Gypsum industry news
US: ABC Supply and USG have entered into a agreement in which ABC Supply will acquire USG's building product distribution business, L&W Supply Corporation for US$670m. The transaction is subject to customary closing conditions, including regulatory approvals, and is expected to be completed before the end of 2016.
"As a world-class distributor of interior building materials, L&W reinforces ABC's leadership position in building materials distribution, and helps set the stage for our next phase of growth," said Keith Rozolis, ABC Supply's President and Chief Executive Officer.
Completion of the transaction will allow USG to reduce debt and achieve its target leverage ratio, accelerate high return investments in its Gypsum and Ceilings businesses through advanced manufacturing initiatives, and position the company to consider future capital returns to shareholders. The sale of L&W Supply is also expected to dampen USG's overall earnings cyclicality as well as provide opportunity for growth in the independent specialty dealer channel.
L&W Supply is one of the largest distributors of gypsum wallboard and suspended ceiling tiles in the US, serving its customers from 136 branches. ABC Supply is a wholesale distributor of roofing, siding, windows and gutter materials. The acquisition of L&W Supply will allow it to expand into the interior of the building through the sale of gypsum wallboard and suspended ceiling tiles and grid.
US: The Port of Monroe in Michigan has been busy exporting gypsum since 4 September 2015, according to Paul C LaMarre III, port director. Five consecutive gypsum loads will leave the port in less than two weeks. Most of the activity takes place at night. The first four loads for USG Corp will be shipped to Port Colborne, Ontario, while the fifth load, for Lafarge, is headed for Alpena.
"Last year, we shipped two loads and this year we will have shipped 10, with more on the horizon," said LaMarre said. The port is also 'very close' to executing a gypsum management agreement with DTE Energy, in which the port will manage and market the gypsum produced. "This would be the first such agreement of its kind between a public port and a public utility," said LaMarre. The Port of Monroe moved more than 2.4Mt of cargo through its shipping channel in 2014, shattering the record for the second time in a row.
Romania: A Romanian investment fund, SIF Muntenia, has sold its 10.3% stake in Lafarge Agregate Betoane to its majority owner, Lafarge, for Euro1.3m. Lafarge bought 619,148 shares of Lafarge Agregate Betoane from SIF Muntenia at a price of Euro2.07/share. Lafarge Agregate Betoane quarries ornamental and building stone, limestone, gypsum, chalk and slate.
Worldwide: Holcim and Lafarge have announced their intention to merge the two companies. The new company, LafargeHolcim, will have a major presence in the global building materials sector with combined production sites in 90 countries across cement, concrete and aggregates sectors. Combined sales of the two companies would amount to around Euro32bn and earnings before interest, taxes, depreciation and amortisation (EBITDA) would be Euro6.5bn.
Lafarge and Holcim confirmed that they would sell businesses worth 10 - 15% of the group's EBITDA to satisfy antitrust concerns, worth about Euro5bn in total. Two-thirds of the asset sales would be in Europe. The companies also have overlapping business operations in Canada, Brazil, India and China.
Lafarge sold the majority of its worldwide gypsum wallboard businesses in 2011 followed by the sale of its North American gypsum wallboard assets in 2013. However it retains plants in Mexico, South Africa and Turkey.
USA: Continental Building Products, which acquired Lafarge North America's gypsum wallboard assets on 30 August 2013, has announced results for the fourth quarter and fiscal year ending 31 December 2013.
In the fourth quarter of 2013, CBP saw its net sales increase by 30% to US$114m compared to Lafarge's like-for-like performance in the fourth quarter of 2012. Its operating income rose from US$2.8m for the 2012 quarter to US$15.9m and its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) more than doubled to US$29.8m. Net income for the fourth quarter of 2013 was up by 125% year-on-year to US$6.7m. CBP sold 58.7Mm3 of gypsum wallboard during the fourth quarter, a rise of 18% year-on-year.
Over the whole of 2013, which necessarily includes results from Lafarge North America's former gypsum wallboard operations, CBP saw its net sales rise by 29% to US$402m and operating income improve to a profit of U$29.8m compared to a loss of US$45.4m in 2012. Adjusted EBITDA increased by 152% to US$103m for the year, while net income was positive at US$4.9m, compared to a net loss of US$68.7m in 2012.
"The positive momentum in our business continued into the year end, resulting in a net sales increase of 30% during the fourth quarter," said Ike Preston, CEO of CPB. "As we progressed though the year, rising housing starts provided favourable residential construction activity, our repair and remodel end markets improved and commercial orders started to show early signs of a recovery. The improvement in our performance reflects the improved demand environment but is even more reflective of our market-leading positions that we have forged in attractive regions throughout the eastern United States."
