None of the three major cement companies in Romania, French-held Lafarge, Swiss-held Holcim and German-held Carpatcement Holding will provide any information about the price or quantity of cement they sell every year.
Information about the average cement price and the total production value are very important considering this is a staple construction material and a good indicator of the performance of the construction sector.
Local cement production stood at some 7.6 million tons last year, according to the association of the companies in this business, CIROM, but no one knows exactly how much each of the three major companies contributed.
ZF requested from each of the three companies information about the total amount sold, average sale price, revenue from the sale of cement and the percentage of sales to wholesalers, builders and of exports in 2008-2012.
“The information you requested is confidential and as such we cannot provide it to you,” Carpatcement Holding (local subsidiary of HeidelbergCement) answered.
Holcim officials in turn said that according to the EU directives in Treaty on the Functioning of the European Union the companies operating on a concentrated market like the cement market in Romania is are not allowed to reveal to the public information about the sales performance, revenue in the last three years and price trend.
“Publicly announcing such figures could be interpreted by the Competition Council as an illegal exchange of information,” Holcim said.
Still, the group publishes the trend of average prices in lei of the cement and clinker it sells in Romania every year. The price of cement and clinker rose 2.3% last year after having dropped 1.4% in 2011, according to the annual reports of the Swiss group.
Lafarge, on the other hand, did not answer ZF’s request. The three companies were fined for price fixing in 2005.
One ton of cement currently sells for RON430, according to ZF’s calculations based on the data in its archive and the data from the National Statistics Institute. The price per ton (of cement bags, considered the list price and therefore negotiable i.e.) peaked at RON450 in 2009 and reached its lowest of RON412 in 2011. The price is negotiable so the final price may differ with the amount of cement purchased.
A 40 kilo bag of the same type of cement now sells for RON19.21 (Carpatcement), RON19.37 (Holcim) and RON19.49 (Lafarge), according to the website of Arabesque, a wholesaler of construction materials, which sells cement from all three producers. This includes the markup, though.
ZF asked the Competition Council if it somehow requested that cement industry companies stop revealing data about the average sale price and the volume of sales (tons) of this construction material after fining them in 2005.
“The Competition Council does not have the authority to intervene and rule in matters of commercial policy of companies, as long as it is not in breach of the competition law. Therefore, the competition authority may not require companies to publicly reveal sale prices or not, because such a decision is for each company to make,” the Competition Council said.
However, the institution said it did warn, “The exchange of sensitive information, especially about costs and prices could be subject to the provisions of competition law and of the provisions of the Treaty on the Functioning of the European Union.”
The local cement market split among the three major players, Lafarge, HeidelbergCement and Holcim, is the sector with the least competition, according to a recent report by the Competition Council.
The market, which ZF puts at EUR600 million to EUR700 million is also concentrated, with a low number of companies operating on it whose market shares are similar and stable over the years, according to the Competition Council.
Although the three major producers, Carpatcement Holding, Holcim and Lafarge dominate the cement market, there are several other producers in this industry, such as Cemrom, which posted RON50.6 million revenue last year and Ceminter International, RON36.7 million revenue last year.
The three top producers saw almost EUR4.4 billion revenue in 2007-2012 and almost EUR1 billion in net profit, according to ZF’s calculations based on the Finance Ministry and Trade Registry data. The cement producers are among the most profitable companies in Romania’s economy.
Top profit maker last year was Lafarge Ciment, about EUR37 million in net profit (19% profit margin). Carpacement Holding posted EUR34 million (19% profit margin), while Holcim posted its first loss in a decade, EUR8.5 million. It has recently said it will return to profit this year.
The cement producers are also some of the biggest investors having spent more than EUR1.85 billion on plants and finish mills.
(English version by Loredana Fratila-Cristescu)