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Italcementi reports on a challenging first quarter

World Cement,

Italcementi’s 1Q13 report shows similar challenges to the other European majors in terms of poor weather and sluggish demand in Europe and the Mediterranean. In Italy, especially, cement consumption continues to fall, prompting a reorganisation of the Group’s production system. The ‘Project 2015’ programme, announced in December 2012, will see a number of continuous cycle plants switch to grinding only. Italcementi will still be able to meet cement demand in Italy, but in a manner that permits closer control of operating expenses. Poor weather was also a factor in North America. Both Asia and North Africa performed well, though poor weather in Morocco and energy procurement problems in Egypt impacted results.

Group revenue for the January – March quarter was down 9.3% to €964.8 million due to lower sales volumes, though this was partially compensated by improved prices and efforts to contain operating expenses (totalling a saving of €35 million in the quarter). The absence of income from management of CO2 rights – especially in Italy, France and Bulgaria – together with high energy costs in Egypt brought EBITDA down to €88.5 million, a decline of 32.7%.

Total cement and clinker sales in 1Q13 reached 10 million t, with revenue for this sector down 9.5% at €627 439. In recurring EBITDA terms, Egypt and Thailand showed the greatest progress y/y, while the largest decreases were in Italy and France/Belgium. The Group posted a loss before tax of €36.9 million owing in part to the impact of net finance costs of €19.5 million. The total loss for the period was €58.5 million compared with a loss of €34.4 million for the same period in 2012. Capital expenditure of €64.5 million brought net debt to €2105.9 million at the end of March, up from €1998.3 million at the end of December 2012. Year-on-year, net debt for the period fell by €73 million.

The Group still anticipates a stable outlook for 2013 compared with 2012, as positive trends in North America and Asia counterbalance the reduced demand in Europe.

Adapted from press release by Katherine Guenioui.

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