Buzzi Unicem

Buzzi Unicem's underlying EBITDA was virtually stable (-0.3%) at €540.2m on a turnover that was off by just 0.9% to €2648.4m. Once the €150.9m impairment charge on the Oglesby, Illinois cement works, other exceptional and extraordinary charges are taken into account, the trading profit (EBIT) was virtually eliminated to stand at just €0.3m. The net interest charge was 3.7% higher at €103.6m and a pre-tax loss of €102.1m was produced, compared with a  €235.2m profit in 2009. The net attributable loss for the year amounted to €63.5m compared with a €139.5m profit. Net debt at the end of the year was 4.8% higher at €1266.9m, while shareholders' funds were 3.4% higher at €2803.7m, giving a slightly improved gearing level of 45.2%. Cement volumes did improve by 4.0% to 26.6Mt.

Italian cement deliveries improved by 5.5%, thanks to revived exports and clinker sales. Domestic demand fell for the fourth year in a row and cement prices fell by more than 22%. Turnover declined by 13.1% to €614.2m and the EBITDA dropped by 64.9% to €32.5m in spite of a 59.8% rise in receipts from the sale of emission rights to €31m. No recovery is expected in construction activity is being envisaged this year, and any benefits from price improvements are likely be absorbed by higher energy costs.

The German turnover did improve by 3.9% to €548.5m, but ignoring the increased sphere of consolidation, there was an underlying 2.5% decline. Higher fuel costs provided the main reason for a 6.2% decline in EBITDA to €76.3m. Prices were down by 3.1% in cement but cement deliveries were 0.4% ahead at 4.8Mt. With an improving German economy, a better result is expected for 2011. In Luxembourg, the turnover improved by 11.3% to €92.3m and the EBITDA rose by €16m to €16.4m, with cement shipments rising by 7.8% to 1.08Mt. The Dutch turnover, which is largely downstream, emerged 0.5% higher at €113.2m, but the EBITDA fell by 51.9% to €3.8m.

The Polish operations benefited from a recovery in the zloty, leading to a 6.8% increase in turnover to €129.3m in spite of a 7.5% fall in local currency and the EBITDA rose by 7% to €33.4m. Cement deliveries were up by 7.3% to 1.5Mt, but prices declined. Further volume increases are expected this year. In the Czech Republic and in Slovakia, turnover was down by 9.3% to €159.4m and the EBITDA fell by 25.9% to €32.8m as cement volume declined by 6.1% to 0.76Mt.

Ukrainian turnover improved by 8.3% to €81.5m, helped by a 5.3% currency appreciation, but a €10.5m loss was incurred at the EBITDA level. After a weak start to the year, volumes began to improve and with the increase in gas prices, the investment in the coal mills at both the Yug and Volyn works has already started to pay off, although initially beset by some teething problems. Cement shipments improved by 11.1% to 1.53Mt, but the excess capacity available in the country led to weaker prices and the average cement price achieved was off by 9.9%.

In Russia, cement production at the Sochoi Log works rose by 35.1% to 1.82Mt in 2010 and the dry-process kiln was commissioned. The results were boosted on translation by a firmer rouble and turnover advanced by 25.6% to €124.1m, but without the exchange rate effect the rise would have been limited to 14.6%. Competitive pressures and higher fuel costs saw the EBITDA decline by 5.7% to €39.7m as the margin dropped from 46.0% to 34.6%. A new cement terminal should come on-stream at Omsk this year. Increased construction activity is expected to boost volumes this year, with further benefits flowing through from the new kiln as it settles in.

Turnover in the United States declined by 1.9% to €600.9m, after an exchange rate-related boost of €29.8m, while the adjusted EBITDA fell by 24.0% to €99.7m as plant under-utilisation depressed profitability. Cement shipments declined by 1.3% to 6.28Mt, with average selling prices falling by 8.8%. No more than a modest improvement, at best, can be expected for 2011, with civil engineering and housebuilding not envisaged to deteriorate any further, but commercial building activity may yet have further to fall.

The 50%-owned Mexican associate Corporación Moctezuma generated a turnover increased by 5.3% in local currency, which translates into an 18.3% rise in euros to €213.4m and the EBITDA, while declining by 1.7% in pesos, actually rose by 10.4% on translation to €77.2m. Cement deliveries improved by 2.1% to 4.9Mt, while prices edged ahead by 0.3%. The new 1.3Mta plant, which came on-stream last November, should boost volumes this year in a market that should be stimulated by increased public works ahead of the presidential elections in mid-2012.