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Votorantim benefits from growth in key markets

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World Cement,

Brazilian cement producer, Votorantim, benefitted from an increase in sales volumes in key markets, reporting a rise in net revenues and earnings in 1Q18. Volumes were up in Turkey, India, and Brazil, as well as in the company’s Latin American business, where volumes were boosted by an increase in exports to Argentina and an expansion of its Bolivian operations.

Over the quarter, sales volumes were up 5% at 7 million t in 1Q18. Revenues were up 11% at BRL2.46 billion, while earnings jumped 28% to hit BRL235 million.

The company also reported higher pricing in North America, which offset lower volumes, resulting from harsh winter weather. Adverse weather also hit the company’s operations in Spain and Morocco, although this was offset by the depreciation of the Brazilian real against the euro.

On a regional basis, Votorantim reported higher revenues in its Brazil (VCBR), Latin America (VC LatAm), and Europe, Africa and Asia (VCEAA) businesses. Votorantim North America (VCNA) revenues were down by 4%.

On the earnings side, VCBR reported an almost doubling from BRL63 million to BRL115 million on the back of an “economic rebound, better performance of adjacent products, speciality mortars, and a one-off expense of BRL43 million that negatively impacted 1Q17 results.” On a like-for-like basis, Brazilian earnings were up 9%.

VCEAA reported a 32% rise in earnings, reaching BRL125 million on the back of “growing demand in Turkey, higher domestic prices in the countries and higher CO2 sales in Spain, which combined [to] offset local foreign exchange depreciation and higher fuel and energy prices.”

The largest earnings rise was reported by VC LatAm, however, which saw a 46% increases against 1Q17. Higher cement exports to Argentina and clinker to Paraguay, combined with ramp-up of the Yacuses plant in Bolivia drove the increase.

Looking ahead, Votorantim looks likely to benefit from a recovery in the Brazilian cement market in 2018, after years of lacklustre demand. The Brazilian Cement Association forecasts growth of 1% to 2% this year. Market growth is also anticipated in Spain and Turkey, where Votorantim recently began operation of its new Sivas plant, as well as India. In North America, the weather-impacted first quarter should also give way to growth over the year of 2.8% in cement consumption, according to the Portland Cement Association.

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Cement news 2018