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Buzzi Unicem 1H falls below expectations

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World Cement,


Sales volumes in 1H13 fell below expectations for Buzzi Unicem. While growth was seen in the US and Russia, Italy remained a difficult market, with weak domestic demand. Elsewhere in Europe, a combination of stagnant or reduced demand and pricing pressures also impacted results, while Mexico suffered from a market slowdown and increased competition.

Financials

Net sales in 1H13 were down 5.7% against 1H12 at €1273.7 million. EBITDA fell 24.8% y/y to €150.7 million. This figure was affected by non-recurring costs of €1.7 million in 1H13 and by the fact that 1H12 figures included non-recurring income of €7.7 million. On a like-for-like basis, EBITDA decreased by 21.1%.

The price effect was favourable overall, though varying from region to region, being on the rise in Germany and the US and declining across parts of Eastern Europe and in Mexico.

Cement and clinker in Europe

In Italy, cement and clinker volumes fell by 13.5% y/y in an environment of decreased domestic demand, though exports grew. Selling prices strengthened slightly, up 1.3% y/y. Overall net sales were down 17.5% y/y at €202.6 million.

Sales volumes in Germany fell 7.3% y/y. The first quarter was affected by bad weather, whereas the second quarter showed more resilience. Prices were slightly up.

Again, bad weather affected 1Q13 in Luxembourg, where sales picked up in the second quarter to be more in line with 2Q12. In all, cement and clinker volumes decreased by 9.6% over 1H13 with slightly lower average unit revenues. Net sales were down 4.6% y/y at €51.6 million.

Cement volumes were down 16.7% y/y in the Czech Republic and Slovakia and average selling prices also decreased. Cement sales volumes were down 6.5% in Poland, while selling prices in local currency also dropped by 6.6%. These were beginning to pick up in 2Q13, leaving Buzzi Unicem optimistic about the rest of the year.

Ukraine saw a drop in sales of 15.1% in 1H13, but in a favourable price environment. Net sales were down 13.5%.

In Russia, there was an increase in cement volumes sold of 3% y/y and prices were up 10.2% against 2H12. Net sales were up 7.4% to €113.2 million, while EBITDA was down 12.6%, negatively impacted by the ruble devaluation. A fire at the plant stopped production on kiln 5, which is expected to resume normal production this month.

Cement demand up in USA

Cement volumes grew differently in different regions, with the southwest performing particularly well while Midwestern regions showed only slight progress. Sales volumes were up 4.4% in 1H13 and selling prices rose 1.8%, contributing to overall net sales of US$453.2 million, up 8.2%. EBITDA also increased y/y, up 1.2% to US$70.3 million.

Mexico’s cement industry grows more competitive

Buzzi Unicem’s JV with Cementos Molins, Cementos Moctezuma, saw cement sales volumes dip 12.3% in 1H13 and prices contract by 3.8%. This is attributed to a market slowdown and keener compeition. Net sales declined by 12.6% y/y, while EBITDA in local currency fell 18.8%.

Outlook

The results in 1H13 reflect the challenges faced in the different markets. Buzzi Unicem believes grounds exist for improvements in the second half, as volumes recover in Central Europe and market conditions continue to improve in the US. However, these gains may not be substantial enough to bring results for the full year in line with earlier forecasts. Therefore, Buzzi Unicem has refined its expectations for full year 2013 recurring EBITDA down 5% to 10% from the previous year.

Adapted from press release by


 

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