Titan Group has posted a widening net loss of €19 million in the first quarter of 2012 from €4 million in the corresponding period of last year. The result has been attributed to the collapse of the Greek building materials’ market, as well as the severe winter weather across the Balkans, Turkey and Greece.
Titan also announced an 11% fall in turnover for the quarter to €225 million, and a 29% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to €34 million.
The improvement witnessed in the USA, albeit from very low levels, was not sufficient to compensate for the aforementioned factors.
In Greece, the deep recession has brought the construction sector to a standstill and driven sales of building materials to extremely low levels. Turnover fell 37% to €46 million. Operating results in Greece were supported by the reduction in fixed costs resulting from Titan Group’s restructuring plan in conjunction with revenue from surplus carbon rights. EBITDA grew to €13million from €7.5 million in the first quarter of 2011.
Demand for building materials in the USA grew, supported by favourable weather conditions. However, sales and plant capacity utilisation rates remain at levels far below average.
Adverse weather conditions in the first quarter of the year affected sales and led to low levels of plant utilisation in Southeastern Europe. Operating profitability in the region also fell 68% to €4 million.
Cement sales fell 4% in the Eastern Mediterranean region, although cement volume sales in Egypt rose compared to the previous year’s levels. Cement demand in Turkey was affected by the poor weather conditions. EBITDA in the region declined to €19 million, largely as a result of the employee profit sharing scheme in Egypt during the first quarter of the year (the equivalent expense was booked in the second quarter in 2011).
Titan Group’s net debt at the end of the first quarter was up 11% to €788 million, compared to the end of 2011. This was attributed to the seasonality of sales and the increase in working capital requirements.
Prospects for 2012
The worsening economic recession in Greece, and the uncertainty that the crisis has created, make private building activity in the country particularly challenging. It is also unlikely that the expected benefits from restarting stalled public works will affect demand for building materials during the current year.
In the USA, building activity is expected to improve on the back of economic growth and the upward trend in new building permits. The PCA recently revised its estimates for cement consumption in 2012 to +4%.
Sales in Southeastern Europe are expected to increase as a result of an expansion in Group activities and a gradual rebound in construction activity.
The outlook for cement demand in Egypt remains cautiously optimistic, despite social unrest and economic uncertainty in the country. Meanwhile, cement demand in Turkey remains high for both private and public works.
Titan Group announced that it will continue to focus on improving its financial flexibility. The Group plans to curtail its operating costs by completing the restructuring plan that it launched last year, which is expected to result in annual savings of €26 million. Titan Group is also implementing solutions to reduce energy consumption, as well as substituting conventional with alternative fuels.
Parent company financial results
Titan Cement Co. S.A. announced a net gain after tax and minorities of €0.2 million for the first quarter of 2012 compared to a loss of €6 million the previous year. The parent company’s turnover fell 29% to €42 million, while EBITDA was €12 million versus €5 million in 2011.
Adapted from press release by Callum O’Reilly
Read the article online at: https://www.worldcement.com/europe-cis/04052012/titan_cement_posts_widening_loss_in_first_quarter_2012/