High energy costs depress Titan’s margins

High energy costs depress Titan’s margins
01 August 2008

Titan’s first half turnover improved by 1.0% to EUR765.1m while the EBITDA declined by 13.9% to EUR191.0m, with the increased size of the operations being offset by currency weakness.  The acquisitions in Greece and Turkey let to a 30.4% increase in net interest payments to EUR19.3m, leaving the pre-tax profit 24.4% lower at EUR122.4.  However, a tax credit in Bulgaria and a reduced tax charge in Greece limited the decline in the net attributable profit to 6.9% to EUR116m.  Group cement deliveries increased by 11.6% to 8.54Mt, but downstream volumes, dominated by the USA and Greece, were lower, with ready-mixed concrete deliveries declining by 4.3% to 2.80Mm³ and aggregates shipments falling by some 11% to 9.14Mt.   

The operations in Greece and Western Europe saw turnover improve by 1.7% to
EUR321.8m, in a the weaker Greek market, cost increased could not be passed on fully in the period and the EBITDA declined by 11.5% to EUR90.3m.  A second price increase, in the region of 4%, was introduced in the Greek market in July.  Greek downstream volumes were essentially flat, with some minor acquisitions making up for the weaker demand.  The remainder of the year is expected to remain difficult, with delays to infrastructure projects and an excessive supply of housing in some areas.

In the South Eastern Europe region, turnover increased by 36.6% to €135.1m and the EBITDA improved by17.7% to
EUR50.6m.  The enlarged Bulgarian works is producing to capacity with additional volumes being imported from Greece, as the domestic construction market remains buoyant.  The Serbian market is also ahead, and in anticipation of the completion of the new cement works in Albania towards the end of next year, an existing import terminal has been acquired in that country. 

The US turnover fell by 21,2% to
EUR246.8m, though in dollar terms the reduction was a more modest 8.7%, while the EBITDA was down by some 58% to EUR26.5m.  The US decline is been the strongest in Florida and the ready-mixed concrete and concrete block operations have been the worst affected, because of the high housebuilding exposure.  The Pennsuco quarry was re-opened in May as a result of an appeal court decision, but the environmental assessment of the Pennsuco quarry is mot expected to be delivered until September, at the earliest.  Because of the weakness of the US market, the higher energy costs have not been able to be passed on and overall cement prices are barely being maintained.
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