Holcim bullish on Sri Lanka; marks $ 150 m in investments

[First Guy]

• Ploughs back dividends for latest commissioning of additional expansion worth $ 22 m in Galle plant

• During 18 years of operations has enjoyed $ 40 m in dividends

• Says adding capacity to a total of 2.3 m tons ahead of future construction boom

• Sri Lanka operations get a boost by first-ever visit by Global CEO

Global giant Holcim on Wednesday reaffirmed its commitment to Sri Lanka, marking $ 150 million in investments to date and boosting capacity to 2.3 million tons ahead of what it described as impending construction boom in the country.

The latest expansion in its production is in the Holcim Lanka Group’s Ruhunu Cement Plant, by 0.6 million tons to reach one million tons. At its flagship Puttalam plant the capacity is 1.3 million tons. Holcim commands a 30% share with sales of 1.6 million tons in a market of 5 million tons of cement.
Holcim Group Global CEO Barnard Fontana who was in Colombo this week indicated that the company was bullish over demand for cement and overall growth prospects in Sri Lanka.

“We are adding capacity ahead with a long-term view as we believe in the future growth,” Fontana told journalists prior to officiating at the commissioning of the expanded Ruhunu Cement plant. Work on the expansion worth $ 22 million began about three years ago. It is also the first major investment since an equal amount was committed to expand capacity at Puttalam plant in 2004.

“We are responding to the demand in advance and building capacity as the Sri Lankan market is very buoyant. We have ambitious plans for Sri Lanka and remain committed to Sri Lanka and its development,” the CEO said.

Amidst impending merger between Holcim and Lafarge worldwide, the visit by Fontana is first by a Holcim Global CEO. During his stay, he met Economic Development Minister Basil Rajapaksa, BOI Chairman Dr. Lakshman Jayaweera, top customers in the public and private sectors, visited Holcim’s operations and met employees as well as attended a reception hosted by Swiss Ambassador in Sri Lanka.

Holcim said it has reinvested dividends from Lankan operations to finance the latest expansion. Having set up 18 years ago, Holcim said it has invested $ 150 million so far and dividends over the years have been around $ 40 million.

For Holcim, which has operations in over 70 countries, Fontana said Sri Lanka is an important market in South Asia. “Sri Lanka operation is of strategic importance and we consider Sri Lanka to be a very valuable part of worldwide network. Holcim’s business strategy is based on growth in both developed economies and emerging, high-growth markets and Sri Lanka occupies an important place in this context. It is for this reason that we have decided to expand our manufacturing facilities here in Sri Lanka,” Fontana emphasised.

Holcim Lanka CEO Philippe Richart said Sri Lanka’s cement market overall has provided strong growth of 6 to 7% per year (though it dipped by 4% in 2013) and outlook for the future was better. Of the 1.6 million tons sales, Holcim being the only integrated manufacturer produces around 1.2 million tons using local clinker and the balance through imported clinker.

Cement usage in Sri Lanka per habitat is around 200 kilos per annum and Holcim expects it to grow to 500 kilos in the next few years.
Rapid development of socioeconomic infrastructure, rise in new buildings in tourism and a pickup in commercial construction have fuelled growth since end of the war and will further empower demand on to the future.

Holcim is also upgrading capacity of its Geocycle shredding line to enhance waste management solutions, upgrading the kiln system, building up clinker warehouse to better cater to market demand with uninterrupted supply, and improve process efficiency via sludge drying facility. It is also making considerable improvements to distribution channels by enhancing logistics.

“Our strategic intent would be to fully localise our cement production, thereby rendering the country self-reliant in cement production,” Fontana said.
He said what guides Holcim when taking these decisions is the focus on the triple bottom-line – economic value, environmental protection and social responsibility. “With our investments and our operations in general we aim at creating value for all our stakeholders, here in Sri Lanka and also across our entire network worldwide,” he added.

He said whilst Holcim continues to invest in upgrading technology and equipment in Sri Lanka the Company also remains strongly committed to compliance by respecting international and local laws and regulations as well as the health, safety and development of employees.

Holcim also reaffirmed commitment to supporting the social and economic development of this country through comprehensive sustainable development programs, several of which have been carried out with great success. “We are constantly looking at new opportunities to enhance the livelihood of Sri Lankans and helping to build a stronger economy,” the Global CEO said.

http://www.ft.lk/2014/06/13/holcim-bullish-on-sri-lanka-marks-150-m-in-investments/

[UkboyTop contributor]

Wonder they will ever go for an IPO. Guess we are not that lucky to see.