Italcementi Q1 net flat to lower

Italcementi SpA’s first quarter net profit, due Wednesday, will be flat to lower, due to poor weather in Italy and other European countries, and higher energy costs, analysts said. Net profit is seen at 25.2-31.5 mln eur, against 31.3 mln, while operating profit will be 84.6-108.0 mln, against 99.7 mln, with EBITDA coming in at 180-185 mln, from 194.7 mln, and sales 978 mln-1.0 bln, from 1.005 bln, they
said. 

The most significant factor to impact Italcementi and all the other cement companies is the bad weather, said one Milan-based analyst. In Italy and France bad conditions have stopped the opening of works and this impacts volumes. This will have an impact on margins, he said. While the good thing is the US, where although the exchange rate is still negative, volumes and prices will guarantee a good return,’ he said.

Energy costs remain another negative factor, with these increasing 10-15 pct from a year earlier, he said. Italcementi has been less able to offset higher oil costs by using alternative fuels, such as industrial waste, since the price of these alternatives has also risen, he said.

On transport costs, this analyst said the reported Euro 6.5m purchase by Italcementi of a ship to carry cement around the Mediterranean is a good first step towards achieving greater savings. The idea of a small fleet can be interesting, also because Italcementi has a lot of exposure in a lot of ports in the Mediterranean in Italy, France, north Africa and Turkey,’ he said.

Another Milan analyst, said the weak first quarter should ’not be overplayed: in our view the slowdown of volumes in Italy... might be
recovered starting in the second quarter. In France, there has been a 3.0-3.5 per cent price increase in the first quarter, despite a 5.6 per cent volume fall, he said, adding that this volume fall can be offset during the rest of the year. In Italy, first quarter sales are seen down 6 pct, while in the US they will be up 7, it said, without further details.