Iberian impairments push Cimpor into a loss

Iberian impairments push Cimpor into a loss
Published: 31 August 2012


Cimpor’s first half turnover declined by 5.5 per cent to €1086.8m, as the deterioration in Spain, Portugal and China could not be compensated for by improvements elsewhere.

EBITDA was down by 15.3 per cent to €267.4m. The deterioration on the Iberian peninsula led to provisions of €270m being taken in respect of the Spanish assets and a further €20m against the downstream assets in Portugal, giving a total value adjustment charge of €407.2m compared with €117m. This led to a trading loss of €139.8m compared with a €198.6m profit last year. A €9m increase in interest costs and a €26m negative effect of the rising US dollar led to a more than trebling of financial charges to €51.2m, producing a pre-tax loss of €191m and a net attributable loss of €204.8m.

Net debt at the end of June was 5.2 per cent lower at €1537m, with the gearing level increasing from 77.6 per cent to 87.8 per cent. Capital expenditure was 32.1 per cent at €114.1m, with Brazil and the purchase of a new ship providing the largest items.

Group cement deliveries declined by 6.3 per cent to 12.94Mt, with sharply lower production levels in Spain and China. The average cement price achieved improved by 2.2 per cent. Group aggregates shipments fell by 23.6 per cent to 5.3Mt, having risen by 21.4 per cent in the same period last year. Ready-mixed concrete deliveries declined by 8.8 per cent to 3.07Mm³, mainly reflecting the weak Iberian markets.

The Portuguese turnover declined 12.9 per cent to €172.6m, of which sales to other parts of the group accounted for €38.2m, an increase of 44.5 per cent. The EBITDA was roughly halved and a €14.9m trading loss was incurred, compared with a €33.7m profit. Cement and clinker deliveries increased by 3.7 per cent to 1.99Mt, but the average price suffered as an increasing percentage was exported. Aggregate volumes fell by 24.1 per cent and ready-mixed concrete deliveries dropped by in excess of 30 per cent. In Spain, the turnover fell by 24 per cent to €97m and the EBITDA dropped by some 70 per cent and a trading loss of €298.6m was incurred. Spanish cement and clinker volumes dropped by 34.5 per cent to 0.82Mt and aggregates deliveries fell by 34.4 per cent. Iberian sales of emission certificates yielded a reduced income.

Brazil is the largest cement producer in the group and accounted or 22.3 per cent of the group volume in the first half. The Brazilian turnover improved by 1.4 per cent to €346.3m, in spite of a weaker currency, and EBITDA improved 2.9 per cent to €109.9m to account for some 41 per cent of the group total, compared with 34 per cent at this stage last year. The trading profit advanced 10.7 per cent to €10.7m. The cement volume was up by 4.2 per cent to 2.88Mt as some of the planned capacity increases have been commissioned. Local cement prices were increased in the period. 

Egyptian cement deliveries showed a 5.2 per cent recovery to 1.75Mt, helped by a good second quarter.  Prices have shown a recovery and the turnover rose 10.6 per cent to €101m and the trading profit improved by 7.6 per cent to €28.8m. In Morocco, cement deliveries were 0.1 per cent ahead at 0.62Mt, with turnover declining by 0.6 per cent to €51.3m but the trading profit was just 0.1 per cent lower at €15.7m. The Tunisian turnover declined 10.3 per cent to €39.7m, but the trading profit did improve by 5.1 per cent to €9.9m, though cement volumes were 10 per cent lower at 0.84Mt. Turkey suffered from a harsh winter in the first quarter and has not fully recovered. As a result, turnover declined 7.5 per cent to €75.5m and the trading profit fell 38.8 per cent to €2.6m. Cement and clinker volumes were 12 per cent lower at 1.28Mt.  

In China, cement deliveries dropped by 29.1 per cent to 1.37Mt as demand eased. As a result, turnover came off by 38 per cent to €39.4m and at the trading level a €9.6m profit was turned into a €12m loss. The Indian business sold 10.9 per cent more cement at 0.56Mt and the turnover increased by 14 per cent to €32.8m, with the trading profit advanced by 39 per cent to €1.4m.

In South Africa, the tonnage declined by 12.3 per cent to 0.54Mt and the turnover eased by 3.9 per cent to €70.4m, but the trading profit did advance three per cent to €21.5m in spite of a weaker currency. The Mozambique cement volume showed the strongest growth in the group, rising by 23.9 per cent to 0.52Mt. The turnover jumped by 27.2 per cent to €60.4m and the trading profit rose six-fold to €10.1m, helped by a strong growth in demand. Cape Verde Islands sold 14.8 per cent less cement at 0.1Mt. The trading and shipping operations generated a turnover 2.5 per cent higher at €104.2m, with the EBITDA rising by 82.8 per cent to €9.6m.