growth in our U.S. operations' net sales driven by higher volumes for our three core products
|MEXICO||UNITED STATES1||NORTHERN EUROPE2||MEDITERRANEAN3||SOUTH, CENTRAL
|Operating earnings before
other expenses, net
|millions of US dollars as of December 31, 2015|
|Capacity per region7|
|Cement production capacity
(million metric tons/year)
|Cement plants (controlled)||15||13||7||11||7||3||56|
|Cement plants (minority part.)||3||5||1||0||3||0||12|
|Land distribution centers||78||41||37||37||29||20||242|
|as of December 31, 2015|
In 2015, our Mexican operations’ net sales decreased 11% year over year to US$2.8 billion, and operating EBITDA declined 3% to US$966 million. On a like-to-like basis, net sales and operating EBITDA increased 7% and 16%, respectively. Our domestic gray cement volumes increased 1%, while our ready-mix concrete and aggregates volumes declined 5% and 9%, respectively, for the year. Our slower-than-industry growth in cement and ready-mix concrete volumes reflects the implementation of our pricing strategy. Our cement and ready-mix prices in local-currency terms increased by 10% and 7%, respectively, during 2015.
The industrial-and-commercial sector was the main driver of our cement volumes during 2015, aligned with improved retail sales and general commercial activity. The formal residential sector also performed positively, supported by credit growth from private banks and public entities. The infrastructure sector saw delays in the execution of the budget. The self-construction sector benefited from improved job creation and remittances.
Our U.S. operations’ net sales increased 7% year over year to US$3.9 billion in 2015. Operating EBITDA rose 34% to US$565 million during the year. Our U.S. operations’ domestic gray cement, ready-mix concrete, and aggregates volumes increased 2%, 13%, and 6%, respectively, for 2015. Adjusted for our acquisition of ready-mix plants in California, our like-to-like ready-mix concrete volumes grew 10% year over year.
The residential sector was the main driver of cement demand during the year, driven by low inventory levels, stronger job creation, and household formation. During 2015, housing starts increased 11%, and importantly, single-family construction improved significantly with double-digit growth after remaining relatively flat in 2014. Infrastructure sector activity picked up during the second half of the year, driven by state spending and TIFIA funding. Moreover, industrial-and-commercial sector growth, excluding oil well activity, was supported by lodging and office construction spending.
Our Northern European operations’ net sales decreased 21% year over year to US$3.1 billion, and operating EBITDA declined 6% to US$325 million in 2015. On a like-to-like basis, regional net sales and EBITDA increased 2% and 13%, respectively. For the full year, our domestic gray cement, ready-mix concrete, and aggregates volumes decreased 3%, 12% and 18%, respectively. Adjusting for the transactions with Holcim closed at the beginning of the year, our like-to-like domestic gray cement volumes increased 9% for 2015.
In Germany, our operations’ domestic gray cement volumes increased 6% on a like-to-like basis during 2015. The residential sector remained the main driver of cement consumption during the year, despite supply-side restrictions such as land availability and regulatory caps on rental increases. The sector benefited from low unemployment, low mortgage rates, rising purchasing power, and growing immigration.
In Poland, our operations’ domestic gray cement volumes increased 15% for the year. During 2015, our volume growth reflected our efforts to maintain a stable market position amid slower-than-anticipated demand and challenging market dynamics. The infrastructure and residential sectors were the main drivers of demand for the year. Infrastructure sector demand developed slower than anticipated during the year due to delays in announced projects.
In France, our operations’ domestic ready-mix concrete and aggregates volumes decreased 5% and 2%, respectively, in 2015. During the year, we experienced greater activity in traded aggregates volumes. Our full-year volumes were affected by macroeconomic weakness; however, residential sector activity picked up during the fourth quarter. Increased housing sales during the year reflected governmental initiatives, including a buy-to-let program and a stimulus package.
