Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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Packaging is a hugely expensive outlay for any business that sells pre-packaged product.
I remember one potting compost manufacturer telling me that they had more money tied up in packaging than product in their yard.
The problem is that they have to order in very large quantities for each product in their range and delivery times are always excessive in the best of times, at the moment they are intolerable with product being sent out in plain packaging or not at all.
Pallets don't seem to be a problem at the moment.
Hi StoneRoses, I remember you were early to the board raising these issues. I recall your suggestion that haulage could be a profitable element in the supply chain., but this element surprised me.
Last week, Hanson announced a reduction in allocations. The Hanson Packed Products director said, “cement shortages are not the only issue”.
“In the longer-term we face issues on the availability of packaging (paper and plastic) due to global demand. We have been notified by our suppliers that they could have difficulties sourcing polymers and kraft paper to manufacture cement bags. Pallet availability is also a concern given the increase in demand across all timber markets affecting availability and pricing.”
wonder if Breedon has a good stock of cement bags. Will it get a mention at the interims?
https://www.bbc.co.uk/news/business-57247757 As stated in the original post, this lack of materials, is and will have a major effect on all housebuilders etc...
Hi Londoner7,
Thank you for the reference.
ATB
L3Trader
p.s.: As for that TU in the other bb, it did not meet my expectations...
Hi L3Trader, thanks for your comments.
I think this is the book:
The Art of Execution: How the world's best investors get it wrong and still make millions in the markets
By Lee Freeman-Shor
It's a quick and easy read and I liked the fact that it captured many on my own trading experiences, and helped me correct some of them.
Hi Londoner7,
This is an investment I am very happy with. I do not even look at it regularly. That is how relaxed and optimist I am about it.
I still owe you a reply to your reply to my post/reply to a post in the Winter. Thank you for you contributions to this BB.
At some point you mentioned a book you had overseas. I was wondering if you could remind me the title.
Thank you.
ATB
Bought another £5k of these to add to my £3k holding. Going to be getting my total holding up towards the £20k mark in the near future. Great company to have shares in.
Thanks to the contributors from the industry.
I understand some of the replies querying the comments but I think it's important to also understand that the contributions are made from personal perspectives. Putting these together I get the sense that demand for Breedon's products generally should be good. On material shortages there's a fundamental difference between the quarrying of aggregates and the production of cement. Breedon has the largest cement plant in the UK and a second in Ireland that together produce c2mT. For maximum efficiency these plants will run flat out, only being shutdown a couple of times a year for kiln maintenance etc. Variations from one year to the next are probably within =/-10%. In addition Breedon operates 4 cement import/export terminals. The latest in Lieth Scotland which may be behind the reference to shipping cement from Scotland to England.
But looking at the production numbers it's interesting to note that Breedon produce more than twice the cement they require for their own concrete plant, though as spogbat points out regional issues might mean the Breedon's cement isn't necessarily in the right place. I know that some plant uses non Breedon cement for logistical reasons. But all in all Breedon has a good supply of cement. I noted cement was called out positively in the latest update.
Key to margins is the ability to increase price over cost. Lafargholcim, the international materials supplier reported numbers this morning that pointed to good price increases over cost.
Only a few comments on Europe, but they sound positive:
Excellent month of March with strong volumes in all
business segments
? Strong pricing trends overall
? Improving activities in the UK, continued strong demand
in France
? Over-proportional recurring EBIT growth vs Net Sales
i work in the construction industry and there are various supply issues at present due to demand and covid related problems ,covid caused many suppliers to shut or mothball sites especially relating to concrete and there were many redundancies in the industry and i personally think companies have been caught out with the upturn so quickly. i think this is a regional issue at the moment especially cement shortages, there are also issues relating to transport with 12 month waiting lists for new vehicles , material shortages in some areas , planning consents are getting harder to pass through, i know of several quarries that could sell more material but are running at maximum output levels due to there legal requirements . some asphalt plants are only allowed to operate so many weekends and nights a year , looking at breedon specifically i think buying the cemex sites when they did was a very good move especially relating to high psv hardsone quarries and greater asphalt capacity , im expecting m&a activity to also pick up in the second half of the year also with bolt ons in certain areas . its looking positive but there are issues to overcome
Nice to see £1 breached (well ahead of schedule too). Given all the post-covid infrastructure projects planned, plus the dividend, there would appear to be plenty of growth left in the market cap.
I drive for Breedons, and certainly in my area, there is no issue with supply of materials for concrete, haven't heard of any across the country either. There is an issue with supply from external sources, but nothing to worry about. Someone mentioned Tarmac, they have closed down 4 plants in Eastern England. This has placed higher demand on Breedon concrete as the Cemex remains aren't functioning well. To be fair Breedons didnt buy that much from them here, but one important acquisition was another Quarry. I came off furlough after 5 weeks last year and haven't stopped. Demand is massive in the wake of 2 of our main opposition leaving the local market.
Below taken from Breedon's 2020 Annual Report:
KEY ASSETS
•Substantial permitted mineral reserves and resources
•Extensive network of quarries, rail-linked aggregates depots, asphalt plants, ready-mixed concrete plants and concrete products manufacturing facilities throughout Great Britain
•Nationwide fleet of delivery vehicles for all products
•Sizeable contracting services operations
Hi Quantum. Having reserves is one thing. But you need to be able to get it out the ground, process it and haul / transport it to customers.
Thanks StoneRoses, this was great to hear however, Breedon state they have millions amount of aggregate material from their quarries therefore surely they are self sufficient. Not entirely sure why they would run out or there not being enough to go around.
Can you help me out here to get my head round this.
There are some major issues facing the construction industry in the next 3 months or so. There is a massive shortage of raw materials (cement, sand, aggregate) across the U.K right now, and this is only going to get worse. As of the beginning of April for example Cemex & Tarmac suspended all concrete and aggregate deliveries on all jobs around the North of U.K. They covered the bare minimum of work. A lot of this was picked up by Breedon and other independent firms during this time., leaving a lot of disgruntled customers around. Right now there is not enough raw materials in the U.K to cover the existing order books that are in place for Breedon right across the spectrum (This is also the case for all major firms). There are major supply issue due to demand, lack of haulage and working capacity. All quarries are flat out, and cant keep up with demand. The supply chain is broken, so much so, that cement is being shipped from Spain into Scotland, for this to then be transported by road down to middle England and beyond. It's crazy what is going on in this aspect. Orders are being turned away left right and centre. This is going to have a major knock on effect given that HS2 is ramping up in the Southern area. Added to that the Commonwealth games infrastructure, that has yet to be started in Birmingham, along with the other projects. According to recent estimates there is only 25% of total product in the UK to cover the HS2 as a whole project, the rest has to come from abroad. Given the impact of Brexit now on the supply chain, costs are going to spiral. Housebuilding is going to be seriously impacted going forward, as the materials are just not there for these sites. Bricks, cement , wood, pipework, general building supplies are massively under supplied. There are sites that are already slowing down their work, and there are plans to suspend new housing projects in certain areas. There are some crazy deals being made for raw materials, and I'm talking serious monies over the odds being agreed. Purchases for exclusive quarry rights to supply certain companies are already taking place covering the next 2 - 3 years and beyond.
Personally I'm not sure where to put my monies now.. Well if I could afford a couple of haulage trucks, or concrete trucks then that's where the money is to be made now.. There is not enough vehicles at present to cope with that demand!