Buzzi 2011 advance restrained by Italy & USA

Buzzi 2011 advance restrained by Italy & USA
Published: 04 April 2011

On a turnover that was off by just 0.9% to €2648.4m in 2010, Buzzi Unicem’s underlying EBITDA was almost stable (-0.3%) at €540.2m. 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 attributable loss for the year amounted to €63.5m compared with a €139.5m profit.

Overall cement volumes improved by 4% to 26.6Mt and by 3.5% to 14.4Mm³ in ready-mixed concrete.
Italian cement deliveries improved by 5.5%, thanks to revived exports and clinker sales.

In the company’s domestic market of Italy, demand fell for the fourth year in a row and cement prices fell by more than 22%. 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 and by 4.9% in ready-mixed concrete. Cement deliveries were 0.4% ahead at 4.8Mt. With an improving German economy, and a better result is expected for 2011.

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 7.0% to €33.4m. Cement deliveries rose by 7.2% to 1.50Mt. In the Czech Republic and in Slovakia, turnover was down by 9.3% to €159.4m and the EBITDA fell by 25.8% to €32.8m. Cement volumes declined 6.1% to 0.76Mt. Volumes in these two countries are not expected to pick up materially until 2012. 

Ukrainian turnover improved by 8.3% to €81.5m, helped by a 5.5% currency appreciation, but a €7.2m 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 begun to pay off, although initially beset by some teething problems. Cement shipments improved by 11.1% to 1.53Mt. The excess capacity available in the country led to weaker prices and the average price achieved came off by 9.9% in cement and by 4.6% in ready-mixed concrete.

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%. 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 6.27Mt, 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 expected to deteriorate any further, but commercial building activity may yet have further to fall.

The 50%-owned Mexican associate Corporaciòn 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.