CemWeek 2011 Middle East & Africa Cement Business Sentiment Survey

CW Group CemWee RESEARCH

GLOBAL CEMENT INDUSTRY. KNOWLEDGE.

DECEMBER 2011

CemWee CemWee BMWeek

2011

CemWee

middle east & africa Business Sentiment Survey

BMWeek

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FOREWORD he CW Group’s “CemWeek 2011 Middle East and Africa Cement Business Sentiment Survey� provides a snapshot of emerging and developing trends that have dominated the African and Middle Eastern, including Turkish, cement sectors in recent months, along with those themes likely to be important in the months ahead. Using quantitative data and qualitative observations, the survey highlights the sentiments and experiences of individuals working within the African and Middle Eastern cement sectors.

The survey reveals changing business strategies, operations, sales and marketing activities, and other attitudes that are impacting the cement sector, from cost to capacity concerns and employment projections. To obtain this data, survey respondents hailed from key industry contributors, including major corporations such as Akcansa, ASEC Cement, Dangote, Heidelberg Cement Africa, Holcim, Lafarge, Pretoria Portland Cement and Saudi Cement, among many others.

The survey results reveal distinct regional variations in viewpoint and outlook. As such, answers are analyzed and presented by region: North Africa (SSA), the six states of the Arab Gulf Cooperation Council (GCC States), Other Middle East countries, and Turkey. Readers may interpret the key findings and determine the significance they hold for their organizations. We are confident readers will find this information enlightening and valuable.

This document is meant as a summary of the themes reported by respondents, and the full data of tabulated responses provides more detailed insights. The CW Group would be happy to assist you with a custom deep-dive review to help your organization uncover and understand trends and market dynamics in your country or region to help improve your competitive positioning.

To further understand the micro-trends and obtain more detail on the answers uncovered in this survey, please contact us at inquiries@cwgrp.com.

Robert Madeira Managing Director & Head Of Research CW Group inquiries@cwgrp.com

Study sponsored by:

INTRODUCTION

Perspectives across The African cement sector

Africa has the potential to become one of the cement industry’s hotspots, with cement demand expected to continue its strong growth in the mid-long term. With a large number of emerging industries needing building materials and an increasing population needing housing and infrastructure, the continent’s future increase in demand is more than understandable.

Nevertheless, the contrast in cement sector production and consumption could not be more different between North and Sub-Saharan Africa.

North Africa

North Africa enjoys some of the highest cement consumption rates in Africa, with Morocco showing consumption of over 400 kilos, Tunisia over 500 kilos and Egypt 600 kilos. Impressive investments have been made by governments in partnership with the private sector in order to develop new multi-million dollar cities, especially in Morocco, Tunisia, Algeria and Egypt, modeled on similar projects in the United Arab Emirates.

The year 2011 brought civil unrest, demonstrations and conflict to Egypt, Tunisia, Algeria and Libya, leading to uncertainty in the region. As a consequence, demand has been affected. Egypt, for example, is seeing a drop in demand by seven to ten percent this year from a previously expected growth of around three to five percent. Morocco, on the other hand, reported increased cement consumption during the first part of the year, largely due to private investments in social building.

The entry of new competitors on the Moroccan cement market created fierce competition.

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multi-faceted region Sub-Saharan Africa

A focus towards increasing trade and decreasing unemployment has been clearly seen in Angola, Botswana, Nigeria, Rwanda, South Africa and Uganda, where government sponsorship has materialized as the primary catalyst for both infrastructure development and a boom in the regional cement industry. From the top producer’s side, Dangote Group’s expansion and its US$3.9 billion investments in cement production facilities in Ethiopia, Tanzania, the Republic of Congo, Gabon and Nigeria during the coming years stands out.

Africa’s newest oil producing countries, Ghana and Uganda, as well as the creation of the 54th African state formed after the secession of Southern Sudan will lead to a significant increase in cement demand. In South Africa, cement volumes continued to decline, though at a slower pace than before, due to high energy prices and transport costs. South Africa’s domestic consumption slump has been balanced by strong exports into Angola and Mozambique. The country’s top cement producer, Pretoria Portland Cement (PPC), registered sales increases of almost 20 percent in Zimbabwe, which continues to focus on infrastructure development.

