Cimpor Q1 seen weak as Iberian operations weigh; Brazil strong

Cimpor Q1 seen weak as Iberian operations weigh; Brazil strong
27 May 2008

Cimpor is expected to post a weak set of first-quarter results to March on Wednesday,  pressured by lower revenues and margins at its Iberian operations, while its Brazilian operation is expected to show strong growth, analysts said.
A UBS analyst said he expects Cimpor’s sales in Spain to be around 22 per cent lower in the first quarter from a year earlier, ’negatively affected by the crisis in the residential construction segment, the impact of general elections on civil construction and stoppages at one of the company’s plants’.
Lisbon Brokers’ Sara Amaral agreed and said that increased competition, especially in the Galiza region, also contributed to lower revenues.
The UBS analyst added that sales at Cimpor’s Portuguese operation will also be negatively impacted by the slowdown in Spain’s cement consumption.
On the positive side, analysts highlight strong sales growth in Brazil, where Lisbon Brokers’ Amaral says there has been a 15 per cent increase in prices and a five per cent rise in demand.
South Africa is also expected to post strong revenue growth, and Cimpor is set to start producing cement in that country at a new plant this month, ’allowing the company to better satisfy the enormous demand for cement from South Africa’s construction boom from the 2010 World Cup football tournament, which the country will host,’ Amaral said.
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