In the United Kingdom, our operations’ domestic gray cement and aggregates volumes increased 7%, and 5%, respectively, while our ready-mix concrete volumes declined 2% for the year. Our cement volume growth was driven by improved demand from all of our main construction sectors. The residential sector was supported by low unemployment, low inflation, and increased wages. The industrial-and-commercial sector performed favorably, reflecting improved consumer confidence and a better business environment. The decline in ready-mix concrete volumes reflected our focus on profitability.
In the Mediterranean region, our operations’ net sales decreased 5% year over year to US$1.4 billion, while operating EBITDA declined 17% to US$257 million in 2015. On a like-to-like basis, regional net sales increased 3% while operating EBITDA declined 12%. As a whole, our regional operations’ ready-mix concrete volumes increased 5%, while our domestic gray cement and aggregates volumes decreased 2% and 4%, respectively, for the year. On a like-to-like basis, our domestic gray cement volumes declined 9% during 2015.
In Egypt, our operations’ domestic gray cement volumes decreased 9% in 2015. The decline in our year-over-year cement volumes primarily resulted from a relatively high base in 2014, when we dispatched additional volumes in light of the then prevalent energy shortage. During the year, the informal sector experienced lower activity. However, increased formal residential and infrastructure activity led to growth in our bulk cement and ready-mix concrete volumes.
South/Central America and Caribbean
In 2015, our net sales in the region decreased 14% to US$1.9 billion, while our operating EBITDA declined 22% to US$571 million. On a like-to-like basis, net sales increased 1% while operating EBITDA declined 9%. Our regional operations’ domestic gray cement, ready-mix concrete, and aggregates volumes decreased 4%, 3%, and 2%, respectively, for the year.
Our Colombian operations’ domestic gray cement, ready-mix concrete, and aggregates volumes declined 9%, 3%, and 6%, respectively, in 2015. While national cement volumes increased during the year, the decline in our cement volumes mainly reflected a high comparable base in 2014, as well as our pricing strategy. Our domestic gray cement prices increased 8% in 2015. During the year, the residential sector continued its positive trend, benefiting from various government-sponsored housing initiatives. The infrastructure sector also remained an important driver of demand thanks to the improved execution of projects developed by departmental and municipal administrations.
Our Asian operations’ net sales increased 9% year over year to US$665 million, while our operating EBITDA grew 23% to US$175 million in 2015. As a whole, our regional domestic gray cement and aggregates volumes increased 15% and 2%, respectively, while our ready-mix concrete volumes declined 6%, for the year.
In the Philippines, our operations’ domestic gray cement volumes increased 21% in 2015. Our volumes during the year benefited from our improved ability to serve our markets through the introduction of our new cement-grinding mill in late 2014, along with increased demand from our main construction sectors. The industrial-and-commercial sector continued its growth momentum driven by office space demand. Also, the residential sector remained strong as developers continued to expand housing projects, supported by stable inflation, low mortgage rates, and higher housing demand from Filipinos overseas.
Our global trading network is one of the largest in the industry. Our trading operations help us to optimize our worldwide production capacity, deliver excess cement to where it is most needed, and explore new markets without the necessity of making immediate capital investments. Our worldwide network of strategically located marine terminals and broad third-party customer base also provide us with the added flexibility to fully place contracted supplies in an optimal way.
In 2015, we enjoyed trading relationships in over 100 countries. Our trading volume totaled more than 10.6 million metric tons of cementitious materials, including approximately 8.8 million metric tons of cement and clinker. We also maintained a sizeable trading position of 1.2 million metric tons of granulated blast furnace slag, a non-clinker cementitious material, and 0.6 million tons of other products.
Freight rates, which have been extremely volatile in recent years, account for a large share of our total import supply cost. However, we have obtained significant savings by timely contracting maritime transportation and by using our own and chartered fleets—which transported approximately 39% of our traded cement and clinker volume in 2015.
In addition, we provide freight service to third parties when we have spare fleet capacity. This not only provides us with valuable shipping market information, but also generates additional profit for our operations.
growth in our U.S. operations' net sales driven by higher volumes for our three core products