A current supply deficit of around 5 mtpy in the Sub-Saharan region is expected to be rapidly filled by 2013. Investments in new capacity are motivated by strong economic growth and the world’s highest cement prices, some 200 percent higher than those in emerging and developed countries.

Middle East’s cement sector

The Middle East market suffers from looming overcapacity, though important exceptions can be seen. The United Arab Emirates (UAE) is a notable example, with current capacity reaching

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Turkey

Number four worldwide in terms of production after China, India and the United States, the Turkish cement sector produced 66 million tons in 2010, a ten percent increase over 2009, while the domestic market only consumed 50 million tons, 16 percent more than in 2009, according to the Turkish Cement Manufacturers’ Association. In terms of cement exports, Turkey holds a 12 percent share of global exports, making Turkey the first exporter worldwide and leaving China and many countries of South Eastern Asia behind.

In addition, 2010 growth in fuel and transportation costs reached 40 percent and pushed costs above inflation levels. As these rising costs were not transmitted to cement prices, the financial performance of cement companies lagged behind their previous performances.

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INTRODUCTION around 31 mtpy despite production of only about 17 mtpy in 2010, a figure set to decrease by the end of 2011 to about 13.5 mtpy. Despite high costs serving as a barrier to exports, UAE producers planned to export up to two million tons to the Gulf and the African continent in 2011.

Large capacity in Saudi Arabia was absorbed by higher-than-expected domestic demand in 2011, given also a government policy restricting exports only to the companies who have first satisfied domestic demand by selling at very low prices. In Qatar, the Qatar National Cement Company is managing increased demand created by preparations for the 2022 FIFA World Cup and is ready to expand production capacity if required.

Lebanon’s market is largely saturated by local production, currently running at six million tons, with a lower consumption of five million tons, leaving enough quantity to be exported to Syria and Iraq. In November 2010, Lafarge announced plans to increase its production capacity in Iraq by 2013. With 2010 cement production reaching 55 million tons from 57 active plants, Iran is confirmed to be the seventh largest cement producer in the world and the second largest in the Middle East after Turkey. Iran currently exports cement to Iraq and Central Asian countries.

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SURVEY COVERAGE

ith the intent to comprehensively cover the insights of the cement industry in Africa, the Middle East and Turkey, the CW Group and CemWeek included over 230 respondents working in or with the cement industry that participated to some degree in the survey. Respondents were asked to look over the reality of the last six months in the industry and to focus especially on issues relating to their company performance according to initial expectations, future business prospects, and to discuss issues of profitability, employment, inputs costs, capital investments, business challenges, the care taken to respect current or future environment regulations, and so on.

As with all surveys, the results reflected in the CemWeek 2011 Africa and Middle East Cement Business Sentiment Survey are the individual views of the survey respondents. The number and division of participants between the different industry sectors guarantee good industry crosssections; nevertheless, the results are not meant to offer a precise quantitative measure of industry performance, be it regarding the past or the future. In evaluating the survey, it should therefore be kept in mind that the observations herein reflect solely the perspectives of survey respondents and not necessarily the CW Group’s views on the markets and trends.

This said, the CW Group and CemWeek hope that the time spent on this report will reward our readers with tangible insights and observation.

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SURVEY INTRODUCTION urvey respondents work with firms across the Middle-East and African regions, ranging from Morocco to Turkey and Iran. For a more relevant analysis, the answers were grouped into distinct regions: North Africa, Sub-Saharan Africa (SSA), GCC States (or the six states of the Arab Gulf Cooperation Council: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE), Other Middle East countries, and Turkey. Given Turkey’s status as a major producer, consumer and exporter of cement, the country has been considered a separate analysis group for the purposes of this report.

