CRH & Steppe Cement (STCM): 2 cement stocks to buy now

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CRH & Steppe Cement (STCM): 2 cement stocks to buy now

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 CRH & Steppe Cement (STCM): 2 cement stocks to buy now
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Highlights

  • The global cement industry plans to cut down its carbon emission generated during production by up to 25% by 2030.
  • The cement industry is responsible for high carbon dioxide emission amongst major industries as the production of cement and concrete releases carbon dioxide.
  • Two LSE listed cement firms CRH Plc & Steppe Cement Ltd. have been showing good sales revenue growth.  stoc

The global cement industry is looking to reduce its carbon emission generated during cement and concrete production by up to 25% by the end of this decade and intends to reach net-zero emissions by 2050. The industry body Global Cement and Concrete Association (GCCA), which represents the cement industry and constituent some of the largest cement producing companies have pledged and committed to reach net-zero emission by 2050.

The cement industry is responsible for high carbon dioxide emission amongst major industries as a chemical reaction occurring during the production of cement and concrete releases carbon. Also, concrete is most widely used in construction activities globally. As a result, the cement industry contributes 7% to 8% of global carbon emissions.  

The cement sector’s commitment to cut down emissions is the first step towards a sustainable environment. As per the estimate, cutting down 25% carbon emissions by 2030 will reduce 5 billion tons of carbon dioxide. However, demand for materials is expected to rise during the period, which could increase carbon footprint as well.

To cut down carbon production, companies plan to use existing technologies to change the chemical process or consider using different materials. Also, the industry plans to use carbon capture and storage technology to cut down emission, by one-third.

The cement sector’s commitment to reduce emissions will act as a trigger for the companies operating in the sector to alter their operations which will help them achieve long term sustainable growth and profitability.

Let us explore 2 FTSE listed cement stocks that could be in focus after the announcement:

CRH Plc (LON: CRH)

FTSE100 listed company operates in the manufacturing and distribution of cement and other building material like ready-mix concrete, lime, precast for construction activities. It has major operations in the US and the UK market.

The company has diversified operations across different countries. It reported sales revenue of USD 14,044 million from all segments, a rise of 15% in the first half of 2021. The company’s sales volume was high, driven by the cement and ready-mix concrete.

The cement segment reported operating profit growth and sales revenue of USD 2,356 million during the period, primarily due to strong market demand and backlog construction work in various markets, also, as overall cement prices rose by 4% across all regions.

CRH Plc’s current market cap stands at £26,822 million, while its dividend yield is at 2.6% as of 12 October 2021. In the last one year, the stock has given a return of 11.16% to its shareholders.

Steppe Cement Ltd (LON: STCM)

The company, along with its subsidiaries is engaged in the production and sales of cement. It carries out its operation through its four wet kilns and dry kilns located in Kazakhstan. It also provides consultancy services to other businesses and does operations in the transmission and distribution of electricity.

The company reported revenue of KZT 12,045 million, a rise of 8% in the third quarter ended 30 September 2021. Higher revenue was attributed to the rise in cement prices in the market. As a result, the company posted a sales volume of 535,200 tons during the period, while the average realised price was at KZT 20,947 per tonne compared to KZT 18,841 per tonne last year. Also, the company exported 1.4 million tonnes of cement from Kazakhstan and estimates future demand for cement to increase in Kazakhstan to 11.2 million tonnes in 2021, a rise of 24% above 2020.

Steppe Cement Ltd’s current market cap stands at £98.55 million, while its dividend yield is at 5.6% as of 12 October 2021. In the last one year, the stock has given a return of 66.36% to its shareholders.

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