Suez Cement Group of Companies' (SCGC`s) Board of Directors has approved the firm's consolidated financial report for the first half of 2014 (January – June). Despite difficult market conditions, SCGC maintained its market leadership and reported a 32% increase in revenues for 2Q14 compared to the same period in 2013. Furthermore, earnings before interest, tax and depreciation (EBITDA) rose by around 18%. However, net profits after non-controlling interest declined by 15%, primarily due to higher corporate income taxes.
Meanwhile, SCGC`s consolidated revenues for 1H14 increased by 23% y/y, while recurring EBITDA was 6% higher than in 1H13, as a result of company-wide efforts to control costs and preserve jobs. However, higher corporate income taxes coupled with an absence of foreign exchange gains were responsible for a 20% drop in net profits after non-controlling interest.
Statistics show that demand for grey cement grew slowly at just 1% in 1H14 versus 1H13. During the same period, overall production capacity was down 55% due to ongoing energy supply challenges. In order to meet market demand, SCGC imported clinker, which resulted in an increase in operational costs. A shortage of cement availability also resulted in market-price adjustments. Despite this, the company’s recent investments in energy efficient processes and waste-fuel production have begun to pay off, mitigating the need for some importing activities.
- Consolidated revenues: EGP1.719 million (from EGP1.302 million in 2Q13).
- Recurring EBITDA: EGP373 million (from EGP315 million in 2Q13).
- Net profits after non-controlling interest: EGP142 million (from EGP168 million in 2Q13).
- Consolidated revenues: EGP3.171 million (from EGP2.575 million in 1H13).
- Recurring EBITDA: EGP689 million (from EGP653 million in 1H13).
- Net profits after non-controlling interest: EGP312 million (from EGP389 million in 1H13).
Market demand grew moderately in 1H14. The gains, however, have been moderate because almost every sector has been negatively affected by the country's political transition. Moving forward, SCGC believes that recovery in the construction industry will attract new investment and help boost economic output. The company also predicts that newfound government stability and the announcement of several large national projects will boost Egyptian demand for cement.
Power cuts and fuel shortages are likely to remain major issues for cement producers as the summer continues. Fuel and energy shortages will prolong challenges to meeting cement production targets, meaning SCGC will still be required to import more cement than usual until it can adequately boost power generation through alternative means. SCGC remains focused on investing in energy efficient initiatives and environmentally sound programmes, including developing alternative fuel strategies that incorporate waste-derived fuels and coal, which will shift the company's energy mix and improve its production capabilities by reducing SCGC's dependence on natural gas and mazut.
Adapted from press release by Rosalie Starling
Read the article online at: https://www.worldcement.com/africa-middle-east/24072014/suez-cement-records-18-increase-in-2q14-ebitda-163/