Vassiliko Cement Works posted a strong set of 1Q06 results with Net Profit reaching CYP 1.89m (+4.0% YoY), slightly above our estimate of CYP 1.99m. The main drivers of profitability were the satisfactory growth in total sales of cement and clinker (+7.8% YoY) driven mainly by higher prices rather than volumes, Egnatia Financial Services (Cyprus) reports.
Total quantities of cement and clinker sold increased to 359,000t vs. 312,000t in 1Q05, (+15.1%YoY). Local quantities of cement and clinker sold decreased to 277,000t vs 282.000t in 1Q05 (-1.8% YoY), whilst VCW’s export sales marked a sizable increase to 81,000t (vs. 30,000t in 1Q05).
Average sale price for local sales of cement improved to CYP 35.4 per ton (vs CYP 33.4 per ton in 1Q05), whilst the average selling price of export of cement and clinker hiked to CYP 19.6 per ton vs CYP 17.5 per ton in 1Q05 and CYP 18.4 per ton in FY05.
Despite the increase in gross profit in absolute terms by 5.5% YoY, gross profit margin fell by 220bps to 26.3% amid increasing energy prices as well as a change in sales mix towards the lower yielding export sales. Rising energy prices contributed to the increase in operating expenses from CYP 1m in 1Q05 to CYP 1.2m in 1Q06.