Ciments Français has a bad year in the United States
Ciments Français, the international arm of Italcementi, produced a turnover of €2898.9m last year, a drop of 1.1 per cent but representing an underlying increase of 3.4 per cent exchange rate movements and changes to the structure are taken into account. The operating profit at the EBITDA level was 4.2 per cent lower at €746.1m and the trading profit was off by 5.6 per cent at €528.6m. A 13.4 per cent drop in the net interest charge reduced the fall in the running profit before tax to 3.8 per cent at €434m. Cement and clinker deliveries were 2.8 per cent higher at 32.6m tonnes generating an
underlying 3.3 per cent increase in turnover to €1864m. The ready-mixed
concrete volume rose by 9.8 per cent to 11.9Mm3, but aggregates deliveries fell by 2.9 per cent to 46.7Mt because of lower deliveries in France and the sale of a Spanish quarry.
The principal reason for the lower profitability was to be found in the United States, where the trading profit fell by 46.7 per cent to €63m, a drop of 34.5 per cent when measured in US dollars. Turnover was 3.7 per cent lower in local currency, which translated into a 16.5 per cent drop to €526m. While cement demand in the markets served by Ciments Français declined by around 2.5 per cent, the group suffered a five per cent fall in volumes as technical problems at the Nazareth and Speed plants reduced the capacity to supply the market during the fourth quarter when demand was picking up. The building of a further new kiln at the Nazareth, Pa. works has now been postponed indefinitely and Essroc is instead building a new kiln at the Martinsburg, W Va works. This will replace two wet kilns at different locations. Work at Martinsburg is scheduled to start in 2005, with completion in 2007 or 2008.
Apart from the United States, the only country where volumes and profits showed a significant drop was Belgium, where a rise in lower priced cement from Germany led to a 7.4 per cent drop in cement volumes in a market that was only marginally lower. The Belgian profit dropped by 45.3 per cent to €16m. Cement deliveries in France were 0.4 per cent higher, thanks to a strong finish to the year, but lower aggregates sales left turnover only a marginal 0.1 per cent ahead at €1193m and the trading profit was 0.6 per cent lower at €213m. The Spanish operations benefited from a strong market with cement deliveries growing by 4.4 per cent and, in spite of the sale of some downstream activities to Cimpor turnover was up by 6.2% to €291m and the trading profit advanced by seven per cent to €61m. The construction boom around Athens helped Halyps to increased profits by 13.4 per cent to €35m on marginally higher volumes as the plant is working to capacity. Bulgarian cement volumes rose by 18.3 per cent, thanks to higher exports and a 10 per cent increase in domestic deliveries.
Morocco emerged as the second largest profit contributor for the first time, thanks to the American drop, with a 15.1 per cent increase in trading profit to €85m on a turnover 8.3 per cent higher at €211m. The cement volume was up by 6.8 per cent, but exports were curtailed and domestic deliveries grew by more like nine per cent. Turkey is now showing signs of an improving market, with deliveries up by 6.1 per cent and prices having improved to around US$45/t, but there was still a small trading loss of €4m last year.
The strongest profit boost came from Thailand, where the trading profit rose by 131.7 per cent to €42m on a 10 per cent increase in turnover to €176m on a cement volume 4.6 per cent higher overall but export sales were reduced in order to cater for the revival in domestic demand. The Indian associate saw marginally lower volumes as unprofitable domestic trading activities were curtailed. The other important associate, Suez Cement, which lost money in 2002, produced a profit. While volumes in Egypt were down, prices began to improve.
