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Company Perspectives:
As one of the leading global players in the movement designed to cons olidate the industry, CIMPOR intends to continue along the path of gr owth and internationalisation, maintaining its independence with rega rd to other cement groups while retaining its decision centre in Port ugal.
Formerly a state-owned business, Cimentos de Portugal SGPS S.A. (Cimp or) is the Iberian region's leading producer of cement and related pr oducts, including concrete, aggregates and mortar. Cimpor has also as serted itself as a rapidly growing player in the international cement market, building up key positions in Spain, Mozambique, Angola, Moro cco, Egypt, South Africa, Tunisia, Brazil and, since late 2005, Cabo Verte. In Portugal, the company is the clear market leader, with a 58 percent share of the national market. The company also holds top pos itions among the top five in each of its other markets, including the number three spot in Brazil. Cimpor's total installed capacity tops 24 million tons per year. The company operates three cement plants in Portugal, along with 66 concrete plants and backed by 16 aggregate q uarries, among other operations. The company operates 15 more cement plants among its international holdings. Together, Cimpor's foreign h oldings account for nearly 60 percent of its revenues. Into the 2000s , Cimpor's domestic production continued to account for some 50 perce nt of its operations, down from 100 percent just a decade earlier. Th e group's strong strategic position has made it an attractive takeove r target from its larger global competitors. If Cimpor was previously protected by the Portuguese government's 'golden share' (which succe ssfully ended a takeover attempt at the beginning of the 2000s) Cimpo r is now 100 percent publicly owned, and therefore remains a potentia l target. The company is listed on the Lisbon Stock Exchange. In 2004 , Cimpor posted sales of EUR 1.37 billion ($1.73 billion).
Nationalized Cement Company in the 1970s
Founded in 1976 as a result of the nationalization of the Portuguese cement industry, Cimpor built on foundations established in the late nineteenth century. The first element of the later national cement gi ant appeared in 1873, with the founding of Companhia Mineira e Indust rial do Cabo Mondego. That company became the first in Portugal to in stall a vertical oven for the production of cement in 1884. Another i mportant element of the later Cimpor was founded in 1890, with the co nstruction of a plant in Alhandra. That plant became the first in the country to produce artificial cement using the Portland cement metho d. The Alhandra plant launched production in 1894, marketing its ceme nt under the Tejo brand. In 1912, the Alhandra company adopted the Te jo name as its own, becoming Cimentos Tejo.
Alhandra was by then an important center for the Portuguese cement in dustry, and included another plant, built in 1904 by the Araujo Rato company. Another company, Compagnie des Ciments du Portugal, founded in 1906, represented the entry of foreign investors into the country.
By 1913, Portugal's total cement production had already topped 3,600 tons. In that year, also, the Alhandra plant became the first in the country to switch over to the dry production process (the last of the later Cimpor's wet process production plants was phased out only in 1985). By the end of the First World War, Portugal's total cement pro duction had topped 8,000 tons per year.
A new company joined the Portuguese cement industry, when Henrique Ar aujo Sommer founded Empresa de Cimentos de Leiria in 1919, and began constructing that company's first cement complex in Maceira in 1920. The new plant was the first purpose-built dry process cement plant in Portugal and the launch of production at the site in 1923 single-han dedly tripled the country's total production, which topped 26,500 ton s that year. The Maceira site also built the country's first modern r otary kiln, with a daily output capacity of 220 tons.
Cimentos de Leiria was merged into Cimentos Tejo in 1925. That year, the Maceira site launched production at Portugal's first horizontal k iln. The new facility, and further investments in the industry enable d the country's total output to near 90,000 tons by the end of the de cade.
In the 1930s, the Sommer family emerged as the dominant force in Port ugal's cement industry. In 1934, the family acquired control of Cimen tos Tejo, including the Cimentos de Leiria operation. In that year al so, Henrique Araujo Sommer acquired the Araujo Rato cement company, g iving the Sommer family the leading position in the national cement i ndustry.
The Sommer-controlled cement group continued to grow, modernizing and expanding its production plant. The group also acquired another ceme nt producer, Favrica da Matola in 1944, and began building a new plan t in Dondo starting in 1945.
Following the Second World War, shortages in domestic production led the government to lower tariffs on cement imports. This resulted in a drop in domestic prices. At the same time, new competitors had begun to emerge in the industry in the 1950s. In 1950, a new facility for the production of white cement was established in Pataias, forming th e basis of the Cibra company. The government too began to invest in t he sector, with the Ministry of Public Works backing the creation of a Fábrica Cimento da Sociedade Técnica de Hidráu lica in Alhandra for the production of asbestos-cement pipes. The Min istry of Defense, at the same time, launched Companhia de Carvoes e C imentos do Cabo Mondego in 1950.
Cimentos de Leiria continued to expand its own operations. At the end of the 1950s, the Alhandra site added a new 167.5-meter kiln, then t he world's largest, with a production capacity of more than 500,000 t ons per year. The following year, the Cimentos Tejo operation install ed the world's largest rotary kiln for the period. By the end of the 1960s, Cimentos de Leiria controlled more than half of Portugal's tot al cement production.
Two new cement companies were established in the early 1970s. In 1972 , Cinorte was established and began constructing a plant at Souselas. The following year, another new company, Cisul, began construction o f its plant at Loulé.
