Transcript Hegazy
Reflection of Economic Hit on Construction & Cement markets in GCC & Middle East Average of 45 $ /b, instead of 100 $/b Falling Oil Prices End of BOOM Tightening Credit Conditions Dropping more than half Following the falling revenues ? Using the reserves to keep spending plans Dramatically reduced Revenues Surpluses Accounts vanishing Revising Spending Plans Economic Growth slowing down Domestic Demand falling sharply RECESSION Past Years Surplus Strong Spending Plan maintained Banks Secured Debt Obligations to be met US $ bn Real Growth % GDP (US $ bn) Fiscal Balance (% GDP ) Inflation % Cement Consumption Million Tons -Arabian Gulf Cement Co. -Imported Clinker -New License faced problems Real Growth % GDP (US $ bn) Fiscal Balance (% GDP ) Inflation % Million Tons -Kuwait Cement company to reach about 4.5m Mt by 2010 -Clinker production about 2m Mt Real Growth % GDP (US $ bn) Fiscal Balance (% GDP ) Inflation % -Oman Cement Co. reached produced about 1.9 m Mt -Raysut Cement reached about 3 m Mt and adding about 1.4 m Mt in Q4 2009 Real Growth % Inflation % GDP (US $ bn) Fiscal Balance (% GDP ) Million Tons -QNCC producing 1.5 m Mt , will increase about 1,2 m Mt -Gulf Cement adding a new production line 1.4 m Mt -Clinker production about 900,000 Mt Real Growth % Inflation % GDP (US $ bn) Fiscal Balance (% GDP ) -12 domestic producers , 4 of them started production in 2008 -Exports reached 3.4 m Mt in 2008 -Severe overcapacity problem. Real Growth % Inflation % GDP (US $ bn) Fiscal Balance (% GDP ) -9 listed companies , producing 60% of local production -Annual consumption growth rate is likely to fall from 24 % to 10% -Overcapacity in clinker production and grinding facilities Government Actions Producers Actions Merges & Acquisitions • Synergies • Increased Market Share • Economies of scale • Geographical Diversification • Resources transfer Vertical Integration • Canceling double marginalization • Vertical Integration form higher entry barriers. • Ready-Mix plants do provide an avenue for entry and expansion for overseas competitors . • Required investments in Fleet and Ports infrastructures to handle the possible expected export volumes . • Decreases the probability of exiting the market. Cost Reductions • Turning to Alternative Fuels. • Increasing the local raw material being used. • Locally manufacturing the packing materials. Regulating Role • Close study to the country’s industry future. • Encouraging investments in related service industries ( Ports , Fleets , etc… ) . Incentives to the Building Materials Industry • Revising Energy pricing strategies • Well studied dynamic import duty taxes to protect the local industry against import floods. • Revising taxes tariffs , allowing temporary reductions and extension of tax exemption periods . Keeping Public Spending levels • Some countries have already announced their plans to keep the annual increase in the Public spending programs , which will minimize the reduction in the GDP growth rate , which is vital at this stage . • Some countries , without enough reserves will face problems to maintain the public spending at required levels , dramatically destroying its presence in the investment attraction struggle. Creating Cement Export Opportunities • Activate existing trading agreements & exploring possibilities of signing more trading agreements with possible export market countries , to creative preference over competitors • Increasing the role of Barter deals , securing more ability to export . - Oil Prices expectations in 2006 THANK YOU