Brazil survey issuu

CemWeek

SURVEY

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

SEPTEMBER 2013

L I Z A R B

2013

CEMWEEK’S AMERICAS CEMENT SECTOR SENTIMENT SURVEY

There is hardly anyThing

more aTTracTive for an

innovaTive engineer

Than finding his

maTch Now it’s time for LOESCHE innovative technology. For further information please call +49 211 53 53 0 or visit www.loesche.com

A

cemweek 2014 americas cement sector survey

1300948_AZ_Image_A4_04.indd 1

www.cwgrp.com 08.04.13 13:11

FOREWORD

T

he Annual Brazil Cement Sector Business Sentiment Survey has now reached its third edition. CW Group is pleased to be able to share the survey’s most eyecatching findings with all interested members of the cement industry.

Building on its extensive knowledge of the global cement industry, CW Group continuously provides comprehensive and reliable market intelligence data in many essential aspects of the sector. The present publication of the survey’s results is bringing yet another perspective on the industry’s development-led experiences and challenges of the cement market.

The CW Group is thankful to the dedication of certain industry members that helped us perceive and formulate the particularities of the Brazilian cement market.

The results of the survey reflect the reality of the industry at a certain point in time and cannot be regarded as complete answers to certain problems that may arise from the interpretation of the answers provided. The present survey aims to bring valuable knowledge for developing strong and reliable future strategies.

Robert Madeira Managing Director and Head of Research, CW Group E: rm@cwgrp.com | T: +1-702-430-1748 Laura Goldner Senior Consultant, CW Group E: lg@cwgrp.com | T: +1-832-622-8921 Raluca Neagu Market Services & Marketing Consultant, CW Group E: rn@cwgrp.com | T: +4-074-152-0372

www.cwgrp.com

cemweek 2014 americas cement sector survey

B

INTRODUCTON

T

he optimism within the Brazilian cement market waned in 2013. Industry stakeholders felt content with the performance of

the market, even though fewer respondents hurried into saying that the industry performed excellent in the last six months. Only 7 percent rated the industry’s performance as “excellent” in 2013, while respondents falling into this category reached 15 percent a year earlier.

The industry lost its somewhat short-lived ability to surprise positively with above expectation performances. A paler share of respondents (11 percent) acknowledged industry’s 2013 performance as exceeding their expectations versus 24 percent noted in 2012. Respondents seemed to have been better prepared for the year’s challenges given that a conclusive 55 percent share of respondents considered performance was in line with their expectations.

No major shifts are expected in the next 12 months versus the previous half year period under review. The industry is projected to fare about the same or better in the short term with only 7 percent of respondents believing the balance can turn considerably for the best.

When assessing the perspectives of their careers in the next 12 months, the survey participants continue to perceive a minimal risk associated with their career evolution. Although respondents that are highly confident their career will receive a boost are fewer (13 percent), there is still a substantial share of respondents to anticipate an improvement in this side. On an overall basis, companies are expected to maintain their workforce level with fewer companies hiring more.

The increasingly competitive market landscape leads respondents to pinpoint “improving domestic sales” as the main concern for their businesses in the years to come. Operational improvement and controlling costs follow closely, while environmental issues and the identification of new export opportunities are the least prevalent topics of concern.

An encouraging note comes from the ability of the companies to integrate in their action plans the resolution of the most pressing challenges of the industry. The companies’ most important themes for the next 12 months go hand in hand with the challenges structure described above.

One thing is certain. Profitability entered a sliding trend in 2013. The number of respondents that believe profitability will decrease more than doubled this year (18 percent versus 8 percent last year).Moreover, only 38 percent of the respondents consider that profitability will improve, showcasing a sharp decrease when compared to the 52 percent share of 2012.

As is the case in times of downturn, capital expenses are the first ones to be restricted. Capital budgets are set to increase in the perception of only 27 percent of the respondents, while in the previous two years 40 percent of the survey’s participants projected capital budget hikes. Around 13 percent consider that capital budgets will be slashed in the future.

The good news comes from the input costs area. There is a general belief that input costs will improve or remain the same (82 percent from total respondents’ pool). Meeting environmental standards remains a preferred topic for cement companies. Around 65 percent of the respondents would sacrifice profitability to improve emissions and reduce CO2. However, cement companies are not ready yet to place the adherence to the emissions standards as their top priority, but do acknowledge in a higher degree that meeting the environmental targets is important.

1

cemweek 2014 americas cement sector survey

www.cwgrp.com

FINDINGS

SURVEY

Generally speaking, how has the cement industry performed in the past 6 months?

