Cement maker LafargeHolcim posts big drop in carbon unit revenues

Published 13:26 on March 17, 2016  /  Last updated at 13:26 on March 17, 2016  /  EMEA, EU ETS, Switzerland  /  No Comments

Cement giant LafargeHolcim said it earned CHF 70 million (€63.8 million) less from global carbon unit sales last year compared to 2014, contributing to an 11% drop in full-year adjusted operating earnings.

Cement giant LafargeHolcim said it earned CHF 70 million (€63.8 million) less from global carbon unit sales last year compared to 2014, contributing to an 11% drop in full-year adjusted operating earnings.

In its first annual report since the firm was created through a 2015 merger between France’s Lafarge and Swiss-based Holcim, the cement conglomerate did not provide much in the way of specific data relating to CO2 emissions or carbon unit sales.

However, it said its 2015 EBITDA was CHF 5.75 billion, and excluding the impact of CO2 unit sales it was CHF 5.73 billion, implying the firm made around CHF 20 million from selling spare inventories last year.

That, in turn, suggests the newly-formed company’s carbon-related revenues dropped by upwards of 75% year-on-year.

LafargeHolcim added that Q4 carbon unit sales were CHF 46 million lower compared to the final quarter of 2014, but it did not disclose the actual revenue figures.

“Switzerland also recorded less gains from the sale of CO2 certificates which amounted to CHF 22 million,” it said, also without providing further details.

The company posted a Q4 loss of CHF 2.9 billion, due mainly to a one-off charge of CHF 3 billion from “changing market conditions” in China, Brazil, Russia, and Iraq, and the closure of some facilities.

It recorded global sales of CHF 29.5 billion, a 6.2% drop on 2014.

2030 TARGET

“Cost saving initiatives were not able to compensate for the negative impacts of lower volumes, prices and sales of CO2 certificates,” it added.

LafargeHolcim has an internal 2030 target to cut CO2 emissions per tonne of cement produced by 40% below 1990 levels.

“At the time of the merger, the combined company had achieved an estimated 26% reduction measured against the 1990 baseline,” it said.

“We are well aware that, due to the nature of our business, our new organization is one of the largest CO2-emitting corporations in the world.”

OVERPRODUCTION?

The EU cement sector is one of the biggest recipients of free allowances under the bloc’s carbon market.

But a report published by green group Sandbag on Wednesday claimed that the sector’s emissions have been inflated by rigid EUA allocation rules that incentivise overproduction.

The study found that the sector overtook steel in 2013 to become the biggest holder of surplus EUAs, with enough to cover 2.2 years of additional emissions, a figure that is likely to swell to 2.5 years by 2020.

While the EU cement sector’s emissions have decreased over the past 10 or so years, Sandbag found that this was largely due to other incentives such as renewables targets and the slump in demand following the bloc’s recession.

By Mike Szabo – mike@carbon-pulse.com

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