Buzzi hit by weaker Russia, Ukrainian, US & Italian markets

Buzzi hit by weaker Russia, Ukrainian, US & Italian markets
Published: 24 March 2010

On a turnover that declined by 24.1% last year to €2,671.8m, Buzzi Unicem’s EBITDA fell by 41.3% to €541.7m and the trading profit was down by 53.7% to €323.0m.  After net interest charges 50.6% higher at €99.9m, the pre-tax profit dropped by 63.8% to €235.2m and the reduction at the net attributable level was 64.7% to €139.5m.  Net debt at the end of 2009 was 14.1% higher at €1,209.3m, while shareholders’ funds were 0.3% ahead at €2,712.2m, giving a gearing of 44.6%.   Volumes declined by 20.4% to 25.5m tonnes in cement and by 18.3% to 13.9m m³ in ready-mixed concrete.

In Italy, domestic cement deliveries declined by 15.2% and exports dropped by some 60%, giving a total volume reduction in cement 16.4%, while prices also suffered from the weakness of the market and fell by an average 6.0%.  In ready-mixed concrete volumes were down by 13.7%, while prices eased by just 0.4%.  The turnover declined by 16.9% to €706.6m and the EBITDA fell by 35.4% to €92.7m in spite of the sale of emission rights for €19.4m.  A further weakening of construction activity is being seen this year, leading to renewed pressure on volumes and margins.

The German turnover declined by 11.2% to €528m.  Price improvements of 7.0% in cement and 8.5% in ready-mixed concrete were countered by a 22% rise in electricity costs and to a 13.2% improvement in EBITDA to €116.3m, became a 20.5% reduction to €81.4m one non-recurring items are stripped out.  German prices are only expected to be maintained this year, with volumes declining, perhaps by as much as 5%.  In Luxembourg the turnover declined by 7.1% to €83.0m as lower volumes weighed more heavily than higher prices and the EBITDA was off by 18.9m to €14.1m.  The Dutch turnover declined by 15.2% to €112.7m and the EBITDA fell by 36.9% to €4.5m.  This year, volumes are expected to be stable in Luxembourg, but a little weaker in The Netherlands.  

The Polish operations had to cope with lower volumes and a weaker zloty, leading to a 34.1% reduction in turnover to €121.1m.  After increases in electricity and kiln fuel costs of 37% and 22% respectively, the underlying EBITDA fell by 45.9% to €37.9m.  Polish cement volumes are expected to increase by some 6% to 7% this year, but prices are expected to decline on the back of increases in capacity and falling demand in neighbouring countries.  In the Czech Republic and in Slovakia, volumes were weaker, as was the Czech currency, and turnover fell by 32.6% to €175.7m while the EBITDA emerged 39.6% lower at €44.2m.     

Local prices in the Ukraine declined by 4.3% in cement and by 6.6% in ready-mixed concrete, but the local currency depreciated by 44.8%, leaving turnover 64.0% lower at €75.3m and a €4.5m loss was incurred at the EBITDA level.  Ukrainian cement demand, which dropped by 35.3% last year to 9.0m tonnes, is expected to decline by a further 0.5Mt this year, but the bottom line should benefit from lower fuel costs as coal mills are being commissioned this spring at both the Yug and Volyn works, enabling a switch from imported gas to domestically produced coal.  In Russia, group cement production fell by 40.8% and prices in local currency were 28.1% below the previous year’s average and are now down to international levels again.  Although the EBITDA fell by 75.7% to €42.1m, the sales margin of 42.6% remains attractive and is the highest in the group.  The dry kiln that is being assembled at the Suchoi Log works should be commissioned this summer and a new cement terminal should go on stream next year, but work on the new cement works at Akbulak, on which €35m has been spent to date, has been postponed until further notice.