The survey analyzed a series of principal sentiments and trends across the region. These broad trends, as confirmed within this survey, include: ■■ A clear set of regional differences appears consistently across survey responses. For example, some 33 percent of GCC states respondents reported that recent performance had been “excellent,” while only 20 percent said the same in Other Middle East states and even fewer in the remaining regions.

■■ GCC states and Other Middle East indicated in a proportion of 33 percent that business performance exceeded their expectations, while only 12 percent of the Turkish firms could give the same answer. At the same time, 46 percent of North African respondents mentioned results below expectations for the last period, a situation understood given the political unrest that characterized most of 2011 in the region.

■■ Most respondents expect future performance to be “about the same” or “somewhat better,” with the most optimistic regions being SSA and Turkey. Most positive about future profitability are the GCC states and SSA, with 65 percent and 57 percent respectively betting on industry profitability growth. However, 48 percent of North African and 29 percent of Other Middle Eastern respondents see a high chance for future decline in profitability.

■■ Across the sector, there is an emphasis on the importance of cost controls and finding new export opportunities, as well as on the need for operational improvements. Nevertheless, at the regional level, these needs can stem from different situations. For example, while Turkish respondents are most concerned by the increase in input costs, peers in the GCC states and North Africa are worried about their excessive capacities.

■■ In terms of employment projections, the most positive feelings come from SSA, while the fear of layoffs appears in the Other Middle East countries. The region with the most stable employment perception is North Africa, with 61 percent of respondents expecting employment to “remain the same.”

■■ Regarding capital expenditure, 75 percent of firms in SSA, 50 percent of those in Turkey and 41 percent of those in the GCC states anticipate an increase. Overall, only 13 percent of all respondents expect to see a decrease in capital expenditure.

■■ A rather strong desire to comply with environmental and emission standards exists on the part of respondents. This trend is more acute in Turkey, perhaps reflecting the incorporation of sustainability standards and mitigation of emissions in the country as part of the European norms and as part of the pre-EU-accession action points. Turkey’s status as the number one global exporter can also represent part of the motivation to comply with such standards, since satisfying any client’s standards can facilitate trade. On the other hand, 42 percent of the Other Middle East respondents considered compliance with US or European environmental regulation to be “not at all” or “not so important,” as did 26 percent of GCC states respondents. Other Middle East countries and SSA were the regions that most recognized the environment/emissions as being relevant challenges for the future, while no respondents from the GCC states considered it to be “the biggest challenge.”

Finally, the survey focused on opinions regarding equipment suppliers in the industry. Quite a few firms seem to be able to build win-win relationships in the cement industry, with the best rated actors being KHD Wedag, FLSmidth, ABB, Loesche, and IKN.

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SURVEY FINDINGS

2011 CemWeek Middle East & Africa Cement Sector survey coverage area 12

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Demographics

he respondents reflect the full range of firm types Most respondents are managers or senior managers, but the that make up the wider ecosystem of the cement sample also includes a representative group of professional staff industry, starting with cement manufacturers and within the industry. equipment vendors to industry traders, consultants and analysts.

TYPE OF COMPANY

LEVEL

Senior management

Other Industry analyst, consultant

Management

Cement trader Professional staff

Equipment vendor Cement company

LOCATION

FUNCTIONAL AREA Other Consulting and research

Turkey Other Middle East

Trading and logistics

North Africa

Planning, ďŹ nance and other administrative

Sub-Saharan Africa GCC states

Production, operations and engineering Sales and marketing

Within this spread of firms and respondents participating Of all respondents, 19 percent work in North Africa, 24 percent in the survey, the full range of roles within the industry was in SSA, 29 percent in the GCC states, 14 percent in the remaining covered. Thus, 34 percent of respondents are involved in sales Middle East territory, and another 14 percent in Turkey. and marketing, 37 percent in production, and a corresponding quantity of respondents work in areas such as planning and finance, trading and logistics, as well as research and consulting.