"The significant investments that we have made to modernise our capacity allowed us to more than double our adjusted EBITDA in the fourth quarter of 2013," continued Preston. "We believe we are well positioned to continue growing our business as we leverage our existing capacity and low cost production capabilities to support additional profit expansion and cash generation over time."
UK: Siniat has invested more than Euro300,000 in the construction of a new laboratory facility at its manufacturing plant in Portbury, Somerset.
The lab provides a high-specification environment for Siniat's production, maintenance and quality assurance teams and has enabled it to consolidate all three functions, which were previously based in different parts of the site, in one central, integrated location at the heart of the plant. Construction work began in May 2013 and is now complete, with the lab fully operational.
The facility will also act as an area where Siniat can welcome customers and other visitors to discuss its latest innovations and demonstrate key product performance capabilities such as fire and water resistance.
The project is just one step in a long-term vision for improving the site, says Stephane Mettavant, Plant Manager. "We've embarked on an ambitious programme of change for our Bristol plant since becoming Siniat (in October 2012). It's focused on improving facilities for our customers and our employees and creating an environment in which we can share our expertise."
"The programme has already delivered tangible results and helped us to streamline our processes throughout the plant," said Mettavant. "We have been successful in reducing the number of customer complaints we receive to industry-leading levels and the new lab represents the next stage of reinforcing that quality assurance.
Siniat was formerly known as Lafarge Plasterboard. It was acquired from Lafarge by Belgium's Etex group at the end of 2011 and began trading as Siniat in October 2012.
US: Lafarge has announced that is preparing the sale of its North American gypsum business to US private equity firm Lone Star in a deal worth an enterprise value of US$700m.
Lafarge North America's Gypsum division manufactures gypsum wallboards and joint compounds throughout a network of plants in the United States and Canada, including three US gypsum wallboard plants. In 2012, these operations generated sales of US$310m. The assets have been held for sale in the Lafarge's consolidated balance sheet since 2011.
This transaction, which is expected to close very soon, is subject to the satisfaction of customary closing conditions.
Global building materials producer Lafarge reduced its net debt by Euro700m in 2012 to Euro11.3bn. It sold the majority of its worldwide gypsum business – in Asia, Europe, South America and Australia – to Boral and Etex in 2011. Lafarge retains a 20% stake in the joint venture with Etex.
US: More than a dozen lawsuits alleging price-fixing on the part of major manufacturers of wallboard have been consolidated in the Eastern District of Pennsylvania. The location was chosen as most of the parties are located in the area and a majority of the parties advocated for consolidation in that district. US District Judge Michael Baylson will handle the case.
"From at least September 2011 to the present the defendants, manufacturers of gypsum board, combined and conspired to fix and raise the prices at which they sold gypsum board in the United States beginning with large and coordinated price increases that all became effective on or about 1 or 2 January 2012," according to the complaint filed in one case originating in the Eastern District of Pennsylvania, Janicki Drywall versus CertainTeed.
Major manufacturers of wallboard have annual sales of more than US$5bn, according to the complaint and the defendants are seeking treble damages. The defendants in the suit account for more than 99% of wallboard sold in North America, according to the complaint. They are USG, National Gypsum, CertainTeed, Georgia-Pacific, American Gypsum, Lafarge, Temple-Inland and PABCO.
In a previous status conference for the Eastern District of Pennsylvania cases, Steven Bizar of Buchanan Ingersoll & Rooney was named as interim liaison counsel for the defence, while H Laddie Montague Jr of Berger & Montague had been named interim liaison counsel for the plaintiffs.
Asia: Australian building material's group Boral has announced that it has completed its acquisition of Lafarge's interests in the two companies' former joint-venture Lafarge Boral Gypsum Asia. The business has been renamed Boral Gypsum Asia (BGA) and transition plans are in place for product branding in each country. BGA has performed to expectations since the acquisition was announced in August 2011.
The chief executive of Boral, Mark Selway, said, "We are delighted to be able to fully integrate BGA into our group. The continued growth of BGA is a strategic priority and we look forward to working with the management team and employees to develop and execute our plans for the future."
France: Lafarge, the French building materials giant, has announced plans to restructure the group along national lines instead of product types. The move will be implanted from the start of 2012 and was described by Lafarge as 'the natural next step' following its geographical expansion and its recent refocusing on cement, aggregates and concrete. This has become more pertinent following the disposal of most of its gypsum activities, with only North America the only area in which it still has gypsum operations. The aim of the project is to increase Lafarge's differentiation through the development of higher value-added products and solutions for construction.
Bruno Lafont, chief executive at Lafarge, said that the project may have a 'limited' impact on staff numbers. "It is premature to speak of the consequences in terms of employment," said Lafont. "If there is an impact, we think it will be limited." Lafarge previously said that it would remove a layer of management at the 'regional' level as part of the reorganisation