Buzzi Unicem has released its interim results.
During the first quarter of the year, at consolidated level, cement demand increased by some percentage points compared to the same period last year. The intensity of the variance recorded in the United States of America, which in turn occurred thanks to more favourable weather conditions in comparison with the first quarter 2015, which was characterised by bad weather, was crucial for the results achieved. Central Europe confirmed the activity levels of 2015, as well as Italy. In Eastern Europe sales declined due to the continuation of the recession in Russia and the temporary weakness of Ukraine, while Poland and the Czech Republic registered shipment volumes in line with the ones achieved in the same period of 2015.
In the first months of 2016 the weakness of international economy and trade accentuated, but still with differentiations according to the geographies. In Europe the modest cyclical expansion strengthened, driven by domestic demand, although with a trend of weaker exports and inflation at null values. The recovery in the United States, albeit with some uncertainty and results below expectations, continued. In emerging economies, the fragility of expectations is the main risk factor for international growth, due to a recessionary phase which is worsening in Brazil and continuing in Russia, where there are yet visible signs of mitigation, and also to the slowdown in the manufacturing sector and the sharp decline in imports and exports in China. India is the only country among the major emerging ones which recorded a GDP growth at a steady fast pace. The decrease in oil prices did not lead to a strengthening of global economy, whose growth for the whole of the year, which had been recently revised downwards, is estimated at slightly lower levels than in 2015. The consumer price inflation is on the rise in the United States, still very low in the main advanced economies, remains low in China and very high in Brazil and Russia, where, however, it was reduced compared to January. In the early months of the year fears about global growth led to a sharp drop of prices on international financial markets, which then subsided in part; the expansive character of monetary policies in advanced countries was accentuated.
Cement sales of the group were up 2.8% from the first quarter of 2015, reaching 5.0 million tons. The volume trend was favourable in the United States (+16.3%) and fairly stable in Central Europe and Italy. Eastern Europe reported a decrease of 9.2%, mainly due to the declines recorded in Russia and Ukraine. Ready-mix concrete sales posted a slight decrease (-1.7%) compared to the same period of 2015, to 2.4 million cubic meters. The additional working day due to the leap year certainly favoured the sales results achieved.
The price effect in local currency, compared to the first quarter of 2015, was positive in the United States and in Ukraine (driven by inflation). In Italy, Germany and the Czech Republic no significant variances were recorded, while, in local currency, unit net sales suffered a decline in Poland, and showed a slight negative trend also in Russia and Luxembourg.
Consolidated net sales increased from €513.4 million to €540.3 million (+5.2%), gross of a foreign exchange effect which was marginally unfavourable for €0.9 million and a negative change in scope for €1.5 million. Ebitda closed at €50.8 million (+€23.6 million compared to the first quarter of 2015); changes in scope of consolidation were a decrease of €0.1 million and the exchange rate effect was positive for €0.3 million.
On a like-for-like basis net sales would have increased by 5.7% and Ebitda would have come in at €50.5 million. The result for the period includes net non-recurring income of €3.4 million related to gains on sale of fixed assets (in 2015 net non-recurring income equal to €3.8 million).
Net of non-recurring items Ebitda increased from €23.4 million to €47.4 million, with Ebitda to sales margin at 8.8% (4.6% in 2015). After amortisation and depreciation of €46.2 million (€46.4 million in the first quarter of 2015) Ebit stood at €4.5 million (it was negative for €19.2 million in 2015). Net finance costs for the period decreased compared to the previous year (€13.7 million against €43.0 million in 2015), also thanks to lower non-cash items included into this category (exchange rate differences, valuation of derivative instruments). Gains on disposal of investments contributed with €0.5 million, while equity in earnings of associates amounted to €14.1 million (€16.1 million in the first quarter of 2015). As a consequence of the above, the first quarter of 2016 closed with a profit before tax of €5.4 million against a loss of €46.2 million in March 2015. After taxes, net profit for the period was €3.8 million (€3.6 million being the portion attributable to the owners of the company).
Net debt as at 31 March 2016 amounted to €1097.9 million, up €68.2 million over year-end 2015. Total capital expenditures of €69.3 million affected this figure (€68.7 million in the same period of 2015), €30.1 million thereof related to the expansion project at Maryneal (Texas). At the end of the quarter total equity, inclusive of non-controlling interests, stood at €2,492.1 million vs. €2579.4 million as at 31 December 2015. Consequently debt/equity ratio was equal to 0.44 (0.40 at year-end).
- Outlook: At the end of April the placement of a Eurobond with institutional investors had been successfully completed, having the following main terms and conditions:
- nominal amount: €500 million
- maturity: 7 years bullet
- interest rate: fixed annual coupon of 2.125%
- issue price: equal to 99.397% of par value.
Adapted from press release by Rebecca Bowden
Read the article online at: https://www.worldcement.com/europe-cis/09052016/buzzi-unicem-interim-results-63/