7%

2%

12%

16%

15%

Excellent

7%

Well

20% 27%

2011 25%

2012

29% 31%

32%

39%

2013

38%

OK Poorly Terrible

As the economic downturn still bites in regions like Europe, Latin America has survived through the crisis in relatively good shape. The region has consistently being outperforming other markets, with Brazil Argentina and Chile leading the way in infrastructure investment.

www.cwgrp.com

cemweek 2014 americas cement sector survey

2

SURVEYFINDINGS

Looking back at the past 6 months, how did it meet your expectations?

2% 1% 31% 14% 36%

2011 47%

2% 3% 26%

2012

1% 2% 9%

21% 34%

48%

2013 55%

Far exceeded Exceeded Met my expectations Below my expectations Nowhere near my expectations

The post-recession’s high expectations for Latin America are starting to fade away. 2013 brought more bad news than good news. Brazil and Mexico, the two biggest economies in the region had modest economic growth in 2013. Brazil reported a 2.3 percent GDP during the year, after growing 7.5 percent in 2010 while Mexico expanded a mere 1.1 percent, the worst result in the last 4 years.

3

cemweek 2014 americas cement sector survey

www.cwgrp.com

FINDINGS

SURVEY

How will the next 12 months perform compared to the last 6 months?

6% 10%

45%

2011

8% 10%

39%

41%

2012

Much better

8% 7%

41%

47%

2013

Somehow better

38%

About the same Somehow worse

With additional downward revisions to Gross Domestic Product (GDP) real growth in 2014 for most countries in the region and an expected slowdown in cement consumption, particularly in Brazil and Mexico, the Latin America near future seems less bright than before.

www.cwgrp.com

cemweek 2014 americas cement sector survey

4

SURVEYFINDINGS

Are you confident your career will see a boost in the next 12 months?

46%

2011

37%

42%

2012

Highly confident

3% 13%

2% 18%

3% 13%

38%

38%

2013

46%

Fairly confident Stay the same My carrier will be at risk

Looking at the bright side. Notwithstanding the not very encouraging perspectives and the recent slowdown in economic growth, executives from the region seem to be empowered and engaged in their work and feel secure in their job positions.

5

cemweek 2014 americas cement sector survey

www.cwgrp.com

CW Group INDIA CEMENT & CONSTRUCTION MATERIALS MAGAZINE

CW Group LLC 132 Larchmont Ave, Suite 12, Larchmont, NY 10538, USA T: +1-702-430-1748 F: +1-928-832-4762 CemWeek CW Group 14 BmWeek NOVEMBER/DECEMBER 2013 CoalWeek E: sales@cwgrp.com CemWeek CW Group CoalWeek BmWeek BmWeek

CemWeek

CW Group

CoalWeek

SURVEYFINDINGS

What is the biggest challenge facing the cement sector in the next few years?

10% 11%

9%

Controlling costs

21%

Improving domestic sales

2013

Operational improvement

26%

24%

Enviromental issues Finding new export opportunities Other

Succeed in highly competitive markets and maximize operational performance drive the industry’s agenda moving forward. Executives concerns are certainly driven by an uncertainty about which direction energy prices will move in the future, economic slowdown in the region pushing down volumes and how to protect margins from rising costs.

7

cemweek 2014 americas cement sector survey

www.cwgrp.com

FINDINGS

SURVEY

What will be your company’s most important theme for the next 12 months?

Controlling costs

8% 12%

9%

2011

34%

10%

10%

28%

2012

6% 15%

13% 23%

31%

9% 10% 11%

21%

2013 24%

Improving domestic sales Operational improvement

26%

Enviromental issues Finding new export opportunities Other

With regional market expectations cut and increased skepticism about the economy in general, for most industry executives cost improvement and increase in domestic sales represent the most important themes for companies in the next 12 months.

www.cwgrp.com

cemweek 2014 americas cement sector survey

8

SURVEYFINDINGS

How will profitability change?

8%

10%

49%

2011

41% 40%

2012

18%

2013

52% 44%

Improve

38%

No change Decrease

The industry has recently enjoy the benefit of low coal and petcoke cost that have offset a decline in real sales prices. Industry expectations of a further deterioration in margins are based on the likelihood of weak demand in the region, even lower real prices and the possibility that fuel prices might recover this year.

9

cemweek 2014 americas cement sector survey

www.cwgrp.com

FINDINGS

SURVEY

How will your company’s capital budget change?

9%

50%

2011

8% 41% 52%

2012

13% 40%

27%

2013 60%

Increase

Stay the same Decrease

From the companies’ perspective, the capital budget will stay the same.

www.cwgrp.com

cemweek 2014 americas cement sector survey

10

SURVEYFINDINGS

Will your company hire more employees?

