Cement majors benefit from milder European winter

Cement majors benefit from milder European winter
Published: 02 May 2011

Q1 2011 results have benefitted from the milder weather in Europe, particularly in Central and Eastern Europe. Conversely, margins have been under downward pressure, due to higher energy costs, with offsetting price increases typically not being implemented until April.

Analysts at Jeffries note that Q1 11 EBITDA forecast for Holcim is nine per cent below consensus, reflecting the negative impact of the stronger Swiss Franc and the decline in the Indian contribution.

The major European headquartered cement companies mainly report their Q1 11 results later this week. Holcim is due to report on Wednesday 4 May, HeidelbergCement, Lafarge and Titan due to report on Thursday 5 May and Italcementi on Friday 6 May. Buzzi Unicem follows a week later on Friday 13 May.

National data on cement consumption in the main countries in Europe show increases in Q1 11 over Q1 10 of 50.6% in Germany, 45.2% in Poland and 19.1% in France. Cemex reported increases in its European sales volumes in Q1 11 on Q1 10 of 25% for cement, 29% for ready-mixed concrete and 21% for aggregates. The particularly large boost from milder weather to Q1 11 volumes in Central and Eastern Europe is one of the main reasons for the expected larger increases in the Q1 EBITDA of Buzzi and HeidelbergCement.

Jeffrries is forecasting increases for Buzzi, HeidelbergCement and Lafarge. Conversely, while it expects Holcim, Italcementi and Titan to report lower EBITDA’s in Q1 11 than in Q1 10.