Vassiliko declares higher profit, merger receives approval

Vassiliko declares higher profit, merger receives approval
Published: 21 November 2007

Vassiliko Cement Works Pcl posted another strong set of results with net profit in 9M07 reaching EUR11.8m up 9.3% YoY on the back of satisfactory growth in total sales from cement and clinker, (price and volumes increases), and further cost savings.
Total sales increased 9.3% YoY to EUR 67.3m driven by increased local sales (up 19.2% YoY), while exports fell significantly by 71.8% YoY. Despite the significant improvement in local quantities sold (993k tones: up 14.8% YoY), total quantities of cement and clinker sold decreased to 1044,000t (-3.8% YoY), due to the significant reduction in export sales.  
Gross profit advanced by 9.6% YoY to EUR 17.6 mln. Despite the higher energy, petcoke prices and depreciation charges (+33% YoY), gross profit margin improved by 10bps to 26.2% due to changes in sales mix towards the higher yielding local sales as well as other cost savings efforts.  

Meanwhile, the Commission for the Protection of Competition concluded that the agreement between Vassiliko Cement Works and the  Cyprus Cement Company Pcl (CCC), is not against competition but it remains subject to certain conditions and guarantees undertaken by the two parties.  
The CPC came to the decision despite opposing views from the Attorney General’s office on the matter as it rules that if the two parties undertake to meet all the obligations set out in the previous agreement, then the deal can proceed.  
The two parties have given the following binding terms: Freeze of cement prices for the next 2 years (up to 31 March 2009); The partial coverage of any subsequent increases in production cost of following the 1st April 2009 until the full operation of the new production unit at the Vassiliko area; Reduce their combined market share in the production of ready-mix concrete in Paphos; VCW and CCC would not be allowed to import cement, except in the case where demand is in excess of supply and no alternative solution is available; No restrictions should be imposed to the usage of the Vassiliko port by third parties and no tension should be created in the event that the port at the Vassiliko area is leased to a third party to import cement; The continuous supply of cement to existing or potential clients without any special treatment to any of the companies/clients involved in terms of quality or pricing.