Titan suffers from weak domestic market

Titan suffers from weak domestic market
Published: 11 November 2011

Titan’s turnover for the first nine months of 2010 declined by 18.4% to €838.9m and the EBITDA came down by 15.5% to €219.8m as the company suffered from weak Greek sales both in terms of domestic deliveries and exports. EBITDA fell €32.7m in Greece and by €11.0m in the USA and the group pre-tax profit fell by 37.2% to €74.5m.  This was after a substantial increase in the proceeds from the sale of emission rights from €8.8m to €52.9m, with most of that coming from Greece and a more modest contribution from Bulgaria. 

Net attributable profit dropped by 46.2% to €52.9m, in part influenced by higher minorities. Net debt at the end of September was 12.0% lower than a year earlier at €7863m. Capital expenditure during the nine months fell by a further 28.3% to  €42.0m, having already been more than halved in the corresponding period last year.  

Shipments of cementitious materials declined by 11.5% in the nine months to 11.6Mt while aggregates sales, which are mainly in Greece and the United States, fell by 18.8% to 8.2Mt. Deliveries of ready-mixed concrete were down by 7.5% to 2.72Mm³, as the advance in Turkey could not make up for the very substantial drop in Greece.  

Greece lost its position as the largest source of turnover to the United States and in terms of profitability both the Eastern Mediterranean and South Eastern Europe rank well ahead of Greece. Greek and Western European turnover fell by 36.4% to €210.3m, which represented just 25.1% of the group total, its lowest share ever. The area EBITDA dropped by 43.4% to €42.7m, or only 19.4% of the group total. Domestic deliveries have been by around 35% and prices have weakened somewhat. Export volume has dropped even more sharply because of the virtual elimination of exports to North Africa and third quarter capacity utilisation was at a record low.  Capacity utilisation currently stands at only some 35- 40%, but gross margins have been supported by the sale of carbon emission rights not required in the current environment.  However, Titan seems confident in its ability to increase exports again in 2012 as Libya resumes imports and scope for additional exports appears to be there in West Africa and Russia.  The Greek downstream operations have also seen volumes fall dramatically.

South Eastern Europe represented 21.9% of turnover and 33.4% of EBITDA.  Turnover edged ahead by 1.2% to €183.2m and EBITDA by 1.1% to €73.4m.  Average cement sales advanced by some 5% across the region, but cement prices are below the level they were a year ago, but have generally been improving since the early part of the year. Cement prices in Albania and in Macedonia, however, are higher than they were a year ago.  An investment in alternative fuels in Bulgaria, using municipal waste, is helping to reduce the carbon footprint there.

The US turnover declined by 7.5% to €229.4m to represent 27.4% of the group total.  The EBITDA went from a positive €6.8m to a loss of €4.3m, as the level of economic activity remained weak. However, the Separation Technology subsidiary, which provides fly ash processing, continued to grow profitably, with turnover increasing by some 15%. US prices have stabilised and overall volumes are very slightly ahead, but Florida remains a very difficult market and remains in recession.

The Eastern Mediterranean region saw turnover decrease by 19.8% to €215.8m as both the Egyptian and Turkish currencies weakened against the euro.  The EBITDA, however, improved by 2.5% to €108.1m to account for 49,2% of the group total. The Turkish associate is benefiting from the strength of the construction activity in the country on the back of a growing economy. As a result, the company is producing at capacity. In Egypt, volumes weakened in the third quarter and are currently off by some 9% in the year to date in an environment currently lacking economic stability, and has also seen the coming on stream of additional capacities, leading to pressure on prices.