Cimpor suffers sharp drop in Spanish profits

Cimpor suffers sharp drop in Spanish profits
Published: 29 May 2008

Cimpor said first-quarter net profit to March decreased 14 per cent to EUR57.6m compared with the first quarter of 2007.

In a statement, the cement maker said EBITDA came in at EUR134.3m, down 4.7 per cent YoY, at the bottom end of estimates for YoY133-141.6 million euros.

Cimpor said that EBITDA was hit by the continued fuel price increases and a decrease in cement consumption in its core markets of Portugal and Spain – which jointly account for about 50 per cent of the group’s EBITDA.

However, it added that improvements in its operations in Morocco, Egypt and Brazil capped EBITDA losses.

Meanwhile, the group said that its EBITDA margin decreased to 28.9 per cent from 33.3 per cent in the first quarter of the previous year, partly due to the integration of its operations in Turkey and China, which have EBITDA margins below the group’s average.

Revenue increased 9.9 per cent YoY to EUR465.2m. The group said that its acquisitions in Turkey and China contributed about 26.5 million euros to the increase in turnover.

It added that all of its business areas – with the exception of Spain, Portugal and Tunisia, which declined – registered significant growth in turnover.

Looking ahead, Cimpor said that it sees an improvement in the group’s EBITDA for the end of 2008.

It said that even though the outlook for the Spanish market is not encouraging, some degree of recovery is expected for cement consumption in Portugal. That factor, together with the integration of its recently acquired Indian operations, expected higher sales in Tunisia, Brazil and China as well as the normalisation of operating conditions in its Spanish plants plus the start-up of a new cement kiln in a South Africa plant allow it to forecast the improvement, it added.

At the end of March 2008, net debt increased slightly over 10 per cent to EUR1.5bn, compared to December 2007, as a result of investments such as the acquisition of Indian company Shree Digvijay.

The group’s net assets decreased 3.3 per cent to EUR4.7bn in the same period due to a devaluation of local currencies against the euro in almost all the markets where it operates.