Sales volumes

Consolidated cement sales volumes rose by 0.2 percent or 0.5 million tonnes to 255.7 million tonnes on a like-for-like basis. The sales volumes development was mixed among the regions, with Asia Pacific, North America and Middle East Africa exceeding the previous year level while Europe and Latin America faced some challenges. In Asia Pacific, volume growth was backed by favorable developments in most countries, partly offset by declines in China, Malaysia and Bangladesh. North America was a significant contributor to the Group’s volume growth with both Canada and the United States benefiting from improved economic conditions. Despite political turmoil and regional conflicts affecting Syria, Iraq, and Lebanon, and spillovers of low oil prices on exporting economies, Middle East Africa delivered higher volumes than last year, partly backed by stronger market demand in Egypt and Algeria. These improvements partially offset the adverse situation in Europe where volumes continued to shrink in most countries and in oil dependent countries such as Russia and Azerbaijan. In Latin America, the economic recession and political scandals in Brazil took a toll on cement demand.

Cement sales volumes grew by 0.8 percent or 1.0 million tonnes to 123.1 million tonnes in Asia Pacific. This development was primarily driven by improved performance in the Philippines where strong activity was recorded during 2015. The main contributors to this improved performance was the growth in public construction activity as the government’s Public-Private Partnership program gained traction, as well as sustained momentum in the private construction sector. In Indonesia, volumes picked up in the last quarter of the year, driven by sales of clinker to the domestic and export market. Vietnam recorded significantly higher cement deliveries, underpinned by a recovery in the real estate market, coupled with positive regulatory changes, robust economic growth and favorable funding conditions. On the other hand, cement sales volume in China decreased by 5.3 percent. Cement demand was hampered by slowing economic growth and more specifically the structural slowdown in the construction sector, where fiscal stimulus for infrastructure projects was significantly reduced. In India, the construction sector was weighed down by a challenging business environment, accentuated by the recent cutback in the government’s drive for land reform. Infrastructure projects announced were not yet launched while the residential sector remained stagnant. As a result, sales volumes receded by 0.1 percent compared to the prior year.

Europe experienced sluggish economic recovery and sustaining budgetary pressures. Amid more challenging global conditions its underlying dynamics remained slow. Investments enjoyed less confidence than in past recoveries and in other advanced economies, as subdued demand expectations and economic and policy uncertainty persisted. Construction activity remained in low gear in a number of the Group’s key countries, impacting cement sales volumes by minus 4.7 percent, a decrease of 2.1 million tonnes to 42.1 million tonnes. In 2015, Russia slipped into recession caused by falling oil prices and economic sanctions which impacted the Russian government’s capacity to fund infrastructure projects. Against this backdrop, cement volumes fell significantly. The economy in Azerbaijan remained under pressure from lower oil and gas prices. In addition to these challenging conditions, intense competition remained in the market, putting strong pressure on volumes. In France, sales volumes decreased as well. Despite temporary tailwinds (lower energy prices, Euro depreciation) which supported consumption and exports, the housing market remained subdued due to economic uncertainty and high unemployment rates. The Swiss economy was significantly affected by the Swiss National Bank’s decision to abandon the exchange-rate peg with the Euro. The termination of major infrastructure projects and cement imports from bordering countries prevented any volume growth. Positive developments were witnessed in the United Kingdom, led by solid performance on the back of improved market conditions. Romania mainly benefited from increased civil engineering activities.

In Latin America cement volumes declined by 1.2 percent or 0.3 million tonnes to 27.9 million tonnes. Most of the volume drop was recorded in Brazil and Ecuador. In Brazil, cement demand shrank drastically, impacted by a severe economic downturn and by the ongoing political uncertainty, which weighed on construction activity. After years of sustained activity, Ecuador’s infrastructure development slowed down considerably as the country faced a wide budget deficit, triggered by the sustained low oil price. Mexico and Argentina boasted stronger sales volumes compared to last year. After many months of recession, the Mexican construction industry continued its recovery, driven by the National Infrastructure Plan and strong growth in the residential and energy sectors. In Argentina volumes benefited from moderate economic growth driven by domestic consumption and increased government spending.

Despite disruption and regional conflicts in some countries, cement deliveries increased by 1.0 percent or 0.4 million tonnes to 43.4 million tonnes in the Group’s region Middle East Africa. In Syria, Iraq, Lebanon and Jordan economic growth has been held back by regional instability. Business activities were suspended in Syria for the full year of 2015, until „force majeure“ conditions cease to exist. Volume losses in those countries were however offset by growing cement demand in Egypt, Algeria and Kenya. In Egypt, the Group enjoyed solid cement demand boosted by on-going public infrastructure projects. In Algeria, cement demand grew over the previous year, albeit at a slower pace. The country’s infrastructure deficit, particularly in terms of residential and social infrastructure, supported growth in 2015. In Kenya, cement volumes were backed by a dynamic construction activity supported by the government’s efforts to modernize transportation infrastructure and by investments in Nairobi’s real estate sector.

In North America, cement sales volumes improved by 4.2 percent or 0.9 million tonnes to 21.8 million tonnes. The solid volume growth in the United States was mostly driven by the dynamic residential building industry. In Canada, higher volumes were delivered from the east coast where the construction sector benefited from the improved economic conditions in the United States and major renewable energy projects.

Aggregates sales volumes decreased by 0.5 percent or 1.5 million tonnes on a like-for-like basis to reach 292.2 million tonnes. This development largely stemmed from Latin America which recorded a sales volumes drop of 25.7 percent or 2.7 million tonnes. Closure of unprofitable business units in Mexico in 2014, low demand driven by sluggish economic prospects in Brazil and Ecuador, and production difficulties in Chile largely explain these developments. In addition, aggregates demand in Europe suffered particularly in France, one of the biggest markets for the Group, as infrastructure projects remained in low gear. Against this backdrop, the region reported a sales volume contraction of 1.1 percent or 1.4 million tonnes in 2015. The remaining regions reported positive developments. In North America, volumes grew by 1.3 percent or 1.4 million tonnes. The United States and Eastern Canada performed well over last year on the back of stronger demand for infrastructure projects. Middle East Africa recorded sales volume growth of 5.9 percent or 0.6 million tonnes mostly attributable to solid growth in Egypt. In Asia Pacific, the sales volume increase of 1.8 percent or 0.6 million tonnes was mainly driven by China.

Sales of ready-mix concrete declined by 1.4 percent or 0.8 million cubic meters on a like-for-like basis. With the exception of Europe, which reported low growth of 0.9 percent or 0.2 million cubic meters, all of the other Group’s regions recorded lower volumes in 2015. In Latin America, the ready-mix concrete business was hit the hardest by the depressed economic environment in Brazil. In North America, volumes dropped due to the divestment of some activities and regional floods which heavily impacted some production sites in the United States. Ready-mix concrete deliveries contracted by 5.8 percent or 0.3 million cubic meters in Middle East Africa, due to a volume drop in Iraq and South Africa. Asia Pacific experienced a slight volume decrease of 0.2 percent, as the solid growth recorded in India could not make up for adverse developments mainly in Indonesia and Australia.