In yesterday’s post we highlighted that the profit margins of the major multinational cement companies are around the median of the range of all cement companies, but there are some cement companies that enjoy much higher profit margins at all profit levels. Who are those lucky, or well-managed cement companies?

As there are currently 67 worldwide cement companies in the Whitehopleman cement company financial performance benchmarking database then there must be 16 cement companies in the upper quartile of any profit margins at any profitability level. For this analysis we will just focus on EBITDA and Earnings profit margins.

At the EBITDA profit level the upper quartile cement companies are located in Saudi Arabia (8), USA (2), Morocco (2), Nigeria (2) Qatar (1) and Pakistan (1).

At the Earnings profit level the upper quartile cement companies are located in Saudi Arabia (7), USA (2), Morocco (2), Nigeria (1) Qatar (1), Tunisia (1), Argentina (1) and multiple South American countries (1).

Cement companies enjoying high profit margins in Saudi Arabia and Qatar is not a surprise. Cement manufacturing is an enery intensive business. Energy costs in Saudi Arabia and Qatar as among the lowest in the world. Low energy costs mean high profit margins for cement companies.

Nigeria is also a member country of OPEC and major oil producer. There are also formidable barriers to entry to the cement industry in Nigeria.

The USA continues to be the largest and strongest market in the world.

The reasons for high profit margins in Morocco are more complex. High profit margins in Pakistan, Tunisia and Argentina are a surprise. Fertile topics for future investigation!