The strengthening euro – particularly against the US dollar – hit TITAN Group’s first half results. The US is the Athens-based company’s largest market, accounting for around 58.15% of the company’s 1H18 turnover. Turnover was flat in US dollar terms in the first half of the year but down 9% in euro terms. Similarly, US earnings were down 3.7% in dollar terms but 13% in euros.
Overall, TITAN posted a fall in turnover of 7.9% at €773.8 million in 1H18, while earnings were down 14% at €142.1 million. Profit before tax was higher, however, rising 11.1% to €35.2 million.
“The growing US market remained the main profit driver for the group, although the combination of record wet weather and prolonged maintenance shutdowns at the group’s key productive units did not allow for an improvement in EBITDA,” the company said.
Conditions remained challenging in many of the company’s other markets. In Greece, turnover declined after the conclusion of major infrastructure works and subdued activity in the housing sector. Much of TITAN’s Greek production is exports – a situation the company expects to continue through the year.
Around the Mediterranean, conditions were challenging in Turkey and Egypt – where a new 12 million tpy Army-owned cement plant has exacerbated overcapacity issues. Energy costs and additional levies imposed on cement production have also hit the company’s Egyptian operations.
Price increased in Egypt at “imperative in order to recoup costs,” the company said. “However, current market conditions will likely make such increases challenging to achieve in the short term.
“In Turkey, the unfavourable evolution of macroeconomic indicators (inflation, interest rates, foreign exchange rates) coupled with the pressures on the banking system are expected to have a severe effect on the construction sector,” the company continued, although its subsidiary, Adocim, is “well prepared to face these challenges effectively.
The company is more positive on southeast Europe and Brazil, where is sees potential for anew growth cycle in the cement market. Meanwhile, in southeast Europe, “there are expectations for a longer term, mild increase in construction activity. Τhe group’s plants are operating below capacity and, thanks to recent investments, have increased their competitiveness through the expansion of alternative fuel usage, to their own benefit as well as to that of local communities.”
Read the article online at: https://www.worldcement.com/europe-cis/30072018/strong-euro-hits-titan-groups-1h18-results/