Suez Cement results impacted by lower selling prices, higher energy costs

Suez Cement results impacted by lower selling prices, higher energy costs
12 February 2016

Suez Cement Co, part of the Italcementi group, reported an 8.3 per cent drop in consolidated revenues for 2015 to EGP5.64bn (US$720m) from EGP6.15bn a year earlier. It recorded a net loss after non-controlling interest of EGP60m, from a prior-year profit of EGP50m.

The company said that in the 4Q15, despite the strong demand and a balanced supply and demand situation, selling prices did not keep pace and further declined about three per cent from the prior quarter, cumulating in a 15 per cent YoY fall.

Simultaneously, traditional energy prices have been increasing sharply (30 per cent) with the implementation of the government's subsidy removal programme, Suez Cement said in a statement.

"In this overall challenging conditions, SCGC was able to maintain its market leadership but saw its sales volumes decline as it tried to defend its pricing.

"Exports to regional markets, such as Libya and Yemen, remained limited because of political and economic instability."

Energy diversification
The company has continued to modify its energy mix with two plants now fully converted to coal and waste, both fuels representing almost 40 per cent of total needs. It is currently preparing for the implementation of coal conversion projects at its Helwan and Tourah plants over the next two years, similar to those already completed at the Kattameya and Suez plants. The energy diversification programme is focussed on increasing the use of waste-derived fuels, petcoke, coal and renewable energy to prevent fluctuating natural gas and heavy fuel oil prices impacting the company’s bottom line.

In terms of its outlook, Suez Cement said it maintains its optimistic outlook on cement production and sales in 2016, and that the fundamentals are still good for the construction sector. However, recent tightening measures on consumer credit and imports could have a negative impact on Egypt’s economic growth.

Published under Cement News

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