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SURVEY FINDINGS Recent Performance

55 percent indicated the industry had performed “excellent” or “well”

hen respondents were asked for their opinion of cement industry performance in the last six months, a total of 55 percent indicated the industry had performed “excellent” or “well.” As predicted, these opinions differed substantially depending on the region. A third of GCC states respondents agreed that industry performance was excellent, compared with 20 percent of respondents from the other Middle East states and even lower values for other regions.

Comparing the regions that agreed the industry performed “excellent” or “well,” the survey still finds the GCC states in first place with 59 percent of respondents agreeing, followed by SSA with 58 percent and Turkey with 53 percent. On a discouraging note, 33 percent of the Other Middle East respondents rated the industry as performing “terrible” or “poorly,” as did some 24 percent of Turkish respondents, 19 percent of SSA, 17 percent of North African and 13 percent of the GCC states respondents.

HOW HAS THE CEMENT INDUSTRY PERFORMED IN THE PAST 6 MONTHS? 1

2

3

4

5

6

EXCELLENT

WELL

OK

POORLY

TERRIBLE

NO ANSWER

4

1

4

2

3

1

3

4

5

5 1

4

2

2

SUB-SAHARAN AFRICA

1

4

3 2

NORTH AFRICA

1

GCC STATES

2

3

3

OTHER MIDDLE EAST

TURKEY

Meeting expectations

When asked if their expectations were met when looking back at the past six months, 70 percent of total respondents indicated that outcomes “met,” “exceeded” or “far exceeded” their expectations.

In particular, respondents in the GCC states and Other Middle East were most likely to indicate that performance had exceeded their expectations, with respondents from Turkey and SSA having mostly seen their expectations merely “met.”

On the other hand, seeing 46 percent of North African respondents stating the recent performance was “below expectations” is to be expected given the recent political turmoil and its impact on the economic and industrial life of the region. At the same time, 35 percent of Turkish respondents and 32 percent of SSA respondents also stated performance was under expectations for the last six months.

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LOOKING BACK AT THE PAST 6 MONTHS, HOW DID IT MEET YOUR EXPECTATIONS? 1

2

3

4

5

6

FAR EXCEEDED

EXCEEDED

MET MY EXPECTATIONS

BELOW MY EXPECTATIONS

NOWHERE NEAR MY EXPECTATIONS

NO ANSWER

1

2

2

4

5

4

1

1

1 2

2

4 3

NORTH AFRICA

5

4

SUB-SAHARAN AFRICA

2

4

3

3

3

3

GCC STATES

Positive view is driven mainly by the GCC states and the SSA region

OTHER MIDDLE EAST

TURKEY

Expectations for the Future

When asked about their expectations for the next 12 months, a significant number of respondents stated that performance would be “much better” or “somewhat better,” with 60 percent of all respondents giving such answers. This is a slight improvement from the 57 percent registered in last year’s sentiment survey. The most optimistic regions this year were SSA, GCC and North Africa, with 71 percent, 64 percent and 63 percent, respectively, of the respondents anticipating a “much better” or “somewhat better” performance compared with the last six months. With the relative stabilization of North Africa, it is indeed to be hoped that such improvements in industry performance will take place.

HOW WILL THE NEXT 12 MONTHS PERFORM COMPARED TO THE LAST 6 MONTHS? 1

2

3

4

5

6

MUCH BETTER

SOMEWHAT BETTER

ABOUT THE SAME

SOMEWHAT WORSE

A LOT WORSE

NO ANSWER

4

4

1 3

4

1

1

NORTH AFRICA

1

3

3 2

4

1

2

2

SUB-SAHARAN AFRICA

GCC STATES

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3

2

2 3

OTHER MIDDLE EAST

TURKEY

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SURVEY FINDINGS 67 percent had positive expectations regarding their future careers

Regarding company expected profitability, about four in ten of respondents (43%) agreed that profits will improve. This positive view is driven mainly by the GCC states and the SSA region, with 65 and 57 percent respectively betting on a rise in industry profitability, while the rest of the regions give optimistic responses in smaller measure窶馬amely Other Middle East and Turkey (21% each) and North Africa (17%). While 50 percent of respondents from Turkey and Other Middle East see no changes in future profitability, 48 percent of North African respondents and 29 percent of Other Middle East ones offer a gloomier view of profitability, expecting decline.

