Gypsum industry news

Canada: Pan American Fertilizer Corp has signed a non-binding Letter of Intent to acquire Demetra Minerals, a Vancouver-based, privately-held junior fertiliser company developing agricultural gypsum products for the Cono Sur markets of Argentina, Paraguay, Bolivia and Brazil.

In the proposed transaction, a new seven-member board of directors will be composed of three nominees from each of Pan American and Demetra plus a mutually agreed 7th independent director. Gregg Jensen of Demetra would be appointed as president and CEO, Sebastian Cattaneo as COO and Jeremy Wright as CFO. Robert Rennie would remain as the chairman. Pan American and Demetra would consolidate all assets and debts.

Canada/US: HIG Capital, a global private equity investment firm, has announced that its portfolio company Harrison Gypsum has acquired JA Jack & Sons, a miner and processor of limestone products. JA Jack owns and operates a quarry on Texada Island in British Columbia, Canada and ships limestone to a processing facility in Seattle, Washington, USA.

"We are excited about the strategic expansion of our operations into the Pacific Northwest," said Paul Harrington, CEO of Harrison Gypsum. "JA Jack not only allows us to grow outside our core markets of Oklahoma and Texas, but also significantly broadens our customer footprint and product portfolio within our expertise of mineral processing. JA Jack has had a long and successful history under the Jack family dating back to the 1940s and we will be sure to serve as great stewards of the business going forward."

France: Saint-Gobain aims to improve underlying operating profit in 2015 and save a further Euro400m. Saint-Gobain saw its 2014 operating profit rise by 1.6% to Euro2.8bn. On a like-for-like basis, the increase came to 7%.

"The group should benefit from good momentum in the US as well as in Asia and emerging countries in 2015," said Saint-Gobain in a statement. "In Western Europe, recovery will be held back by France."

Saint-Gobain derives about 66% of its sales from Europe and 25% from its home market in France. Total sales reached Euro41.1bn in 2014, down by 1.7%. Savings in 2014 reached Euro450m, as predicted in October 2014 when Saint-Gobain said that it aimed to do better than the Euro350m cost savings it had previously targeted for 2015. Saint-Gobain's net income, excluding depreciations and one-off charges, came to Euro1.1bn in 2014.

US: Continental Building Products (CBP) has announced strong results for the fourth quarter of 2014 and the entirety of the year.

"Our results marked a solid year of progress for our company, allowing us to generate significant cash flows and dramatically improve our balance sheet," said Jay Bachmann, CBP's CEO. "The positive momentum in our business continued into the fourth quarter, with our net sales up by 5.6% and our adjusted EBITDA and operating income increasing by 15.6% and by 35.2%, respectively, reflecting favourable operating leverage driven by our low cost structure. During the full year 2014, we converted the majority of our adjusted EBITDA into free cash flow, which we used to reduce our long-term debt and strengthen our financial position. As we move into 2015, we believe that the construction markets will continue to recover and steadily improve. Amid that backdrop, we believe that our business is well-positioned to continue building on our progress by optimising our revenues and exercising strict cost controls to deliver improved returns and cash flows."

Net sales for the fourth quarter of 2014 were US$121m, up by 5.6% from US$114m in the fourth quarter of 2013. The increase in sales was primarily driven by 6.8% growth in the average mill net price. Wallboard volumes were 627Mft2 compared to 632Mft2 in the 2013 quarter, with flat US volumes offset by a single-digit percentage decline in Canada. Gross profit was US$31.7m, up by 28.6% compared to US$24.6m in the 2013 quarter. The gross margin of 26.2% increased from 21.5% in the prior year quarter, primarily as a result of higher average wallboard mill net prices and CBP's focus on leveraging its low cost structure.

Operating income was US$21.5m, up by 35.2% from US$15.9m in the 2013 quarter. Interest expenses were US$4.6m, down from US$8.2m in the 2013 quarter, reflecting a reduction in the long-term debt and a decrease in the interest rate on CBP's borrowings. Net income during the quarter was US$10.4m compared to US$6.7m in the 2013 quarter. Adjusted EBITDA increased by 15.6% to US$34.5m, compared to US$29.8m in the 2013 quarter.

Net sales for the enitrety of 2014 were US$425m, up by 5.5% from US$402m in 2013. Wallboard volumes increased by 0.9% to 2.18Bnft2 compared to 2.16Bnft2 in 2013. The average wallboard mill net price increased by 6.1% year-on-year. Gross profit was US$94.3m, up by 35.6% from US$69.5m in 2013. The gross margin of 22.2% was higher than the 17.3% margin of the prior year. Operating income was US$60.8m, up by 104% from US$29.8m in 2013. Interest expense was US$29.1m compared to US$23.4m in the prior year. Net income was US$15.9m compared to US$4.9m in 2013. Adjusted net income was US$23.8m compared to US$22.8m in 2013, excluding the impact of nonrecurring costs. Adjusted EBITDA increased by 12.2% to US$115m compared to US$103m in 2013. During the full year of 2014, CBP generated operating cash flow of US$78m, incurred US$5.7m of capital expenditures and used cash on hand for the repayment of US$65.6m of debt.

India: Gypsum wallboard and plaster maker FACT-RCF Building Products Ltd (FRBPL) is expecting to sign a supply contract with Tata Housing. FRBPL is a 50:50 joint venture between Kochi-based Fertilisers and Chemicals Travancore Ltd and Rashtriya Chemicals & Fertilisers Ltd (RCF).

"The negotiations are on with Tata Housing. We hope to conclude the negotiations soon and ink the deal," said C P Dinesh, managing director of FRBPL. Dinesh said that the plant in Kerala has a capacity of 1.4Mm2/yr and started production in 2012. According to Dinesh, Tata Housing is planning to construct ground plus four buildings and needs wallboard panels in large numbers.