Florida holds back Titan

Florida holds back Titan
Published: 01 November 2007

For the first nine months of the year, Titan’s turnover declined by 3.7% to EUR1,143.8m and the EBITDA was off by 6.7% to EUR341.8m.  Net debt at the end of September was 35.0% higher at EUR529m on the back of acquisitions, notably in the United States, and capital expenditure. As a result, the net interest charge was 27.7% higher at EUR24.0m and the pre-tax profit fell by 16.0% to EUR248.2m. The lower US profitability, notably in Florida, led to a reduction in the tax rate and the decline in the net profit was limited to 9.5% to EUR193.3m.  Cement shipments declined by 3.9% to 11.70Mt, while deliveries of aggregates were off by 10.3% to 15.12Mt and of ready-mixed concrete by 3.5% to 4.38Mm³.   The reduction in US cement demand led to a shifting of export shipments out of Greece from the United States to West Africa and to Albania.
Greece and Western Europe provided a turnover that was 6.1% higher at
EUR468.6m and the EBITDA advanced by 8.4% to EUR152.0m.  The Greek domestic cement and downstream volumes declined compared with the exceptionally strong shipments seen in the previous year, as housebuilding activity cooled down.  Kiln fuel costs have continued to rise and Greek cement prices were raised by an average 4%.   Higher freight rates also hat a negative effect on the Greek profitability.
The lower return from the United States reflects not only the deterioration in the housebuilding industry buy also the prohibition of mining on a major part of the Pennsuco quarry that supplies the cement the Pennsuco cement plant, pending an environmental impact study.  Contingency plans have been implemented to ensure production at the cement plant, while aggregates are having to be bought from third parties at no more that a modest margin. 

A decision on the future of extraction in the Lake Belt area is expected to be taken by the Federal authorities in the first quarter of next year.  The US turnover declined by 16.2% to
EUR466.9m, though in dollar terms the reduction was a more modest 9.7%, while the EBITDA fell by 37.1% to EUR90.7m.   In spite of the deterioration of demand, cement prices are ahead in dollar terms in all markets and price increases have been announced from January of US$10 per short ton in Florida and of US$6 per short ton further north. The impact of the reduction in ready-mixed concrete volumes has been limited by the acquisition downstream operations in North Carolina and in South Carolina and deliveries of cement to customers outside the housebuilding industry are still ahead.