hopes for significant revenue in the medium term. Titan is one of Greece’s most outward-oriented firms, since only 37 percent of its sales are in the domestic market. The group is undertaking a big investment program, worth 350 million euros, in 2002-2003. Among other things, it will help modernize a number of factories, beginning with their factory in Thessaloniki. Production line changes in Thessaloniki, set to be completed by the end of the year, are expected to bring in considerable additional revenue. During the first half of the year, Titan completed its acquisition of Serbian cement firm Kosjeric, which has a 20-percent market share in Serbia. Titan aims at increasing Kosjeric’s production from 600,000 tons to 800,000 tons annually and having the firm branch out into reinforced concrete. At the same time, Titan expects increased revenue from its factories at Usje, in the Former Yugoslav Republic of Macedonia, and Plevenski, in Bulgaria. A top Titan manager recently told Kathimerini that he expects these countries to receive considerable foreign investment, to help improve their infrastructure, in the near future. Early this month, Titan strengthened its position in the Egyptian market by acquiring, for a sum of $25.5 million, a 50-percent stake in Alexandria Portland Cement Company (APCC). Titan will also undertake 50 percent of APCC’s $100-million-debt, but the company has an annual production capacity of over 2 million tons. Lafarge acquired another 50 percent of the company; Titan and Lafarge have established a joint operation at APCC’s Beni Suef factory. Titan’s US operation, TitanAmerica, contributes substantially to group turnover and profits. Recently, the company received permission to double production and cut costs at its Pennsuco plant in Florida. Halyps modernizes Halyps continues its five-year modernization and operational cost-cutting plan and is also launching new, specialized products. Management considers that cement, in sacks, will continue to sell briskly beyond 2006. Halyps invested 6.32 million euros in 2001 and expects to invest a similar amount this year. Besides expanding the production capacity of its Elefsina plant, the company aims at increasing its presence in the Albanian market, where it has its own port installation. Also, Halyps is about to be delisted from the Athens Stock Exchange. The floated shares will be bought by parent company Ciments Francais, a subsidiary of Italy’s Italcementi Group.
