The Board of Directors of Cementir Holding have approved the company’s consolidated results at 31 March 2016.
Revenue from sales for 1Q16 increased by 2.8% compared to 2015, as a result of the strong performance in all the main geographical areas of operations, except for Italy and China.
Specifically, in the Scandinavian countries revenue increased by €1.6 million (+1.6%) compared to 1Q15, thanks to the positive performance of cement sales in Denmark, which offset the decline in ready-mixed concrete sales volumes, despite the seasonal effect of the earlier Easter holidays with respect to the previous year. In Denmark, the construction industry began the year intensively with strong activity in civil works projects, favouring the 11.2% increase in cement sales, despite the harsh winter, with average sales prices almost unchanged compared to the 1Q last year. In contrast, ready-mixed concrete sales declined by 3.4% compared to the same period of 2015, although with differing trends in the countries involved: a fall in Denmark (-9.7%), due to the completion of several infrastructure projects, and a rise both in Norway (+2.8%), where the market showed signs of growth compared to the previous year, and Sweden, where the intensive construction activity in the Malmö area generated an 11.4% increase in sales volumes. The average price of ready-mixed concrete in local currency remained stable in these geographical areas compared to 1Q15.
In Turkey, revenue from sales in local currency was up 15% on 1Q15, as a result of the increase in demand in the Izmir and Edirne areas, which generated a significant increase in sales volumes of cement and ready-mixed concrete (+8.1% and +39.4% compared to 31 March 2015), while average sales prices in local currency were slightly down on the average for the same period of 2015. However, the increase in revenue achieved in Turkey was offset by the depreciation of the Turkish Lira against the Euro, as the average exchange rate for 1Q16 was around 17% lower than the average exchange rate for 1Q15.
In Egypt, despite the economic impact of the climate of political and social instability, sales volumes for cement and clinker were up 11.5% on 31 March 2015, mainly due to the recovery in domestic demand, with a slight drop in sales prices in local currency.
In Malaysia, after having increased production capacity, revenue from sales was up around 75% compared to the first quarter of 2015, as a result of the doubling of sales volumes of white cement and clinker, mainly due to exports to Australia.
In China, however, revenue in local currency fell by around 9% compared to 1Q15, with the increase in sales volumes of white cement on the domestic market having been offset by the fall in export volumes. Lastly, in Italy, revenue from sales was around 8% lower than at 31 March 2015 due to a fall in sales volumes of cement (-11%) accompanied by a slight rise in sales prices.
The performance for the quarter was adversely impacted by the seasonal effect of the earlier Easter holidays with respect to the previous year. Total operating revenue, which came to €218.9 million, were down 1.1% compared to €221.3 million for the first quarter 2015, reflecting the decrease in the stock of semi-finished products and finished goods. Operating costs, amounting to €197.6 million, were essentially unchanged on 1Q15; however, at constant exchange rates, operating costs would have amounted to €209.1 million, up €11.9 million on the previous year, with €11.5 million attributable to the positive exchange rate effect of the depreciation of the main foreign currencies against the Euro. Specifically, the cost of raw materials at constant exchange rates amounted to €104.2 million, an increase of €7.8 million on €96.4 million at 31 March 2015, mainly due to the higher quantities of cement and readymixed concrete produced and sold. Personnel costs at constant exchange rates amounted to €40.5 million, up €0.8 million over 2015. Other operating costs at constant exchange rates came to €64.4 million, an increase of €3.4 million compared to 1Q15, mainly due to the difference in the scheduling of the maintenance work on industrial plants. EBITDA, amounting to €21.3 million, was down 11.8% on €24.2 million for 2015, as a result of lower earnings generated in Turkey, and to a lesser extent in Italy, as well as the improvements achieved in the Scandinavian countries and the Far East, and the steady performance in Egypt. The EBITDA margin came to 10.1%, showing a slight reduction in industrial profitability compared to the same period of 2015 (11.8%). At constant exchange rates, EBITDA would have been €23.4 million, down €0.8 million on 31 March 2015, with an EBITDA margin of 10.5% at constant exchange rates. EBIT, net of amortisation, depreciation, impairment losses and provisions totalling €20.2 million, was positive at €1.2 million, (€3.1 million at 31 March 2015). The net financial expense of €7.2 million represented a deterioration on 1Q15 (income of €0.7 million), mainly due to the negative valuation of the financial instruments held to hedge commodity and interest rate risk. Profit (loss) before taxes showed a loss of €6.0 million (profit of €3.8 million at 31 March 2015). Net financial debt at 31 March 2016 totalled €271.9 million, with a negative change of €49.8 million compared to 31 December 2015, mainly attributable to movements in working capital and the annual maintenance of plants, usually only carried out in the early part of the year.
Total equity at 31 March 2016 amounted to €1098.9 million (€1131.1 million at 31 December 2015), without including the calculation of the taxes on the earnings for the period. Key events of the quarter With regard to the offer for the acquisition of the business division of Sacci SpA made by the subsidiary Cementir Italia Spa, on 14 March 2016 a meeting was held with creditors, which voted in favour of the Sacci SpA’s composition with creditors. On 18 May 2016, the composition with creditors will also be subject to further endorsement by the Court of Rome. The closing of the transaction is scheduled for July 2016, save for postponements or delays. With regard to the Waste Management operations, both the United Kingdom and Turkey posted an increase in volumes and revenue compared to the same period of 2015. Outlook Management confirms the performance and financial targets for the year 2016, which forecast EBITDA of around €190 million and net financial debt of about €180 million.
Adapted by press release by Rebecca Bowden
Read the article online at: https://www.worldcement.com/europe-cis/16052016/cementir-holding-1q16-results-107/