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Ciment Francais Q2 results reflect upheaval in Egypt

World Cement,

At a meeting on July 27, 2011 chaired by Yves René Nanot, the Board of Directors of Ciments Français (Italcementi Group) examined and approved the consolidated accounts as of June 30, 2011.

Significant events

On March 25, 2011 the Group sold Set Group Holding to the Turkish conglomerate Limak Holding. Pursuant to IFRS 5, gains and losses on the disposal of these assets are presented in one line “Profit (loss) from discontinued operations” in the income statement. Data for the first six months of 2010 has been restated likewise. During the reporting period, the Group’s percentage of interest in Afyon Cimento decreased from 76.5% to 51.0%. The opportunity to sell the remaining interest in this company is currently being assessed.

Results for the period

During the first six-month period of 2011, the Group’s business activity remained stable compared with the year-earlier period, mostly because of the sound results posted in the first quarter supported by particularly favourable weather conditions. Most of the industrialised countries faced a still difficult economic situation, whereas major Asian countries and Morocco reported significant business growth. In Egypt, operations slowed down considerably although results at the end of June remained strongly positive.

Cement demand on the Egyptian market decreased due to the political crisis. This together with the commissioning of new production capacities created pressure on prices. Overall, the price uptrend in the second quarter, particularly in India and Thailand, managed to partly mitigate the increase in variable costs.

Group sales volumes in the first six months of 2011 remained relatively stable (-0.7%) for cement and clinker at 21.9 million t. They decreased slightly (-4.2%) in aggregates at 18.4 million t, but improved (+4.4%) in ready mix concrete at 5.0 million m3.

In cement and clinker, sales volumes increased in India (+16.3%), France/Belgium (+10.8%), Thailand (+6.6%) and Morocco (+6.0%). Volumes dropped in Greece (-26.1%), Bulgaria (-25.0%) and Egypt (-14.1%). Volumes remained fairly steady in the other countries.

In aggregates, sales volumes increased in North America and France/Belgium; they declined in Greece, Spain and Morocco.

In ready mix concrete, sales volumes improved in France/Belgium, Morocco and Thailand, but fell in Kazakhstan, Greece, Spain and Egypt.

Consolidated revenues for the six-month period amounted to €2042.2 million, down 1.8% on H1 2010 due to a negative exchange effect (-2.5%) mainly related to the depreciation of the Egyptian pound. Revenues net of the exchange effect were up 0.8%. They increased in India (+47.5%), Thailand (+19.1%), France/Belgium (+9.5%) and Morocco (+4.6%). Aside from Egypt (-20.3%), revenues decreased in Greece (-35.8%), Spain (-10.2%) and North America (-2.1%).

Recurring EBITDA amounted to €386.4 million, down 12.8% primarily due to higher energy costs and an unfavourable exchange effect. EBIT totalled €205.0 million, down


After recognition of €13.8 million in net interest expense (inclusive of gains on disposal of equity investments) as against €32.4 million in 2010 (including the impact of the US private placements buyback), net consolidated Group profit totalled €232.2 million (including the impact of the sale of Set Group Holding for €109.1 million) as against €166.9 million in the first six months of 2010. The share of profit attributable to equity owners of Group parent amounted to €193.0 million compared with €103.0 million in the first six months of 2010.

Investments in industrial and financial fixed assets over the first six months of 2011 amounted to €170.8 million as against €202.8 million in the first six months of 2010. They increased mainly in France/Belgium but declined in North America, Morocco and India, following the commissioning of the new lines of production.

As of June 30, 2011 net financial debt was down €218.1 million (-15.5%) at €1193.4 million as against €1411.6 million as of 31 December 2010. The decrease resulted essentially from the sale of Set Group Holding and the subsequent reduction of €281.4 million in net financial debt.

Total equity amounted to €4129.9 million as against €4268.0 million at the end of December 2010. The debt to equity ratio (net financial debt/total equity) was 28.9% as against 33.1% as of 31 December 2010.

Interim dividend

In view of the net profit for the first six-month period and the financial strength of the Group, the Board of Directors has decided the payment of an interim dividend of €1.50 per share. Dividend will be paid on August 17, 2011 with August 12, 2011 as ex-dividend date.


The improvement in Group business activity in emerging countries (essentially Morocco, India and Thailand) together with the stabilisation of both prices and volumes in most of the mature countries should continue during the second half of the year, albeit in a difficult market environment.

However, because of the deterioration of the Egyptian market performance so far included in the Group’s forecasts, operating results for the second half of the year should be in line with the performance of the first half. The still substantial uncertainty characterising the political and market framework in Egypt remains a risk factor hard to measure.

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