Gypsum industry news

US: Eagle Materials offset higher energy and maintenance costs by raising the prices of its products in the first quarter of its 2023 financial year. This contributed to an 18% year-on-year sales rise to US$561m. The group achieved earnings before interest, taxation, depreciation and amortisation (EBITDA) of US$184m during the quarter, up by 13% year-on-year.

President and CEO Michael Haack said "Our results this quarter exceeded our expectations, as our portfolio of businesses performed well, and we executed on the opportunities available to us. Construction activity remained healthy across our markets, and we realised broad pricing gains across our portfolio again this quarter."

The producer’s light materials sales rose by 30% year-on-year to US$248m due to increased gypsum wallboard sales volume and prices. Wallboard volumes increased by 5% to 74.1Mm2; their average price increased by 24%. Haack said “In our light materials sector, wallboard shipments and orders remain strong, but we recognise quantitative tightening will likely have an impact on residential construction activity in the future. In the near term, we expect record home construction backlogs to support product demand this year. With Eagle's excellent balance sheet, the favourable geographic positioning of our operations and consistent execution of our operating strategies, we are poised for a strong fiscal 2023."

France: Saint-Gobain’s sales were Euro25.5bn in the first half of 2022, up by 15% year-on-year from the same period in 2021. Its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 13% to Euro3.68bn. Sales rose by 15% in Northern Europe, by 14% in Southern Europe, Middle East and Africa, by 17% in the Americas and by 30% in Asia-Pacific. The producer ends the period with a net debt of Euro8.3bn, up by 9.2% from Euro7.6bn.

Chief executive officer (CEO) Benoit Bazin said, “Over the coming quarters, we are ready to adapt as needed to the consequences of rising interest rates and inflation along with the geopolitical and energy situation in Europe. Each country CEO has designed action plans, focusing especially on margins and cash flow. In this more uncertain environment, our target is to continue to outperform our markets and our deep transformation will enable us to demonstrate greater resilience. Over the past three years, our teams have successfully risen to the challenges of the coronavirus pandemic, supply chain disruptions and a strong inflationary environment. With portfolio rotation of almost Euro10bn in sales since the end of 2018, and with a local organisation keenly aware of immediate realities on the ground, Saint-Gobain has significantly increased its value creation. Against this backdrop, I am confident in the group’s 2022 outlook, which targets a further increase in operating income compared to 2021 at constant exchange rates.”

Winstone Wallboards has been in the spotlight in recent months over ongoing supply issues of gypsum wallboard in New Zealand. Many places around the world have suffered from similar shortages of building materials following the coronavirus lockdowns. However, the shortages in New Zealand have started to generate a considerable response, as we detail below.

Rightly or wrongly, Winstone Wallboards’ dominance in the market locally has been perceived as part of the problem. It operates the country’s only two wallboard plants and it is frequently reported to hold around a 95% share of the market. It is also currently building a new 10Mm²/yr gypsum wallboard plant at Tauriko near Auckland. Commissioning is planned for mid-2023. Once completed the company will have a total national wallboard production capacity of around 40Mm²/yr.

The current problems date back to the start of the coronavirus pandemic when New Zealand started implementing its lockdowns and residential renovation work increased. The issue then gained prominence in September 2021 when Winstone Wallboards started issuing regular supply updates on its website as the government began to relax the lockdown at that time. It says that order volumes more than doubled from November 2021 to February 2022 as customers started to bring forward their orders to cope with general building material shortages. It coped for a while by using its inventory stock and by bringing in imports from Australia but the latter stopped in November 2021 due to shortages there also. So it proposed introducing an allocation model from July 2022 whereby customers could place orders no more than one month in advance. It then says it worked on increased output through plant and process upgrades with the installation of a heat exchange system for its Auckland plant planned for July 2022 and by securing further imports from an Australian producer for the second half of 2022. As of late June 2022 it expected the market to return to equilibrium by October 2022.

Unfortunately, some consumers have been vocal about their unhappiness with the supply situation. Rental property developer Simplicity Living took to the press to complain about the delays in June 2022. It added that it had started importing its own wallboard from Thailand instead. The story then became nastier when Simplicity Living alleged that Winstone Wallboards’s parent company, Australia-based Fletcher Building, was blocking imports of certain colours of wallboard. Fletcher Building clarified in the same article that it had trademarked “specific” shades of blue, green, mauve and pink to differentiate its products in the marketplace. This, of course, will be familiar to insulation sector readers of Global Gypsum as Owens Corning is arguably the world’s most famous and successful example of how to copyright a colour. It’s unclear how much of an impediment Fletcher Building’s colour trademarks have been to imports to New Zealand. The company did say in an investor presentation in late June 2022 that it had granted 10 trademark royalty-free licenses so far to allow other companies to import wallboard. To give readers an idea of the amount of attention being focused on Winstone Wallboards and its connected companies, when a shipment of wallboard was delivered early to a construction subsidiary of Fletcher Building, apparently breaking the company’s own supply rules, a video of the incident started circulating on social media before being picked up by national news channels.

Government oversight then stepped up a notch in late June 2022 with the formation of a ministerial taskforce to tackle the wallboard shortage. It plans to troubleshoot the regulation of alternative plasterboard products, look at ways to streamline the use of products that are currently untested in the New Zealand market, provide advice on building consent and explore new distribution models, amongst other goals. Alongside all of this, the New Zealand Commerce Commission started a market study into residential building supplies in November 2021. Its aim is to look into any factors that may affect competition for the supply or acquisition of key building supplies. A draft report for consultation was scheduled for release in July 2022 and the final report should be due in December 2022.

Winstone Wallboards’ woes are clearly down to the disruption caused to supply chains by the coronavirus pandemic. However, fairly or unfairly, its local market dominance has exposed it to most of the blame for the situation in the eyes of some of the New Zealand public. Its products are so integrated into the usage of wallboard in the country, for example, that the Gib brand is specified by name in many of the region’s building consent application documents. The government has now become involved adding further to the public scrutiny. Structural changes may or may not be required at some or multiple levels of the New Zealand wallboard market to fix the current crisis. Yet, funnily enough, in one interview Fletcher Building chief executive officer Ross Taylor raised the issue of customers developing the ‘fear factor’ in response to hearing about shortages and then buying more than they might need. This may sound familiar because it is exactly what happened at the start of the worldwide coronavirus lockdowns when people started panic buying toilet-roll. Whatever else is happening in New Zealand, human nature can’t be helping either.

Uzbekistan: Germany-based Knauf has launched a new 17Mm²/yr gypsum wallboard plant at Fergana. The unit can also produce 40,000t/yr of dry building mixes. The project had an investment of just under Euro19m. It is the company’s third production plant in the country.

UK: The Competition and Markets Authority (CMA) has formally launched the first phase of a merger inquiry into the proposed acquisition by Saint-Gobain of GCP Applied Technologies. The competition body said that proposed merger had met the threshold for investigation under UK law. The CMA will now decide whether to refer the merger for further scrutiny by 21 September 2022.

Saint-Gobain said it had agreed to buy construction chemicals producer GCP Applied Technologies for Euro2bn in late 2021 with a conclusion date to the transaction by the end of 2022.