Suez Cement records 18% rise in EBITDA in 3Q14

Suez Cement Group of Companies’ (SCGC’s) Board of Directors has approved the company’s consolidated financial reports for the third quarter of 2014 (3Q14). SCGC witnessed a 48.2% y/y increase in revenues and an 18.3% y/y improvement in EBITDA during the period, which was attributed to improved market conditions.

For the first nine months of 2014 (January – September), SCGC recorded a 30% y/y rise in sales and a 7.8% y/y increase in recurring EBITDA. However, higher corporate taxes together with an absence of foreign exchange gains resulted in a 14.6% y/y drop in net profits after non-controlling interest.

3Q14 financial highlights

• Consolidated revenues: EGP1.442 billion (EGP973 million in 3Q13)
• Recurring EBITDA: EGP165 million (EGP139 million in 3Q13)
• Net profit after non-controlling interest: EGP52 million (EGP37 million in 3Q13)

January – September 2014 financial highlights

• Consolidated revenues: EGP4.613 billion (EGP3.548 billion in 2013)
• Recurring EBITDA: EGP854 million (EGP792 million in 2013)
• Net profit after non-controlling interest: EGP364 million (EGP426 million in 2013)

The strong gains in revenues largely reflect the cement price evolution, which has been driven by a rise in production costs and shortage of production (clinker production decreased due to severe energy shortages, which impacted a number of SCGC’s companies). In addition, energy costs (gas, mazut and power) increased by 25 – 35%. The implementation of energy efficiency plans and the growing utilisation of alternative fuels has helped to contain the production drop and limit the impact of clinker imports on cement costs. SCGC will continue with the deployment of using coal in a number of its plants over the next two years.

Outlook

The company expects that the recovery of the construction industry will attract new investment, encouraged by regained government stability and the implementation of several large national projects.

Power cuts and fuel shortages are likely to remain major issues for cement producers. SCGC’s plans to diversify its energy mix with waste, petcoke and coal are underway – in September 2014, the operational test run for coal started in one of the company’s plants in Kattameya, and it will be started in the Suez plant later this year. This is expected to increase SCGC’s manufacturing capacity utilisation, with a positive impact on the cost of production. The deployment of coal and petcoke goes hand in hand with the reduction of SCGC’s environmental impact through the implementation of state-of-the-art dust filter technology, and through the consolidation of its manufacturing capacity on the most efficient and less polluting lines.

The company remains focused on investing in energy efficient initiatives and environmentally sound programmes. This includes developing alternative fuel strategies that incorporate waste-derived fuels and coal, which will shift the company’s energy mix and improve its production capabilites by reduing SCGC’s dependence of natural gas and mazut.

Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldcement.com/africa-middle-east/05112014/suez-cement-records-18-percent-rise-in-ebitda-in-3q14-793/