Italcementi – Europe slows while North America sees upturn
By Sandy Guthrie02 August 2012
Half-year figures for the Italcementi group showed that revenue dropped 4.9%, which it put down to the contraction in volumes on the European market and the volatility of the Egyptian market.
At the same time, the board has approved the proposed merger of Cementeria di Montalto with Italcementi.
Claiming to be the fifth largest cement producer, Italcementi said that its EBITDA (earnings before interest, taxes, depreciation and amortization) was down 11.8% in the first half of the year, which it said was in part a result of the decision to sell fewer CO2 emission rights. It said, however, that its operating results benefited from programmes to boost efficiency and cut fixed costs.
Among industrialised countries, it felt the first half confirmed the upturn in North America and the recovery in prices in some markets. Demand slowed in the Eurozone, however.
Among emerging countries, it reported positive market performance in India and Morocco. While the sales trend in Egypt remained negative, it felt it was "better than expected".
The group said that its withdrawal from the Turkish market and a new strategic agreement in China had generated a positive impact on the financial position.
Italcementi said that widespread economic uncertainty in the first half of 2012 had reflected varying trends from one country to another among the industrialised nations. Although conditions were generally better, it also said it reflected the onset of some uncertainty in the second quarter in some emerging countries.
Against this background, Italcementi confirmed the improvement in cement sales in North America, while Central Western Europe continued to be affected by the contraction in demand as a result of the difficult economic and financial situation in the area.
In the emerging countries, sales made good progress in Asia, with the exception of Kazakhstan, it said, and were substantially stable at healthy levels in Morocco.
During the first half, the majority of group cement sales volumes were said to have benefited from a "substantially positive" sales price trend. Italcementi said that, compared with the previous year, the largest increases were in India, Italy, North America and Spain.
In Egypt, the average price in the first half was slightly down on the year before, although the level in the second quarter of 2012 was higher than in the second quarter of 2011. Conversely, Italcementi said that in the countries where price levels were most penalised - Bulgaria and Thailand in particular - it reported an increase in sales volumes.
It said the drop in revenue to 4.9% eased in the second quarter, to a reduction of 3.4%.
Looking ahead in the construction sector, Italcementi said the growth of the US market and healthy trend in the group's emerging countries helped mitigate the decline in demand in the Eurozone.
It has intensified the rationalisation and efficiency-boosting measures previously introduced or underway, in what it described as "an incisive response to the negative trends in economic conditions".
It felt the effects of these measures, together with a positive dynamic in prices on a number of markets, should enable the group to reach full-year operating margins in line with those of 2011.