Votorantim Cimentos reports stable 3Q revenues but drop in adjusted EBITDA

In its third-quarter 2017 results announcement Brazil’s Votorantim Group reported a one per cent increase in the net revenues of Votorantim Cimentos to BRL3.208bn (US$968.2m) from BRL3.19bn in 3Q16. Adjusted EBITDA fell 27 per cent YoY to BRL521m in 3Q17 from BRL715m in the year-ago period. The company’s EBITDA margin stood at 16 per cent.

Brazilian results were negatively impacted by a BRL134m non-recurring tax adjustment, leading to a fall in adjusted EBITDA of 45.4 per cent YoY, according to the company’s 3Q17 earnings release.

While the domestic market remained down, the US construction sector continued to perform well and cement consumption increased 1.7 per cent. Moreover, in the markets of Votorantim Cimentos North America (VNCA) such as the Great Lakes region, strong price increases of around 10 per cent were noted, offsetting a softening of demand due to weak public spending in Illinois and Michigan. In Canada the company was also able to improve its sales volumes. As a result, VNCA posted a 4.7 per cent rise in 3Q net revenues, boosted by higher sales volumes and prices in Canada and high single-digit price growth in the US. Adjusted EBITDA for the company’s North American operations advanced 12.7 per cent YoY.

Meanwhile, in the Europe, Asia and Africa region, where Votorantim Cimentos Europe, Asia and Africa (VNCEAA) is active, the Spanish domestic market returned more positive figures while improved market conditions were also reported in Turkey, particularly in the Anatolia and Black Sea regions, supported by government infrastructural spending. In Tunisia competition intensified amid geopolitical instability of the border countries while in Morocco the delay in infrastructure projects due to the political stalemate impacted 3Q demand. However, the company expects Morocco’s improving forward scenario to have a positive impact on cement consumption. Furthermore, the outlook in India looks to be improving as the country leaves the issues caused by demonetisation behind. In China, Votorantim has benefitted from rising prices as the country consolidates its cement industry. However, overall, VNCEAA posted a 6.4 per cent rise in revenues and a 13.7 per cent increase in adjusted EBITDA in 3Q17.

Votorantim Cimentos Latin America (VCLatam) saw sales volumes rise considerably as the company enjoyed an increased domestic market share in Bolivia in addition to exporting from its ramped-up Bolivian plant as well as Uruguay to Argentina. This led to a rise in adjusted EBITDA of 63.8 per cent in 3Q17 when compared with 3Q16.