Italcementi sees continued short term price pressures

Italcementi sees continued short term price pressures
Published: 10 May 2010

Italcementi’s first quarter turnover was off by 10.7% to €1,072.5m, while the running EBITDA fell by 28.2% to €135.7m and the trading profit dropped by 63.0% to €23.9m.  At the pre-tax level, there was a swing from a €36.9m profit into a €12.3m loss and the net loss widened from €12.7m to €37.5m.  The net debt at the end of March was reduced by 12.2% to €2,360.7m to give a gearing level of 48.5%, down from 57.8% a year earlier.  The sale of emission rights yielded €3m in the quarter and further sales are likely during the year.

Cement and clinker sales were 5.0% lower at 12.3Mt, though international trading activities increased volumes by 64% to 1.2Mt and boosted turnover by 31.6% to €64.7m, helped by increased inter-group sales in the direction of Egypt, and its EBITDA improved by 16.4% to €3m.

Western European, cement and clinker volumes declined by 9.5% to 4.14Mt with Italian shipments being down by 0.2Mt to 1.9Mt. The Italian cement and clinker volumes fell by 7.4%, which was a better performance than the market, but prices continued to weaken, in part offset by lower fuel prices and lower overheads.  Turnover in Italy fell by 14.6% to €160.2m and a €6.6m loss was incurred at the EBITDA level.  In France and Belgium, turnover declined by 9.4% to €325.9m and the EBITDA fell by 21.4% to €42.6m, with cement volumes being down by 10.2% in France and by 18.5% in the Benelux. In Spain, turnover fell by 21.4% to €44.3m, but thanks to cost control and a lower fuel bill the EBITDA actually improved by 20.5% to €8.8m with, volumes being down by 17.4% in cement, by 17.2% in aggregates and by 25.6% in ready-mixed concrete.  In Greece, turnover was down by 9.5% to €17.3m, though cement volumes were maintained, thanks to increased exports.  

Egyptian revenues were off by 2.0% to €213.7m as power cuts disrupted production, which was running at capacity, and domestic deliveries were still 1.5% ahead and Italcementi imported clinker from other parts of the group to satisfy demand, in particular during kiln repairs. 

Asian sales declined.  This was particularly the case in India, where turnover fell by 20.2% to €39.5m and the EBITDA dropped by 60.8% to €8.0m.  Competitive pressures have increased in Southern India, but domestic cement and clinker volumes improved by 3.8% in the quarter and clinker production started at the Yerraguntla works in late March.  Prices appear now to have stabilised at lower levels.

The North American turnover declined by 17.4% to €61.5m and the EBITDA loss widened from €9m to €17.1m.