Cementir Holding 9M14 results in line with expectations

Italian cement company Cementir Holding has reported its results for the first nine months of this year. Year-on-year, revenue fell from €741.4 million to €714.7 million over the period under review, while EBITDA grew 10% to €127.7 million. Profit before taxes saw significant growth of 60.7%, reaching €63.7 million and net financial debt fell to €322.2 million from €354.9 million. These results were in line with management expectations and reflect the excellent performance of the group’s businesses in Turkey and Scandinavia, and the positive contribution of Egypt and the Far East, as well as the difficulties experienced in the Italian market and the unfavourable impact of currency depreciations.

Geographic overview

In Denmark, sales of both cement and concrete were up by 3%, while in Norway revenue was more or less in line with 9M13. In Sweden, revenue fell due to a slowdown in construction in the Malmö area.

An increase in cement volumes and prices in Turkey pushed revenue in local currency to grow by about 20% in 9M14. However, the depreciation of the Turkish currency meant that this increase was not expressed in euros. Currency depreciation also affected results from China and Malaysia, meaning the Far East region saw a fall of 3.5% y/y in revenue expressed in euros. In Egypt, where revenue in the local currency rose by around 6% y/y thanks to higher cement sales prices, the depreciation of the Egyptian pound again meant that the positive performance was not expressed in euros. Italy’s construction sector, meanwhile, shows no signs of recovery, with revenue falling by over 20%.

Operating costs fell by 7.9% in 9M14, from €630.8 million to €580.7 million, benefitting from currency depreciations against the euro. Savings were achieved on raw material costs, which fell by €35.9 million compared with 9M13, of which €24.8 million was attributable to the positive impact of exchange rate gains and €11.1 million to savings on the purchase of fuels and energy consumption achieved through a centralised procurement policy and plant efficiency gains.

3Q14 performance

Revenue from sales and services in 3Q14 amounted to €241.8 million, down from €268.9 million in 3Q13, due to the continuing weakness of the Italian market and a slowdown in demand in other regions, including Scandinavia. By contrast, a drop in domestic demand in Turkey was offset by increased cement exports and higher average sales prices, boosting revenue by 6% in local currency (though this was not translated into euros). In China, revenue fell by 10% as a result of falling cement sales, while in Malaysia revenue picked up by around 9% due to rising export prices. Finally, in Egypt, revenue from sales was slightly down y/y due to a decline in volumes sold, partially offset by improved prices. Operating costs for the quarter came to €195 million, a reduction of €20.8 million y/y, thanks to exchange rate developments, the contraction of raw material costs and efficiency gains in procurement, production and logistics.

Outlook

Cementir Holdings does not expect any significant changes in developments in the fourth quarter of 2014 compared with the first nine months of the year. The positive trends recorded in Turkey and Scandinavia are expected to continue and the group hopes to achieve its targets in the Far East and Egypt, while the Italian market is likely to remain weak.

The performance and financial targets for 2014 are confirmed, with the achievement of EBITDA of more than €180 million and net financial debt of about €280 million.

Adapted from press release by Katherine Guenioui

Read the article online at: https://www.worldcement.com/europe-cis/19112014/cementir-holding-9m14-results-in-line-with-expectations-882/