Vicat reports regional variation in full year results

French cement manufacturer Vicat has reported full-year sales of €2286 million, illustrating a 2.9% y/y improvement at constant scope and exchange rates. The cement sector achieved full-year sales of €1110 million, down 4% from 2012’s €1156 million, but up 0/9% at constant scope and exchange rates. Currency effects had a highly negative impact over the year, which was otherwise relatively positive, with particular highlights in the US, Turkey and Kazakhstan.

Consolidated sales in 4Q13 reached €545 million, up 2.1% at constant scope and exchange rates, while cement operational sales were down 1.6%. In some group regions, the results were impacted by unfavourable weather conditions compared with the same period of 2012.

Mixed results in Europe

The continuation of the depressed economic environment in France led to a fall in sales of 3.3% in the full year 2013. Cement sales contracted by 7.6%, while average selling prices remained stable. In 4Q13, consolidated cement sales fell 8.4%.

In the rest of Europe, Vicat experienced mixed results. Positive market conditions in Switzerland led to an increase in sales to €407 million, with consolidated cement sales reaching €113 million. Highly competitive conditions within the cement industry led to a slight decline in selling prices, but volumes held up well.

Economic conditions in Italy were less favourable, and the group’s performance suffered in line with that. Sales dropped by 18.1% y/y and by 18.3% in 4Q13. An increase in selling prices could not make up for the steep decline in volumes, which were down 25%.

Upswing in the United States

Sales were greatly improved in the US in 2013, reflecting the turnaround in the US economy. In cement, consolidated sales increased by 6.3% over the full year and by 9.7% in the last quarter. California performed particularly well, while volumes in the southeast were lower across the year due to adverse weather conditions. Conversely, prices recorded a stronger increase in the southeast than in California.

Key markets: Turkey and Kazakhstan

Sales in Turkey rose 16.5% to reach €235 million over the full year, with a more moderate 8.2% rise in 4Q13. Consolidated sales in the group’s cement division increased 16.7% as both volumes and sales prices grew. In 4Q13, sales grew by 15.3% despite a significant volume contraction due to less favourable weather conditions than in 4Q12.

Volumes grew in Kazakhstan, which is proving to be an important market for the company. Full year sales posted 14.3% growth to €71 million and volume growth was close to 5%. An unfavourable base of comparison with 4Q12 led to a fall in consolidated sales of 10.4% in 4Q13.

New capacity: India

Group sales increased 12.7% to €155 million in 2013 thanks in part to the start-up of Vicat Sagar, which boosted volumes by close to 28%. However, competition is fierce in the Indian cement industry, which is suffering a slump ahead of the spring 2014 elections. This greenfield plant marks the completion of Vicat’s ambitious investment programme and the group notes in its full year report that its start-up will have adversely affected the EBITDA margin for 2013, particularly given the pricing pressure in India.

Difficult business environments: Egypt and West Africa

The continued challenging security environment in Egypt led to a 14.1% decline in consolidated sales in the country and a 27% fall in sales volumes. Prices rose, however, and in the second half government action resulted in an improvement in the security situation, which paid off in the fourth quarter.

Cement volumes fell 2.1% in West Africa and selling prices in Senegal were lower than in 2012. Pricing pressure in Senegal is also listed as one of the factors affecting EBITDA in 2013.

Outlook

Taking into account the negatives mentioned and the positive affects of the upswing in the US and strong performance in Turkey, Kazakhstan and Switzerland, EBITDA for the year is expected to be stable at constant scope and exchange rates when compared to 2012. Capital expenditure is expected to show a significant decline in 2013 and net debt is expected to be lower at year end in comparison to 2012.

Adapted from press release by Katherine Guenioui

Read the article online at: https://www.worldcement.com/europe-cis/04022014/vicat_reports_regional_variation_in_full_year_results_694/