Italcementi hit by lower Egyptian volumes and prices

Italcementi's full year 2011 results have been impacted by its Egyptian operations which saw lower volumes and prices as the outlook for region remains uncertain.

Italcementi’s turnover edged ahead by 1.3% last year to €4720.5m, but declined by exactly the same percentage on a comparable basis. Group cement shipments were down by 1.9% to 51.1Mt and the turnover from cement fell by 7.8% to €3056.3m, with cement volumes a bit higher in North America and in Asia but being lower elsewhere.  In concrete and aggregates, turnover amounted to €1,387.9m as shipments of aggregates improved by 3.7% to 38.1Mt and ready-mixed concrete deliveries improved by an underlying 0.8% to 14.5m m³.

The western European turnover was down by around 7.9% to €2680.8m as cement and clinker volumes declined by 2.3% to 18.8Mt, with Italy down by 0.5Mt to 8.9Mt. Italian prices, however, showed a recovery. The re-consolidation of Calcestruzzi makes the absolute European downstream volumes non-comparable, but at the underlying level aggregates shipments were down by 5.8% to 34.8Mt though ready-mixed concrete deliveries did advance by 1.5% to 10.7Mm³. Analysts at JP Morgan have noted that it foresees no near term positive catalysts as residential and non-residential orders continue to remain subdued and government austerity measures are likely to impact infrastructure spending.

Turnover from the Mediterranean and Black Sea regions fell by 17.2% to €1,030.2m as Egypt, in particular, weakened in the face of increased supply and reduced demand. Cement and clinker shipments declined by 5.4% to 16.1Mt, with an improvement in Morocco partially offsetting the reduction in Egyptian demand. Aggregates volumes fell by 16.7% to 1.7Mt, but ready-mixed concrete deliveries, where Egypt plays a relatively smaller part, improved by 3.5% to 2.4Mm³. Again, JP Morgan note that given the political instability, it remains concerned about the region’s outlook.

Asian turnover improved by 11.2% to €499.4m, though cement deliveries were just 0.3% higher at 11.1Mt, but pricing did improve in both India and Thailand. The Asian downstream activities are still fairly small in group terms and remain comparatively modest and are dominated by Thailand. Aggregates shipments recovered by a modest 3.3%, after the previous year’s 52.1% prop, and stood at drop to 0.2Mt. Ready-mixed concrete deliveries weakened by 5.9% to 0.7m m³, after a very strong performance in the previous year.

North American turnover showed a further recovery of 2.4% in local currency terms, but when converted into euros, there was a 2.5% reduction to €405.1m. Cement deliveries improved by 5.1% to 4.2Mt, but ready-mixed concrete deliveries were 1.4% lower at 0.8Mm³. Sales of aggregates were boosted by important road works in Canada and deliveries jumped by 40.7% to 1.4Mt.

Finally, the international trading activities saw turnover fall by 20.0% to €183.4m, as the cement and clinker trading volume dropped by 27.1% to 2.7Mt. The reasons behind this fall are to be found in the absence of clinker sales from Egypt and reduced volumes available for export from Thailand.

The full 2010 results are set to be announced on the 2nd of March after the market has closed.