Buzzi Unicem’s balance sheet

On turnover 1.2 per cent lower at €1461m, Buzzi Unicem’s operating profit at the EBITDA level declined by 5.9 per cent  to €433.9m in 2003.  Adjusting for the weakness in the US and Mexican currencies gives underlying increase in the EBITDA of 3.4 per cent  and a 7.0 per cent  increase in respect of the turnover.  The reduction in operating margins reflects higher energy and freight costs.  Group cement deliveries rose by 3.9 per cent  to 14.2Mt and ready-mixed concrete deliveries were 10.1 per cent  higher at 9.8Mm3.  The net debt fell by €125.8m to €406.3m.  This combined with the share exchange offer for Dyckerhoff preference shares further reduced Buzzi Unicem’s already low gearing level from 45.5 per cent  to 28.3 per cent , or 30.2 per cent  excluding intangibles.  Capital expenditure amounted to €102.1m last year and a further €30.4m was spent on buying additional shares in Dyckerhoff.

In Italy turnover rose by 7.2 per cent  to €938.3m and the EBITDA moved ahead by 3.8 per cent  to €258.3m. The cement business reported a 3.2 per cent  increase in turnover on volumes that were 1.3 per cent  higher with average prices also improving.  Higher fuel and transport costs, however, reduced the increase in the profit at the EBITDA level to just 0.5 per cent .  The major boost to the Italian profitability came from the ready-mixed concrete operations, where the EBITDA rose by 17.8 per cent  on the back of an 11.5 per cent  increase in deliveries and improved prices that helped push up turnover by 14.4 per cent .  Cement consumption is expected to remain at a high level this year and prices are expected to be stable, but energy costs may have some adverse effect on profitability.  Having increase its stake in Cementi Riva from 90 to 100 per cent , this company, which operates a 0.3Mta cement works at Riva del Garda, will be incorporated into the parent company.  The full consolidation of Dyckerhoff from this year will considerably increase the European operation of the group.

The group’s operations in the United States showed a volume growth of 7.8 per cent  to 4.8Mt of cement, but prices were slightly lower and the turnover rose by only 4.4 per cent  in US dollar terms.  On conversion the turnover fell by 12.8 per cent to €394.5m.  Higher fuel costs and the lower prices led to a 2.2 per cent  decline in EBITDA in local currency terms and, on conversion, by 18.3 per cent  to €114.1m.  Synergy benefits from the merging of the Dyckerhoff North American interests into the group should be coming through this year and the reduced import pressure because of higher freight costs should allow prices to be increased.

In a Mexican cement market that grew by 3.1 per cent , Corporacion Moctezuma pushed ahead cement and ready-mixed concrete deliveries by 6.9 per cent  and 8.4 per cent  respectively, increasing turnover by 13.9 per cent  and EBITDA by 12.6 per cent in local currency terms.  In euro terms, however, Buzzi Unicem’s share of the operating profit at the EBITDA level was 15.5 per cent  lower at €61.6m on a turnover down by 14.6 per cent  at €129.1m.  With the new Cerritos cement plant coming on stream during the first half of this year, higher volumes and increased profitability, at least in local currency terms can be expected in 2004.