Cement industry in Chile: CBB and its look to the future

Abstract

In 2019, Cbb (previously known as Cementos Bío Bío) was one of the main companies dedicated to the production of cement, concrete and lime. It had the largest logistics coverage in Chile and the largest installed production capacity with 3.5 million tons of cement per year and a dispatch of 1.3 million tons. It employed more than 2,800 collaborators, of which 1,344 provided services as contractor companies. Its annual sales for 2019 had been 263,182 million pesos (MM $), which allowed it to generate a net operating result of MM $ 13,104 and an EBITDA of MM $ 36,321. Cbb had managed to position itself in the industry thanks to its long history in the market and its innovative vision in creating high quality products by reusing waste such as slag and ash.
 Until 2010, the cement industry in Chile had had three major participants: Melón S.A., Cemento Polpaico S.A. and Cbb. All three companies operated under a traditional business model that ranged from the extraction of raw materials in their own mines to their dispatch. In 2011, Chile no longer only produced cement, but also imported it, as a result of low freight costs and lower cement prices due to overproduction in countries such as South Korea, China and Japan. These new conditions allowed other competitors to enter the industry with a different business model based on the import of cement for the production of concrete or the import of clinker (Substance obtained as a result of kiln calcination of limestone mixtures artificially prepared clays with the eventual addition of other materials) installing cement grinding plants. Clinker was one of the key raw materials that was in the middle of the cement production chain, which was obtained from the calcination of limestone. As clinker was imported, it was no longer necessary to have limestone mining deposits.
 At the end of 2019, the General Manager, who had arrived at the company on January 1, 2018, had to propose to the Board of Directors the focuses to work to continue with the implementation of the Transforma 2021 Strategic Plan. The plan included a set of six initiatives with those seeking to renew the company given the changes that were already beginning to be reflected in lower financial performance. Two years after evaluating the implementation and results obtained, the General Manager sought to define the work focuses for each of the initiatives. Could changes in the industry affect a consolidated and long-standing company like Cbb? Where should you direct your effort to achieve the goals and expected results in the plan? Would the Transform 2021 Plan succeed in taking Cbb where they expected?