Buzzi Unicem improves its margins

Buzzi Unicem improves its margins
Published: 29 March 2005

On an underlying 1.8% increase in cement sales to 31.9Mt, the Buzzi Unicem group has reported a 7.4% increase in the operating profit at the EBITDA level to €710.6m.  This compared with a corresponding increase in turnover of 2.7% to €2,771.6m.  At constant exchange rates, turnover rose by 6.4% and EBITDA by 12.5%.    The running profit before tax improved by 6.0% to €326.4m, in spite of higher pension provisions in the United Stated and in Germany but the net interest charge was little changed at €100.9m.  Net debt at the end of the year stood at €1,260.8m to give a gearing level of 60.9%.

Italian margins narrowed as EBITDA advanced by only 1.8% to €262.9m compared with a 2.9% increase in, turnover to €965.8m as higher electricity, kiln fuel and freight costs had to be absorbed.  However, a lower contribution from ready-mixed concrete was more that offset a higher profit in the cement business.  Continued cost pressures and little scope to recover much of this in higher cement prices suggest that profitability in Italy may well decline in 2005, but this should be offset by improved profitability elsewhere.

Thanks to benefits from restructuring at Dyckerhoff and cement prices recovering, the German EBITDA advanced from just €5.5m to €53.4m on a turnover up by a 7.0% to €501.9m, though cement deliveries were down by 4.8%.  In Luxembourg, the cement volume rose by 3.5% and turnover by 9.8% to €123.6m giving a jump in EBITDA from €8.8m to €21.0m, excluding one off items that boosted the profit by a further €5.3m.  In eastern Europe, higher volumes and better prices overall led to a 32.3% rise in EBITDA to €75.4m on a turnover 14.2% higher at €297.0m.  

Although turnover in the United States rose by 4.1% to US$917.2m, EBITDA fell by 6.3% though excluding one off items, there was an underlying 2.6% increase to US$27.8m to US$313.1m.  The narrowing of margins reflects bad weather in the final quarter and capacity constraints caused by hurricane damage to the Stockertown, Pennsylvania plant as a result of which cement deliveries fell by 0.5%.

The Mexican associate Corporación Moctezuma had the benefit from the new Cerritos works from May, but had to deal with higher production costs, in particular for electricity that led to a narrowing of margins and the overall numbers were also affected by the lower exchange rate of the Mexican peso against the euro.  The EBITDA advanced by 2.8% to €63.3m on a turnover 4.2% higher at €134.5m, and the margin, although down from 47.7% to 47.1%, remains the highest in the group.