First Tarmac disposals agreed

First Tarmac disposals agreed
Published: 19 February 2010

In 2009, Tarmac generated a turnover of US$2,870m (€2,106m), a reduction of 34.8%, and an EBITDA 35.9% lower at US$313m (€230m).  At the trading level, the profit fell by 55.9% to US$101m (€74m), with like for like profits being down by 71% in Great Britain, on the back of volume reductions in the region of 24%, and by 52% elsewhere.  Capital expenditure was 9.3% lower at US$88m (€65m).   

Tarmac sold 70.44Mt of aggregates last year, a reduction of 24.3%.  Deliveries of ready-mixed concrete were rather worse affected, with the production level falling by 44.2% to 3.52m m³.  A significant portion of quarrying and downstream capacity in ready-mixed concrete and concrete products, has been mothballed over the past two years in response to the fall off in demand.  While Tarmac’s asphalt volumes still held up well in 2008, these have too suffered in 2009.  Lime products sales, less related to construction activity, held up rather better, declining by a more modest 10.2% to 1.21m tonnes.

Anglo American, the international mining group that bought Tarmac just over ten years ago, at the end of 1999, has in recent years been looking to sell it again and concentrate on mining.  Having been trying to sell it in its entirety, Anglo American now appears to be looking at selling it piecemeal instead.  It has already agreed, subject to official approval, to sell the aggregates operations in France, the Czech Republic, Poland and Germany to Eurovia, the road-building arm of Vinci Group.  Euravia is already one of the top three aggregates producers in France.  There is also an agreement to sell the concrete products activities in Poland to a Central European private equity fund.  We should thus not be surprised to see the sale of the cement operations, the most logical buyer for which would be Holcim, which has in the past been buying cement from Tarmac’s Buxton works, though a desire to sell the cement assets along with the lime business might complicate matters.  However, Anglo American’s moves can sometimes appear strange as the Yang Quarry in China has recently been transferred from Anglo American’s coal division and Tarmac having already successfully having divested of its coal assets.  The possibility of a Brazilian buyer cannot for Tarmac cannot be ruled out completely.