French cement maker Vicat has reported its first half figures, which show a 1.7% y/y increase in consolidated sales across the Group for 1H13 on a reported basis, rising to 3.2% at constant scope and exchange rates. Particular geographic market highlights included Turkey, the US and Kazakhstan, which performed particularly well. There were also positive developments in India, as well as robust growth in Switzerland. These positive factors were partially offset by poor weather conditions in some markets, as well as the continuing economic downturn in Western Europe and pressure on prices in India and West Africa.
In all, consolidated EBITDA reached €201 million, up 2.1% y/y. Net financial expenses rose by almost €2 million to €21.5 million, due mainly to the end of the capitalisation period for financial expenses related to the start-up of new business in India and partly offset by reduced financial expenses in France. Consolidated net income rose by 9.0% to €54.9 million, giving a net margin of 4.8%, up from 4.5% in 1H12. The cement business saw sales growth of 3.8% in 1H13 and 3.8% in volume growth, while EBITDA totalled €147 million, down 3.4% at constant scope and exchange rates.
Cement sales were down 10.5% in France, due in part to poor weather conditions and the continued downturn of the construction market. However, average selling prices increased slightly. EBITDA fell by 5.2% y/y, but improved operating performance led to a rise in the EBITDA margin in 1H13. For the Group, consolidated sales decreased by 4.6% to €426 million, while the concrete & aggregates business segment performed favourably. Looking ahead, the Group expects the market to remain difficult, with further declines in volumes though in a favourable price environment.
Europe (excluding France)
Vicat’s Swiss business performed well in a more competitive environment. In the cement sector, sales were €55 million and EBITDA fell by 6.2%. In Italy, total sales fell by 16% and volumes by more than 23%. However, selling prices rose and EBITDA grew by more than 49%. Consolidated sales in Europe, excluding France, rose by 5.1% and EBITDA by 2.6%. Going forward, the Group anticipates continued positive performance in Switzerland and an improving outlook for Italy.
Business picked up in the US on the back of an improved macro-economic climate, with sales up by 9.8% y/y. In the cement sector, sales increased by 4.1% and selling prices likewise improved. EBITDA for this business line improved from 2012, drawing close to breaking even. Meanwhile, the concrete business saw sales increase by 12.3%. Vicat expects further improvement in both volumes and prices in the remainder of the year.
Turkey, India and Kazakhstan
In Turkey, sales increased by 24.2% to €118 million and EBITDA rose by 30.7% y/y. In cement, the Group’s sales expanded by 18.9% thanks to improved volumes and selling prices. EBITDA for this business line increased by 22%. The Group foresees further positive developments through the rest of the year.
In India, sales were up 18.4% to €87.3 million in 1H13. The Group has been focused on the start-up of Vicat Sagar and building business for Bharathi Cement and has therefore increased volumes by about 34% in the first half. The increasingly competitive business environment led to a deterioration in selling prices, which, in addition to start-up costs, caused EBITDA to decline by 77.7% at constant scope and exchange rates. Going forward, Vicat expects to continue to benefit from India’s burgeoning economy, now as a major player in Southern India. However, the pricing environment will remain volatile.
Vicat managed volume growth of more than 23% in Kazakhstan, where good weather conditions and major infrastructure projects were driving growth in 1H13. Sales for the period rose by 42.8% to €38.9 million and EBITDA hit €14 million as compared with €1 million in 1H12. Vicat is very optimistic about Kazakhstan’s future potential.
Africa & Middle East
Sales in Egypt decreased 11.8% at constant scope and exchange rate, due to a ~25% drop in volumes. Business in Egypt continues to be affected by the security problems there, though this was partially offset by strong selling prices. EBITDA contracted by 19.5%.
In West Africa, sales fell 4.1% and selling prices were down due to price pressures. Volumes remained relatively stable (down 0.8% from 1H12). An increase in electricity prices in Senegal contributed to a fall in EBITDA of 18.6%.
Going forward, the Group expects to capitalise on its production base to expand sales across the region as volumes rise.
Adapted from press release by Katherine Guenioui.
Read the article online at: https://www.worldcement.com/europe-cis/08082013/vicat_reports_growth_in_cement_1h13_97/