8% 6%

7% 3%

3% 11%

A lot more

43%

2011

42%

45%

2012

42%

53%

2013

37%

A bit more Remain the same Lay off workers

In terms of job market, the majority of companies will remain the same. At the same time, a high percentage believes they will hire more employees, and in comparison to last year, the percentage of companies that will lay off workers is slightly higher.

11 cemweek 2014 americas cement sector survey

www.cwgrp.com

FINDINGS

SURVEY

How will your input costs change?

24%

34%

2011

22%

25%

2012

18%

26%

2013

Increase

Stay the same Worsen

42%

54%

56%

Economic uncertainty seems to remain in 2014 and the region is anticipating that input cost will increase along the year. Logistics costs played an important role in diminishing industry margins in 2013. For 2014 the main issue will be fuel prices. Have fuel prices hit bottom yet?

www.cwgrp.com

cemweek 2014 americas cement sector survey

12

SURVEYFINDINGS

Do you think the cement industry should sacrifice profitability in the next few years to improve emissions and reduce CO2?

34%

40%

2011

35%

2012

66%

60%

2013

Yes

65%

No

In the past decade there has been a significant shift in how the industry thinks about corporate environmental performance. Today, the topic has become a permanent item on the agenda of most CEOs. For most of the executives, even if clean air comes at a high cost, they believe the cement industry should do it’s best to improve emissions and reduce CO2.

13 cemweek 2014 americas cement sector survey

www.cwgrp.com

SUBS

CRIBE

TODA Y!

Print is back, but did it ever really leave?

Subscribe to the print edition of the CemWeek Magazine and have it mailed directly to you for an annual rate of USD 280 + Shipping & Handling.

Contact CemWeek at sales@cemweek.com to place your order.

We know the cement industry well. Let us guide you. For more information please contact us at inquiries@cwgrp.com, or on +1-702-430-1748

T: +1-702-430-1748 F: +1-928-832-4762

132 Larchmont Ave, Suite 12 Larchmont, NY 10538 USA

www.cemweek.com

SURVEYFINDINGS

How important is for your company to meet the latest emissions standards (e.g. CO2 mercury etc)?

19% 3%

4%

2011

15%

25% 1%

4%

2012

13%

19%

2%

5%

Top priority

13%

2013

Important Not so important Neutral

49%

67%

61%

Not at all

Being considered an important source of CO2 emissions worldwide, the cement industry has embarked in multiple initiatives to reduce carbon dioxide in the production process and create environmental consciousness among employees.

The efforts have paid off. Today most employees in the industry believe that meeting regulation standards is key for their companies.

15 cemweek 2014 americas cement sector survey

www.cwgrp.com

Conclusions

The results of the Annual Brazil Cement Sector Business Sentiment Survey have once again resembled strongly with the range of signals received from the Brazilian cement market throughout the year.

The cement industry’s performance continued to grow, but its softer increasing trend took its toll on the market’s sentiment. Even though the industry’s performance met in principle the expectations articulated by stakeholders, the level of concern was higher when compared to the one of last year. Cement companies were more and more consumed by the prospect of not being able to secure a higher domestic market share. The involvement of cement companies in environmental issues has gained a higher importance in 2013 as more respondents consider that the cement industry has to sacrifice profitability in order to reduce emissions and CO2.

In general, the industry performed well and met respondents’ expectations. The optimism showed regarding the future performance evolution could also be explained by the high level of satisfaction revealed by more than 60 percent of executives. Even though the future of the Brazilian cement market looks promising, there are still significant challenges that limit the growth of the industry. In order to support a sustainable and intensive growth for the Brazilian cement sector, the focus should be directed in the next period especially on improving domestic sales, operating improvement and controlling costs.

www.cwgrp.com

cemweek 2014 americas cement sector survey

16

CemWeek

SUBSCRIBE TO

CEMWEEK.COM ONLINE NEWS !

Global coverage Daily news updates

Subscribe to CemWeek.com and have access to the latest global industry news on our website, as well as directly in your inbox through our daily and weekly e-mail newsletter, for an annual rate of USD $225. Contact CemWeek at sales@cemweek.com to place your order.

Daily email newsletter

We know the cement industry well. Let us guide you. For more information please contact us at inquiries@cwgrp.com, or on +1-702-430-1748

www.cemweek.com T: +1-702-430-1748 F: +1-928-832-4762

132 Larchmont Ave, Suite 12 Larchmont, NY 10538 USA

CW Group