Italcementi’s Turkish profits virtually eliminated last year

Italcementi’s Turkish profits virtually eliminated last year
10 March 2009

Italcementi’s turnover was off by 3.8% last year to €5,775.9m, while higher energy costs and pressures on prices in some markets led to a 20.7% drop in the underlying EBITDA to €1,113.1m.  The trading profit fell by 36.6% to €607.3m.  Net financial costs declined by 27.3% to €86.3m, thanks to the receipt of €50m from Sibirskiy Cement as a penalty for the non-completion of the deal to sell Set Çimento.  The running profit before tax was 36.0% lower at €545.3m, before charging €124.9m for the writing down of assets, mainly related to the investment in Göltas Çimento.  The net attributable profit dropped by 67.3% to €138.8m. 

Capital investment was 31.8% higher at €698.2m and a further €282.3m went on acquisitions, including the buying out of minorities.  Net debt at the end of December year was 10.8% higher at €2,679.3m, which gave a gearing level of 58.1%, compared with 50.8% a year earlier.  Shipments of cement and clinker declined by 3.1% to 62.6Mt in the year, while the aggregates tonnage fell by 15.5% to 47.6Mt and the underlying ready-mixed concrete deliveries were down by 6.0% to 13.9Mm³. 

European cement and clinker volumes declined by 6.7% to 24Mt, out of which the Italian operations accounted for 12.1Mt compared with 13.7Mt in the previous year.  The Italian turnover declined by a more modest 7.7% to some  €1203m thanks to better pricing, but the EBITDA dropped by 53.3% to €89.9m, as profits were hit by costs of reorganising the Italian cement business at a time of weaker cement demand and higher energy costs.  Italcementi is expecting come weakness in both volumes and prices in 2009.  The Calcestruzzi business remained outside the scope of consolidation for the whole of the financial year. 

France remains the largest contributor both in terms of turnover and EBITDA, but turnover was ahead by just 0.5% to €1602m, and the EBITDA declined by 3.1% to €334m, as the fourth quarter was very weak with cement volumes down by some 12%.  Volumes are expected to decline in 2009, but pricing should remain firm.  In Belgium, turnover improved by 4.5% to €246m but the EBITDA declined by 14.3% to €45m in a generally stable cement pricing environment.  Spanish cement volumes declined in Andalusia but were relatively stable in the Basque Country and the turnover fell by 17.3% to €300m and the EBITDA dropped by 23.9% to €68m.  Greek volumes were pretty stable, but costs rose and the EBITDA fell by 7.9% to €28m and the turnover was down by 5.7% to €97m as the downstream activities on Crete were sold at the beginning of the year.

Egypt is, by far, the largest overseas contributor and turnover there increased turnover by an underlying 24.7% to €665m on the back of higher prices and costs, but the improvement in EBITDA was limited to 3.8% to €239m as the plants produced to the limits of their capacity, but the margin still remains the highest in the group at 36.0%.  In Morocco, the underlying turnover rose by 12.1% to €309m, but higher fuel costs and clinker purchases led a reduction in margins and the EBITDA declined by 8.5% to €95m.  In Turkey, underlying turnover declined by 11.8% to €215m, but severe over-capacity in both the cement and ready-mixed concrete markets led to a 93.4% drop in the EBITDA to just €3m.  Apart from Set Çemento, the group has two minority stakes in the Turkish cement industry.

North American cement shipments fell by 14.7% to 5.3Mt as US housebuilding and commercial and industrial building activity fell.  Thanks to acquisitions in both the USA and Canada, the comparatively modest aggregates volume jumped by 64.2% to 0.5m tonnes and ready-mixed concrete deliveries advanced by 17.5% to 1.0m m³, though at the underlying level this represented a 7.9% reduction.  The North American turnover, which in addition to the USA and Canada also includes Puerto Rico, declined by 17.5% to €500.7m and the EBITDA dropped by 56.6% to €55.6m. 

In Asia, cement shipments increased by 4.4% to 11.3m tonnes in spite of lower volumes in both Thailand and Kazakhstan.  The turnover increased by an underlying 8.8% to €450m, but the corresponding EBITDA declined by 15.5% to €105m.  In Thailand, two kilns have now been closed and ready-mixed concrete deliveries were down by 11.3% to 0.9Mm³. 
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