S&P: Cement producers consolidating

A report published by Standard & Poor's Ratings Service said the top five global cement producers are expected to continue their roles as the industry's main consolidators, translating into intermediate financial risk profiles for the companies.

"Peer Comparison: Five Global Cement Manufacturers" compares the five largest cement manufacturers worldwide, Holcim Ltd., (BBB+/stable/A-2), Italcementi (BBB/positive/A-2), Lafarge SA (BBB/stable/A-2), Cemex SA de CV (BBB/stable) and HeidelbergCement (BBB-/stable/A-3).

The agency said all five have satisfactory-to-strong business risk profiles, driven by broad geographic diversity, considerable market shares and good cost structures. The five companies are the five largest cement producers worldwide, totaling roughly 600 million tons of cement capacity. By comparison, the world consumption market is in excess of 2 billion tons.

S&P said these companies benefit from the favorable overall fundamentals of the cement and aggregate industries, which include high barriers to entry and the regional nature of their markets, limited substitution risks and high market consolidation in many regions, which fosters healthy price behaviors.

These positive factors offset the negative industry characteristics of cyclicality and seasonality of markets, affordability of shipping cement to other regions by sea, sensitivity to energy costs of the capital- and energy-intensive manufacturing processes and exposure to antitrust investigations and potential fines for alleged anticompetitive behavior, S&P added.

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