Lower profits in Italy and Turkey hit Italcementi

Lower profits in Italy and Turkey hit Italcementi
Published: 10 November 2008

Italcementi’s underlying turnover for the first nine months improved by 3.5% to €4419m, though in absolute terms there was a 4.2% reduction because of the non-consolidation of Calcestruzzi, and the running EBITDA declined by 18.5% to €906.0m. The trading profit fell by 26.5% to €577.8m and the net profit by 30.2% to €325.2m, with the profit from associates being hit by a reduced profit from Vassiliko Cement on Cyprus.  The net debt at the end of June stood at €2,581.4m, which represents a gearing level of 55.0%.  Cement and clinker shipments in the period declined by 1.4% to 48.3Mt.  Underlying sales of aggregates were off by 4.2% to 36.9Mt, mainly because of lower volumes in Spain, while ready-mixed concrete deliveries emerged 3.6% lower at 10.8Mm³.  
 
Cement and clinker volumes in western Europe declined by 5.3% to 18.51Mt, largely because of lower volumes in Spain and Italy.  Ignoring the currently de-consolidated Calcestruzzi, aggregates shipments fell by 5.1% to 33.87Mt and ready-mixed concrete deliveries by 8.7% to 5.73Mm³.  Italian cement volumes fell in response to the reduction in construction activity, though cement prices improved, but not sufficiently to cover both the increased costs and falling volumes as well as rationalisation costs and the EBITDA fell by 40.7% to €92m on a turnover that was ahead by an underlying 2.4% to €942m.  The French cement demand eased in the third quarter, having suffered from industrial action earlier in the year.  However, better prices helped both the cement and downstream operations and the turnover improved by 3.2% to €1,242m, but the EBITDA declined by 5.1% to €259m.  The weakening of the Spanish market led to a 14.8% reduction in turnover to €161.7m, but the lower costs of the new Malaga cement plant limited the profit reduction to 17.3%.   The weaker markets in Spain saw turnover there decline by 14.9% to €237m and the EBITDA dropped by 16.7% to €58m. While cement prices rose in the north of Spain in response to higher energy costs, they weakened in Andalusia. Turnover rose in Belgium and, to a lesser extent, in Greece, but not sufficiently to cover the rise in costs and profitability declined. 
 
Turnover from the Mediterranean and Black Sea regions rose by 12.3% to €1,014m, but the EBITDA declined by 9.2% to €307m as Turkey saw turnover fall by 14.7% and the EBITDA drop by 76.8% in an over-supplied market, reducing the EBITDA to just €9m. Area cement shipments were off by 2.8% to 15.64Mt.  Egypt is, by far, the main source of turnover and profit.  The Egyptian sales figure rose by 18.8% to €479m and the EBITDA grew by a modest 3.0% to €181m as higher energy costs reduced the still comparatively high margins.  Turnover in Morocco rose by 10.2% to €235m, but higher energy costs and the need to by in clinker led to a 12.2% fall in the EBITDA to €72m.  In Bulgaria, both volumes and prices continued to strengthen with turnover rising by 14.6% to €127m and the EBITDA advancing by 12.2% to €44m.