Buzzi Unicem hit by weak Italian market

Buzzi Unicem hit by weak Italian market
28 March 2014

On a turnover 2.1 per cent lower at EUR2753.1m, Buzzi Unicem's EBITDA improved by 5.7 per cent to EUR481.2m. After writing down the assets in Italy and Ukraine by EUR57.7m and EUR39.9m, respectively, the trading profit (EBIT) showed a 24 per cent reduction to EUR149.8m.

After a net interest charge 12.4 per cent lower at EUR110.5m, the pre-tax profit declined by 35.4 per cent to EUR50.3m. Because of a mismatch between where profits and losses were generated and tax payments, at the consolidated net level there was a loss of EUR29m compared with a restated profit of EUR2m in the previous year, while at the net attributable level the loss rose by 77.9 per cent to EUR50.7m.

Net debt at the end of the year was reduced by 5.3 per cent to EUR1065.6m, while gross shareholders' funds declined by 8.8 per cent to EUR2374.2m giving a gearing level of 44.9 per cent. Group cement shipments were 0.3 per cent higher at 27.4Mt, while ready-mixed concrete deliveries declined by 5.1 per cent to 12.9Mm³.

Italian domestic cement deliveries fell for the seventh consecutive year to less than half of the peak level seen in 2006. Increased export volumes and sales of clinker reduced the negative effect of falling domestic cement demand and shipments were just 3.1 per cent lower in a market that fell in the high teens. Underlying cement prices were broadly stable and a 2.1 per cent decline in the average selling price primarily reflects a different sales mix. Unlike in the previous year, there was a EUR4.5m contribution from the sale of emission rights. Ready-mixed concrete volumes fell by a further 18.5 per cent after a 24.7 per cent drop in the previous year, though the average selling price did improve by 0.5 per cent. The turnover declined by 9.2 per cent to EUR434.8m and the EBITDA loss increased from EUR5.9m to EUR18.1m.

The German turnover eased by 0.7 per cent to EUR599.7m, while the EBITDA did rise by 49.9 per cent to EUR108.1m, though net of exceptional items, the increase was a more modest 11.6 per cent to EUR8.4. EUR1.9m was spent on inter-group purchases of emission rights compared with credit in 2012. Cement deliveries decreased by 0.8 per cent to 5.91Mt but the average price improved by 1.2 per cent, with exports and sales of oilwell cement improving but sales of white cement declining. Ready-mixed concrete deliveries declined by 0.9 per cent, but on a comparable basis there was a 2.1 per cent increase. The

Luxembourg turnover improved by 4.9 per cent to EUR109.1m and EBITDA staged a 42.8 per cent recovery to EUR19.7m, with cement deliveries being 3.7 per cent lower at 1.17Mt. The Dutch turnover declined by a further 16.4 per cent to EUR73.2m and the EBITDA loss increased from EUR5.5m to EUR8.2m as restructuring charges of EUR3.4m were incurred. Dutch ready-mixed concrete deliveries fell by a further 15.2 per cent to 0.67m m³.

The Polish turnover declined by 7.3 per cent to EUR101.0m, but the EBITDA did recover by 24.6 per cent to EUR27.1m and there was an internal EUR0.4m contribution from the sale of emission certificates. Cement deliveries improved by 2.5 per cent to 1.36Mt, but ready-mixed concrete volume declined by 17.4 per cent.  In the Czech Republic and in Slovakia, turnover came off by a further 11.9 per cent to EUR131.8m and the EBITDA fell by 24.3 per cent to EUR19.2m. The cement volume declined by 15.5 per cent to 0.72Mt and ready-mixed concrete deliveries declined by 4.5 per cent though prices here did improve by 1.7 per cent.

The Ukrainian turnover declined by 7.8 per cent to EUR123.8m and the EBITDA came off by 22.1 per cent to EUR12.3m, though net of exceptional items the reduction was a more modest 6.5 per cent. Cement deliveries declined by 7.3 per cent to 1.66Mt, but ready-mixed concrete deliveries did advance by 20.7 per cent. In Russia, turnover improved by six per cent to EUR248.6m while the EBITDA declined by 3.7 per cent to EUR92.6m. Cement shipments improved by 7.3 per cent to just over 3Mt, with average prices in local currency being boosted by increased sales of oilwell cement.

Not withstanding a 3.4 per cent weaker dollar, the United States turnover emerged 7.3 per cent higher at EUR729.9m and the EBITDA advanced by 21.8 per cent to EUR123.9m, and excluding last year's EUR7.8m gain on property disposals the underlying increase was 36 per cent, taking the EBITDA margin rose from 15.2 per cent to 20.7 per cent.

Cement shipments rose by a further 8.7 per cent to 7.41Mt and the average selling price improved by 2.8 per cent in local currency, boosting the margin. Ready-mixed concrete volumes were ahead by five per cent and prices improved by 6.4 per cent.

With the continuing improvement in the housing market and other segments not expected to do any worse, Buzzi Unicem should see a further results improvement in 2014.

The 50 per cent-owned Mexican associate Corporaciòn Moctezuma saw cement deliveries decline by nine per cent and prices came off by 7.2 per cent in local currency, reflecting weak demand and increased competitive pressures. Ready-mixed concrete deliveries were off by a more modest 3.4 per cent and average selling prices did improve by one per cent. A weaker Mexican peso added to the problems faced by Moctezuma and the turnover declined by 13.2 per cent to EUR233.8m and the EBITDA fell by 20.5 per cent to EUR77.5m as the trading margin came down from 36.2 per cent to 33.2 per cent.

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