Ciment Français: bad weather conditions hampered Q1 performance

At a meeting on May 5, the Board of Directors of Ciments Français (Italcementi Group), examined and approved the unaudited consolidated accounts as of March 31, 2010.

Against a difficult economic background, the first quarter of 2010 was characterised by very bad weather conditions in Western Europe and North America.

In Q1, Group sales volumes declined in cement and clinker at 10.3 million t (-4.8%), in aggregates at 8.1 million t (-11.0%) and in ready mix concrete at 2.4 million m³ (-7.2% and -4.2% on a historical basis). Cement and clinker volumes were down in all the industrialised countries. In emerging countries, while volumes dropped in Bulgaria and China, they remained stable in Egypt and increased in Morocco, Turkey and India. They improved in the trading activity.

Lower sales volumes and a globally unfavorable trend in prices weighed on Q1 consolidated revenues, which were down 9.4% on Q1 2009 at €930.2 million, after recognition of a negative exchange effect (-1.3%) and a positive consolidation scope effect (+0.2%). On a comparable basis, revenues dropped by 8.3%; the decrease was particularly marked in the industrialised countries.

The impact of market conditions on results related to slumping volumes in some countries (France/Belgium, Spain, Bulgaria and China) or declining prices (particularly in India and Bulgaria). These effects were mitigated in part by the positive contribution from the continuing efforts made by the Group towards productivity and fixed cost-containment. Recurring EBITDA totaled €140.1 million (-26.3%) with EBIT down 44.1% at €54.8 million.

After recognition of €22.1 million in net interest expense (as against €21.9 million in 2009), including the cost for early repurchase of US private placements (net cost of €16.6 million), net consolidated Group profit totaled €28.1 million (-48.3%) with the share attributable to equity owners of Group parent amounting to -€1.1 million (compared with +€25.7 million in Q1 2009).

Total Group investments in industrial and financial fixed assets over the first three months of 2010 totaled €74.8 million as against €133.4 million in Q1 2009. They mainly related to the completion work of the new plants in Morocco, India and North America, initiated over the last years.

As of 31 March 2010, net financial debt amounted to €1503.0 million as against €1562.3 million as of December 31, 2009. The decrease in indebtedness can be explained in part by a further decrease in working capital requirements.

At the beginning of March, Ciments Français made a repurchase offer to all holders of its 2002 and 2006 US Private Placement Notes. The offer closed on April 14, 2010 with the repurchase of 100% of the Notes issued in 2006 and 92% of the Notes issued in 2002.

The transaction was re-financed via Italcementi loans, which will extend by another year the average duration of the debt. The more favourable interest rates of the loans will offset the cost of early repurchase of the US private placements.

Total equity totaled €4109.2 million as against €3896.5 million at the end of December 2009 and the debt to equity ratio (net financial debt/total equity) was 36.6% as against 40.1% as of 31 December 2009.

Outlook:

The uncertainty related to the international economic development remains very high. Signs of a moderate recovery in industrialised countries at the end of the quarter, together with the continuing upward business trend in most of the emerging countries seem to indicate that market conditions will remain difficult yet better than at the beginning of the year.

Despite the positive contribution deriving from efforts to improve productivity and contain costs, operating results for the rest of the year should reflect those difficult market conditions.

Read the article online at: https://www.worldcement.com/europe-cis/18052010/ciment_fran%C3%A7ais_bad_weather_conditions_hampered_q1_performance/