The 1974 revolution, which saw the end of some 50 years of dictatorsh ip in Portugal, led to the new government's taking control of much of the country's industry. The nationalization of the cement sector cam e in 1975. Under that legislation, the government took control of Cim entos de Leiria, Cimentos Tejo, Cinorte, Cisul, Sibra, Cabos Mondego and Sagres, all fully owned by Portuguese interests, as well as the P ortuguese share of another company, Secil, Companhia Geral de Cal e C imento. The following year, these companies were merged together to f orm a single company, CIMPOR - Cimentos de Portugal EP.
International Cement Leader in the New Century
Cimpor operations included its newest production site, at Souselas, w hich came online in 1975. The government-owned company continued to e xpand that facility, opening two more production lines. The third lin e at Souselas, with a capacity of one million tons/year, began produc tion in 1982. Cimpor also began shifting its factories from a relianc e on coal as a fuel source, adapting the plants to run on oil. This p rogram was completed in 1983. Two years later, the company shut down the last of its wet process production lines, completing its shift to the more fuel-efficient dry process method.
Portugal's admittance into the European Union in 1986 signaled the st art of a new era for the country's cement industry. The Portuguese go vernment made a commitment to privatize the cement industry in the ea rly 1990s. As part of that effort, Cimpor was converted to limited li ability status in 1991, becoming Cimpor-Cimentos de Portugal S.A. In that year, also, the company launched a new ready-mix business, creat ing subsidiary Precimpor. In 1992, the company's operations in Maceir a and Pataias were hived off into a separate company, Cimentos Maceir a e Pataias (CMP).
In the run-up to privatization, Cimpor recognized that in order to be come competitive in a deregulated market it would have to expand its operations beyond Portugal. The company took its first step internati onally in 1992, buying 97.7 percent of Spain's Corporacion Noroeste S .A. The purchase of Noroeste gave Cimpor control of two cement plants and a number of ready mix plants, with a total cement production cap acity of 1.3 million tons, and a 4 percent share of the Spanish marke t. At that time, the company announced its plans to increase the shar e of international sales to 50 percent of its total sales.
Cimpor's privatization began in 1994, when the Portuguese government sold 20 percent of the company to the public. In that year, the compa ny continued its drive to boost its foreign holdings, acquiring a 51 percent stake in Cimentos de Moçambique, which, with three cem ent plants, was that country's largest cement operation. While the Mo zambique market remained quite small, the lack of infrastructure in t he country suggested strong growth possibilities in the future. Back in Europe, meanwhile, Cimpor became one of 33 European cement compani es fined for forming a price-fixing cartel.
Cimpor next expanded into North Africa, acquiring 55 percent of Asmen t Temar, which operated a cement plant between that country's two pri ncipal markets of Casablanca and Rabat. That 1996 purchase was accomp anied by the sale of a new tranche of Cimpor's shares, representing a nother 45 percent of the company. The following year, the company mov ed into the Brazilian market, acquiring two companies, Cisafra, and t he cement division of Serrana Group. These purchases gave the company approximately 5 percent of the Brazilian cement market.
The third stage of Cimpor's privatization was completed in 1998, redu cing the government's stake to a 'golden share' of just 10 percent--g iving the government the right to veto a potential takeover of the co mpany. In the meantime, Cimpor continued its own acquisition drive, b uying up Société des Ciments de Jbel Oust, the second-l argest cement producer in Tunisia. The following year, the company re turned to Brazil, buying up three cement companies belonging to the B rennand Group. That acquisition, at a cost of more than $500 mill ion, boosted Cimpor to the number three position in Brazil, with a 10 percent share of the total cement market there.
By 2000, Cimpor's international growth, and the strong positions it h eld in its selected markets, had brought it to the attention of the r apidly consolidating multinational cement industry. The company found itself at the center of a bidding war, launched by Holcim, of Switze rland, and joined by France's Lafarge. Cimpor's independence appeared in doubt--until the Portuguese government deployed its golden share to veto any acquisition of Cimpor. When the government sold off its r emaining stake in 2001, it did so to Portuguese group Teixeira Duarte , which became Cimpor's single-largest shareholder.
Assured of its independence, at least for the time being, Cimpor retu rned to its expansion drive. The company added operations in Egypt in 2000, buying Amreyah Cement Company, and adding its 2.4 million ton capacity. In 2002, Cimpor entered South Africa, buying up 33 percent of Natal Portland Cement Company. Later that year, the company took c ontrol of Natal through its purchase of Lafarge's own 33 percent stak e in Natal. Lafarge provided the source for other Cimpor acquisitions , including its Cimento Brumado operation in Brazil, and, for EUR 225 million, its cement operation in southern Spain in 2003. This latter acquisition boosted the group's Iberian Peninsula capacity to 9.7 mi llion tons.
By 2005, Cimpor had completed two more acquisitions, of 49 percent of Nova Cimangola, in Angola, and 86.65 percent of Cimento Cabo Verde. With a total capacity of more than 24 million tons, Cimpor had raised itself to the upper levels of the global cement industry. The compan y expected to continue its expansion in the new century, boosting its production while adding new international acquisitions.
Principal Subsidiaries: Societé des Ciments de Jbel Ous t; Cimentos de Mozambique SARL; Amreyah Cement Company.
Principal Competitors: Lafarge S.A.; Guizhou Cement Factory; T ata Sons Ltd.; CRH plc; Supercemento S.A.I.C; Beijing Yanshan Cement Plant; Grupo Empresarial Maya S.A. de C.V.; Cementos Apasco S.A. de C .V; Holcim Ltd.; HeidelbergCement AG; Taiheiyo Cement Corporation.
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