HOW WILL PROFITABILITY IMPROVE? 1

2

3

4

IMPROVE

NO CHANGE

DECREASE

NO ANSWER

1

34

3

1

3 2

3 2

2

1

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1 2

NORTH AFRICA

4 3

GCC STATES

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2

TURKEY

As expected, most of respondents’ views about the industry’s past and future are also reflected in a certain measure in their perception of their own future careers. Across the whole sample, 67 percent had positive expectations regarding their future careers, with only two percent perceiving their careers to be at risk. In SSA, 77 percent of respondents were highly confident or fairly confident regarding their careers in the next 12 months, compared with 67 percent in GCC and Other Middle East states, 63 percent in North Africa and 59 percent in Turkey. The regions with the highest number of respondents seeing their careers at risk were Other Middle East (7%), Turkey (6%) and North Africa (2%).

ARE YOU CONFIDENT YOUR CAREER WILL SEE A BOOST IN THE NEXT 12 MONTHS? 1

2

HIGHLY CONFIDENT

FAIRLY CONFIDENT

4

1

3

NORTH AFRICA

1

1

3

5

NO ANSWER 4

1

3

2

2

SUB-SAHARAN AFRICA

4

AT RISK 4

3

3

2

PROBABLY THE SAME

GCC STATES

1

For GCC countries and Other Middle East, controlling costs is the most urgent need

3 2

2

OTHER MIDDLE EAST

TURKEY

priorities

When asked about the most important themes for companies for the next 12 months, 29 percent of respondents expressed concern over profit sustainability by indicating cost control as the most important issue. The next important priority for respondents was to find new export opportunities (21%) and to focus on operational improvement (18% of respondents), followed by improving domestic sales (16%).

However, various differences are to be noted again between regions. It seems that for GCC countries and Other Middle East, controlling costs is the most urgent need, with 38 and 36 percent of responses, respectively, directed towards this theme. For the remaining regions, between a quarter and a fifth of respondents focused on cost control. Finding new export opportunities is the most important theme for Turkey (29% of respondents) and the second most important for the GCC region (28%). Operational improvement is very important for SSA (24%) and Turkey (21%). Only seven percent of respondents in SSA and Turkey mentioned “Environmental issues” as a theme for the next 12 months. In the case of North African respondents, 25 percent stated “controlling costs” is a priority for the next 12 months, while 21 percent of respondents noted “improving domestic sales,” another 21 percent “operational improvement,” and 17 percent look forward to finding “new export opportunities.”

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SURVEY FINDINGS WHAT WILL BE YOUR COMPANY'S MOST IMPORTANT THEME FOR THE NEXT 12 MONTHS?

Excess capacity is the primary challenge for 32 percent of respondents

1

CONTROLLING COSTS

5

ENVIRONMENTAL ISSUES

8

2

1

7

3

IMPROVING DOMESTIC SALES OPERATIONAL IMPROVEMENT

6

7

8

RECONSTRUCTION

2

6

2

5 4

3

NORTH AFRICA

NO ANSWER

6 5

2

3

GCC STATES

2

4

4

3

1

1

7

3

SUB-SAHARAN AFRICA

SAFETY AND OCCUPATIONAL HEALTH 9

8 1

6

OTHER

8

6

1

4

FINDING NEW EXPORT OPPORTUNITIES 7

2

3

OTHER MIDDLE EAST

TURKEY

Nevertheless, when asked if they believe that their country’s cement industry should sacrifice profitability in the next few years in order to improve emissions and reduce CO2, an average of 65 percent of respondents agreed. However, the strongest positive response was obtained in Turkey (86% of respondents), followed by GCC states (72%) and SSA (66%). Opinions in North Africa were more or less evenly split, with 46 percent agreeing and 54 percent disagreeing.

DO YOU THINK YOUR COUNTRY'S CEMENT INDUSTRY SHOULD SACRIFICE PROFITABILITY IN THE NEXT FEW YEARS TO IMPROVE EMISSIONS AND REDUCE CO2?

