Italcementi FY sales to rise on improved H2

Italcementi FY sales to rise on improved H2
Published: 03 February 2006

Italcementi SpA’s full year sales, due out today, are expected to rise because of the impact of stronger Italian operations and of international expansion, analysts said. Sales are seen at Euro 4.777-4.968bn, against 2004’s Euro 4.528bn, analysts said. One said the consensus is Euro 4.943bn. This range implies fourth quarter sales of Euro 1.056-1.247bn.

’Italy has recovered very well in the second half and the positive trend is continuing. Prices are going up, and have returned to the level at the end of 2004,’ said a Milan-based analyst. He said the impact of higher energy and transport costs is becoming less of a factor as rises in these costs have slowed.

Outside Italy, the results will benefit from two acquisitions made during 2005 in Egypt, which will contribute for the full year in 2006. ’I expect further acquisitions in the Middle East and Mediterranean region, including in Turkey in 2006,’ the analyst said.

Italcementi could make another purchase in Saudi Arabia, after the one it carried out in 2005, and could look again at Turkey, after rejecting privatisation opportunities there in 2005 as too expensive, he said.

Exane BNP Paribas, which has the lowest sales forecast in the AFX range, said the Italian activities were ’disappointing’ in the fourth quarter, with November and December volumes hit by bad weather. ’December volumes were down more than 12 per cent year-on-year,’ it said.

’We have also adopted a more cautious scenario for 2006 cement volumes in Italy -- down 1.5 per cent as for Buzzi Unicem to reflect the potential decrease in infrastructure spending,’ it said. Government public works projects have supported cement sales in the past.

Exane, along with Milan-based analysts, said Italcementi faces a shortfall in carbon credit allowances under a government scheme to limit carbon dioxide emissions, compared to other cement producers. One Milan analyst said this could cost Euro 24m per year.