Spain and Turkey hurt Cimpor’s results

Spain and Turkey hurt Cimpor’s results
Published: 27 November 2008

Cimpor’s turnover for the first nine months increased by 7.9% to EUR1,580.3m, but a 13.9% increase in operating costs left the EBITDA 4.9% lower at EUR444.23m.  Financial charges more than tripled to EUR133.6m, leading to a 42.5% drop in the pre-tax profit to EUR168.2m. 

However, the financial charges include a
EUR60m write-down on financial assets by an associate that is completely unrelated to the cement industry. Net debt at the end of September stood at some EUR1,650m, giving a gearing of just over 93%. Volumes were ahead in all product categories, helped by additional capacity being consolidated. Cement shipments were 11.3% higher at 20.3Mt, aggregates deliveries increased by 8.9%, ready-mixed concrete volumes by 3.9% and mortar volume by 5.8%.   

The Portuguese turnover declined by 0.6% tot
EUR416.3m and the EBITDA was off by 2.1% to EUR129.0m. While the Portuguese construction market remains depressed, the figures for the third quarter show an improvement on the first half. In Spain, turnover dropped by 20.4% to EUR286.3m in the face of the sharp drop in housebuilding activity and no real relief from other segments of the construction industry, with the EBITDA falling by 39.9% to EUR67.0m. As a result, the profit contribution from Spain fell to below that of Brazil to be only the third largest contributor.

Higher volumes and prices and with all three production lines in operation, the Egyptian turnover rose by 28.3% to €115.8m and the EBITDA advanced by 19.6% to
EUR52.7m, with margins being the second highest in the group at 45.5%.  Morocco over took Egypt in terms of margins and achieved 46.9%.   The Moroccan EBITDA increased by 14.4% to EUR32.5m on a turnover some 11% higher at EUR69.3m.   The Tunisian margins suffered from the need to import clinker and the EBITDA fell by 21.8% to EUR13.2m on a turnover that was marginally lower at EUR46.8m. In Turkey, falling prices hit profitability hard, with the EBITDA dropping by 58.8% to EUR14.4m in spite of consolidating the business for the full nine months as against only six months last year and even the actual turnover was lower.  The increase in capacity that is under way may lead to a further deterioration over the next year or so.

The previously very difficult Brazilian market has started recovering strongly on the pricing front.  Turnover in Brazil rose by 31.4% to
EUR304.0m and the EBITDA forged ahead by 52.4% to €75.4m.   The commissioning of the new kiln at the Simuma works in South Africa has led to improving results, but the EBITDA for the nine months was still 1% down at EUR32.5m on a turnover that was about 8.5% ahead at EUR103.5m. 

In Mozambique, the EBITDA improved by 9.2% to
EUR11.1m on a turnover of EUR54.7m.  The comparatively small business on the Cape Verde Islands further improved its return, increasing the EBITDA by 32.1% to EUR3.5m.  The recent entries into the Chinese and Indian markets achieved EBITDA contributions of EUR5.5m and EUR1.3m respectively and both have the lowest margins within the group.  The international trading activities managed to achieve a 9.1% improvement in the EBITDA to EUR5.4m.