1

2

3

YES

NO

NO ANSWER 2

1

2

2

2

2 1

NORTH AFRICA

1

1

SUB-SAHARAN AFRICA

GCC STATES

1

OTHER MIDDLE EAST

TURKEY

Respondents were asked what they perceived to be the biggest challenge faced by the cement sector in the next few years. Cross-regional averages show that excess capacity is the first challenge with 32 percent of answers, followed by energy prices at 27 percent and plant efficiency with 12 percent. Profitability and the environment/emissions followed with an equal nine percent each.

However, when we take each challenge by region, we see that Turkey and North Africa are very much concerned with energy prices, at 40 and 33 percent respectively declaring energy to be the

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Durban, South Africa

43 percent of participants anticipating budget growth

primary challenge. Excess capacity remains the main concern for North Africa, GCC, and SSA and the second concern for Turkey and Other Middle East countries. The latter, nevertheless, has two issues—“environment/emissions” and “energy prices”—as top concerns with 29 percent of responses for each.

It is also interesting to notice that in the previous question, regarding the break-even between profitability and emissions, even if the statements were directed towards an agreement that profitability should be sacrificed towards higher environmental standards (reduced emissions and CO2), the environment now appears as a less important future challenge for the industry: nine percent on average overall, with Other Middle East at an extreme (29%), followed by SSA (14%). The GCC states show a zero percent concern regarding this issue despite having previously agreed—at 72 percent—that profitability should be sacrificed in order to reach improved emission and CO2 standards. This may be explained due to other important issues that keep the regions preoccupied, such as the turmoil in North Africa, the persisting global economic crisis, and weak demand and increased competition leading to excess capacity.

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SURVEY FINDINGS Almost 90 percent anticipated hiring would “remain the same”

WHAT IS THE BIGGEST CHALLENGE FACING THE CEMENT SECTOR IN THE NEXT FEW YEARS? 1

PROFITABILITY

EXCESS CAPACITY

6

SHORTAGE OF SKILLED LABOR

2

ENERGY PRICES

7

1

9

1

7

7 2

3

NORTH AFRICA

4

8

7

SUB-SAHARAN AFRICA

NO ANSWER

2 4

GCC STATES

10

REGULATORY

2

8

3

5

OTHER

9

9

1

5

3

ENVIRONMENT / EMISSIONS

4

SAFETY AND HEALTH

6

2

5 4

PLANT EFFICIENCY

3

7

2 7

5

OTHER MIDDLE EAST

4

TURKEY

Half of all respondents recognized that being on par with the US and European emission standards is important for them, and the most concerned is again Turkey with 78 percent of respondents perceiving it either as important or a top priority. Meanwhile, 63 percent of North African respondents evaluated it as important, and 52 percent of SSA respondents did the same, with an added seven percent deeming it a top priority. The least concerned region from this point of view seems to be the Other Middle East, with 42 percent of respondents seeing meeting US and European standards as “not at all important” or “not so important.”

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HOW IMPORTANT IS FOR YOUR COUNTRY'S CEMENT INDUSTRY TO BE ON PAR WITH US OR EUROPEAN EMISSIONS STANDARDS (E.G., CO2, MERCURY, ETC)?

1

2

3

4

5

6

NOT AT ALL

NOT SO IMPORTANT

NEUTRAL

IMPORTANT

TOP PRIORITY

NO ANSWER

2

5

1

1

5

2

3 4

4

SUB-SAHARAN AFRICA

5

1

4

3

4

NORTH AFRICA

5 2

2 3

2

3

4

3

GCC STATES

50% said being on par with the US and European emission standards is "important"

OTHER MIDDLE EAST

TURKEY

In terms of capital budgets, the average MEA response showed 43 percent of participants anticipating budget growth, 44 percent of respondents perceiving them as stable and only 13 percent expecting capital budgets to decline. At the same time, one can notice clear optimism in the SSA region, where 75 percent of respondents expressed an expectation of increased capital budgets for the next period, a clear improvement from last year’s average of 44 percent. In this year’s survey, Turkey follows with 50 percent and the GCC states with 41 percent. On the other hand, 26 percent of North African respondents and 21 percent of Other Middle East firms believe these budgets will decrease.

