Titan held back by US developments

Titan held back by US developments
27 February 2008

Titan’s turnover declined by 4.5% in 2007 to EUR1,496.9m as the weakness in the United States and, to a lesser extent, Greece could not be fully compensated for by the stronger performance elsewhere.

The EBITDA declined by 11.5% to EUR425.5m, while at the pre-tax level, the reduction reached 21.1% to EUR300m. A lower tax rate was a result of falling US profits and a higher contribution from low tax countries meant that the reduction in the net profit was limited to 7.6% to EUR239.6m.  Having spent EUR246m capital expenditure and a further EUR243.2m on acquisitions, net debt at the end of December was 74.0% higher than a year earlier at EUR569m. The gearing level remained modest at 48.9%. Group cement deliveries declined by 3.1% to 15.6Mt, while deliveries of aggregates were 11.2% lower at 19.9Mt and ready-mixed concrete shipments were off by around 2% to 5.9Mm³.  
The activities in Greece and Western Europe produced a turnover 3.9% higher at EUR630.9m while the EBITDA edged ahead by 0.1% to EUR191m. The Greek domestic cement deliveries were down by around 2% compared with the record volume achieved in 2006.  The slower Greek construction market also led to a reduction in downstream volumes, but these activities have been boosted by modest acquisitions as the market softened.  For this year, a stable civil engineering market is expected, accompanied by a further reduction in building activity. 

Higher kiln fuel and electricity costs as well as higher freight rates have had a negative effect on the Greek profitability. Domestic cement prices were raised by about EUR4 /t in January of this year and export prices are also higher than last year.  The use of alternative fuels has been increased, but remains low by European standards.

In the United States, turnover fell by 16.8% to EUR592.6m and the EBITDA dropped by 42.1% to
EUR106.4m, though in dollar terms the impact was somewhat less marked at –9.1% and –36.7% respectively.  Cement consumption fell by 29% in Florida, but the impact was less severe in Virginia, at –10%, and in North Carolina, at -4%.  Prices for ready-mixed concrete and concrete products fell in Florida, in spite of higher prices for both cement and aggregates. 

A US$8/st price increase was announced in Florida in January, but it remains to be seen how much of this increase will stick. Prices in the Mid Atlantic area will be reviewed in April. A decision on the future of extraction in the Lake Belt area of Florida is now not expected from the Federal authorities until some time in May.  The prohibition on excavation of the major part of the Pennsuco quarry thus remains in force, but a provisional permit has been obtained for a small area.  Titan is reducing its exposure to Florida by expanding downstream operations in North Carolina, South Carolina and Kentucky.
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