Italian and French winters disrupt Italcementi first-quarter

Italian and French winters disrupt Italcementi first-quarter
Published: 08 May 2012

Tagged Under: Italcementi Italy. 

Italcementi’s first quarter turnover declined by 6.8% to €1071.7m, but the running EBITDA was only off by 3.1% to €126.7m. The trading profit, however, fell by 41.4% to €21.3m and, at the pre-tax level, there was a €7.8m loss, compared with a €24.1m profit. At the net attributable level, there was a swing from a €80.7m profit, thanks to capital gains last year, to a loss of €49m. Net debt at the end of March was 4.1% higher at €2179.1m, giving a gearing level of 45.5%, compared with 42.8% a year earlier. The sale of emission rights yielded €13m in the quarter, compared with €9m booked that time last year.

Cement and clinker sales were 8.1% lower at 11.4Mt, though international trading activities did see volumes recover by 45.9% to 0.8Mt, but the EBITDA from cement and clinker trading fell by a further 36% to €1.8m. Aggregates shipments declined by 14.1% to 8Mt, while ready-mixed concrete deliveries were down by 10.7% to 3.1Mm³. 

The Western European, cement and clinker volumes fell by 19.9% to 3.81Mt, in part affected by poor weather conditions. Consolidated aggregates shipments were down by 15.7% to 7.16Mt and ready-mixed concrete deliveries also declined by 15.7% to 2.18Mm³.

The Italian cement and clinker volumes dropped by 27.9%, but the price in the quarter did improve by 13% in spite of strong import pressure from Turkish cement. In spite of the recovery in the quarter, prices were still lower than a year earlier. A further price improvement is expected during this year, following list price increases last June and in January. Turnover in Italy was off by 9% to €193.6m, but the loss at the EBITDA level was reduced from €19.4m to €5.6m as the loss at Calcestruzzi was substantially lower. Both Italy and France suffered from adverse climatic conditions. In France and Belgium, turnover was 10% lower at €353.6m and the EBITDA contribution came down by 12.2% to €47.2m as cement volumes declined by 11.9%. Import pressure has increased in France, with imports representing some 8% of the market. Volumes are expected to be little changed in France this year, while being down in high single figures in Belgium. Prices are expected to be stable in both countries.

In Spain, turnover fell by a further 21.4% to €30.5m and the EBITDA dropped by 52.7% to €1.4m with the loss at the trading level more than doubling to €4.7m as, volumes fell. Domestic cement deliveries dropped by 35.6%, but exports were ahead, leaving total cement and clinker volumes just 8.9% lower. Italcementi hopes to be able to increase prices in low single figures in a market that is expected to fall by a further 15% or so. In Greece, turnover dropped by 52.2% to €5.8m and a €0.6m loss was incurred at the EBITDA level as cement and clinker sales dropped by a further 49.4%, including exports. 

Egyptian turnover declined by 12.5% to €146.6m and the EBITDA fell by 30.4% to €35.4m. Domestic cement deliveries declined by 13.5%, but increased exports, primary to Libya, reduced the overall volume decline to 4.9%. Domestic cement prices are now higher than last year’s average. However, gas and labour costs have risen and the political situation remains very uncertain. In Morocco, turnover improved by 7.7% to €91.4m and the EBITDA grew by 11.9% to €40.9m on the back of a 6.6% increase in cement deliveries. The market environment was very positive, with an increase in cement consumption in excess of 20%, which helped accommodate the additional capacity from recent entrants. Demand is expanding fast, and Italcementi is still planning additional capacity, though timing and location have still to be decided on.

The results from the rest of the region, which now consists of Bulgaria, Kuwait and Saudi Arabia, generated a turnover 7.8% higher at €24.2m producing an EBITDA 21.9% lower at €5.6m. Kuwait saw turnover decline by 3.5% to €16m and the EBITDA fell by some 21% to €2m, while Bulgaria reported a similar percentage reduction to €4m though the turnover jumped by 43.5% to €8m. Again, the Bulgarian profit contribution came mainly from the sale of emission certificates.

Asian turnover eased by 0.7% to €129.4m while the EBITDA fell by 23.9% to €18.9m, because of a swing into loss in the Chinese operations. The activities in China are now being merged into West China Cement, with Italcementi taking a 6.25% interest in this company, which is quoted on the Hong Kong stock exchange, in return for these assets.

The Indian turnover improved by 5.7% to €64m, but the EBITDA was 2% lower at €15m. Cement and clinker sales were just 0.4% higher but domestic cement deliveries were 11.0% higher. In the Thai market, turnover eased by 1.7% to €53m and the EBITDA fell by 32% to €7m as the competitive environment prevented the recovery of increased costs and cement shipments were off by 1.7%. Improved volumes, however, are expected for the remainder of this year. In China, Italcementi saw volumes fall by 19.6% and turnover by 19.9% to €8m and a €2m EBITDA loss was incurred. Kazakh volumes dropped by 40.7% to €4m and a small loss was incurred, but for the full year an improvement should be possible.

The North American turnover jumped by 25% to €79.8m and the loss at the EBITDA level narrowed from €21.9m to €12.6m. Cement shipments rose by 19.5% to 0.8Mt, while for the full year both volumes and prices are expected to advance in single figures. In the period, slightly better prices were achieved in the USA, but the were a little lower in Canada. Aggregates shipments advanced by 29.2% to 0.3Mt and ready-mixed concrete deliveries jumped by 41.5% to 0.16Mm³, helped by better weather conditions and come economic recovery.