HOW WILL YOUR COMPANY'S CAPITAL BUDGET CHANGE? 1

2

3

4

INCREASE

STAY THE SAME

DECREASE

NO ANSWER

3

1

3

3

3

2

2

NORTH AFRICA

1

1

1

SUB-SAHARAN AFRICA

2

1

2 2

GCC STATES

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OTHER MIDDLE EAST

TURKEY

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SURVEY FINDINGS Feelings of either cautious optimism or relative neutrality were reflected in respondents’ views as to whether their firms were likely to hire more staff in the next 12 months.

Overall, almost 90 percent anticipated hiring would “remain the same” or be “a bit more,” an increase from 80 percent of respondents stating this in last year’s survey. The main exception to this was seen in Turkey, where the majority of this year’s respondents (57%) expected companies to hire “a bit more.” The most pessimistic answers came from Other Middle East respondents, where 29 percent foresee layoffs.

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An optimistic 39 percent of all firms anticipate input costs to improve during the next year, with the majority of optimistic answers coming from SSA (46%), Other Middle East (43%) and GCC states (41%). The most pessimistic regions, foreseeing worsening input costs, were Turkey (43% of respondents), followed by North Africa (30%) and SSA (29%). These answers are not as optimistic as last year, when 55 percent of respondents foresaw improvements in input costs and only 16 percent expected worsening input costs.

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Relations with Equipment Suppliers

The cement manufacturing firms in the sample were asked to give their opinions of the various equipment manufacturers serving the industry. FLSmidth was universally the highest rated equipment supplier, with 72 percent rating it as “best” in class and an additional 23 percent as “good.” Loesche, IKN, and KHD Wedag were other companies with more than three-quarters of respondents ranking them as “best” or “good” to work with1.

1 This is an extract of responses offered. The list of equipment suppliers on which the respondents were asked to provide their view is: FLSmidth, KHD Wedag, Polysius, Sinoma, Loesche, Gebr Pfeiffer, Aumund, Siemens, Fives FCB, ABB, IKN, Magotteau, and SNEF.

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CONCLUSION Conclusion

The cement industry in Africa, the Middle East and Turkey has been through a tough year, with political turmoil affecting North Africa, increased competition leading to excess capacity, and increased energy costs keeping the industry on its toes in terms of profit margins. Environmental sustainability represented a real concern for survey respondents, even though some other issues take priority when it comes to future industry challenges.

However, most respondents prove to be optimistic with regard to the industry’s future performance, with the positive sentiment spreading to their views regarding future capital expenditures and employment.

Slowly and perhaps accelerating, the cement industry in the MEA region has been overcoming challenging market conditions, driven in no small part by attractive fundamentals, including need for infrastructure. A disparate set of countries, from those that have been witnessing recent disruptions (e.g., Libya and Yemen), to those embarking on massive infrastructure programs (e.g., Saudi Arabia and Qatar), to, albeit it more fragile, frontier economics (e.g., Congo and Angola), show great promise.

The intent of this survey was not to provide market analysis for the region, but rather to poll industry stakeholders to help paint a more nuanced view of what the business sentiment is like across the region. The CW Group provides comprehensive analysis of the markets covered in this study in reports and for clients and the survey should be viewed as one of many important inputs into understanding the man different cement sub-markets in the region. As such, we hope that our readers and clients, find this primary research interesting as a unique data point in understanding what is today one of the world's most dynamic and encouraging cement markets.

Contact us at inquiries@cwgrp.com to discuss these findings as well as the CW Group's market research further.

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CemWeek CemWeek CemWeek Contact us at inquiries@cwgrp.com to discuss further how we can support your market intelligence needs. www.cwgrp.com/research T: +1-702-430-1748 F: +1-928-832-4762

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