Weak private sector leads to continued pressure on Vulcan

Weak private sector leads to continued pressure on Vulcan
Published: 05 May 2010

Vulcan Materials’ first quarter turnover declined by 18.0% to US$493.3m and the EBITDA fell by 39.3% to US$58.8m.
 
At the trading level the loss widened from US$1.3m to US$36.8m.  With the net interest expense edging up by 0.4% to US$43.3m, the pre-tax loss widened by 72.8% to US$78.7m and the net attributable loss for the period was 18.2% higher at US$38.7m.  Net debt at the end of the period was 1.5% higher than a year earlier at US$2365.2m, giving a gearing of 58.2%.  Capital expenditure was reduced by 22.9% US$19.8m.
 
Aggregates shipments in the quarter declined by 14.4% to 24.89Mt (27.43Mst), though the average price improved by 0.9% to US$11.41/t (US$10.35/st) and the aggregates turnover was off by 15.1% to US$341.3m.
 
Ready-mixed concrete volumes were down by 18.8% and prices by 12.3%, while asphalt deliveries declined by 9.2 and prices by 10.3%%.
 
Full year ready-mixed concrete volumes are expected to be stable, but prices may continue to drift because of the excess capacity.  In asphalt, prices and volumes are expected to be little changed, though higher input prices may put pressure on margins.   Vulcan’s cement volume actually increased by 3.6% to 0.16Mt thanks to an 11.9% rise in third party sales more than making up for a reduction in volumes going to the ready-mixed operation.  The average cement price declined by 12.0% to US$94.05/t (US$85.32/st) and the cement turnover was off by 9.1% to US$17.9m.  A lower cost base led to a return to a profit at the gross level of US$0.6m compared with a loss of US$1.3m last time.  For the full year, the cement business is expected to return to a modest profit.