Italcementi’s profits fall in spite of recoveries in North America and India

Italcementi’s first half turnover came off by 4.9 per cent to €2299.8m while the running EBITDA declined by 11.6 per cent to €328.7m. The trading profit fell by 37.4 per cent to €100.6m, and after an 84.2 per cent increase in the net interest charge to €47.3m and a 39.8 per cent reduction in income from associates, the pre-tax dropped by 59.8 per cent to €55.4m. 

With a 13.6 per cent increase in the net interest charge to €63.0m and a loss, rather than a gain, from discontinued activities, the net group profit shrunk to just €0.8m and after a €38.2m minorities charge, there was a net attributable loss of €37.4m compared with a €115m profit. Net debt at the end of June was 1.2 per cent higher than a year earlier at €2,283.5m, giving a gearing of 47.6 per cent compared with 46.5 per cent a year earlier. Capital expenditure during the period was 17.9 per cent lower at €178.8m.

Cement and clinker shipments in the half year declined by 7.5 per cent to 23.5Mt, while deliveries of aggregates were down by 13.6 per cent to 17.2Mt and ready-mixed concrete volumes came off by 11.3 per cent to 6.6Mm³. 

The Western European turnover came off by 10.7 per cent to €1252.5m and the EBITDA declined by 16.8 per cent to €126.4m. Cement and clinker volumes fell by 18.6 per cent to 8.2Mt, while aggregates shipments were down by 14.9 per cent to 15.5Mt and ready-mixed concrete deliveries were down by 16.3 per cent to 4.6Mm³. Italian cement and clinker volume reduced by 24.9 per cent in the second quarter, having fallen by 27.9 per cent in the first quarter, while cement prices have improved. Turnover declined by 9.2 per cent to €421.2m, while the EBITDA loss was reduced from €16.3m to €0.5m. France & Belgium saw turnover decline 8.9 per cent to €769.5m and the EBITDA fell 19.6 per cent to €126.2m. Including modest exports, cement volumes declined by 9.9 per cent in France and fell by 17.1 per cent in Belgium, with average prices being slightly lower as import pressures increased. Spanish turnover fell by 27.0 per cent to €61m and the EBITDA dropped by 79.1 per cent to €2.3m. Domestic cement deliveries declined by 37.5 per cent, but thanks to exports, the overall tonnage was down by a more modest 15.8 per cent.

The Middle East and Bulgaria generated a turnover just 2.3 per cent lower at €533.1m, but the EBITDA came down by 14.7 per cent to €158.6m. Egyptian turnover was off by 5.6 per cent to €296.3m and the EBITDA fell by 21 per cent in uncertain political environment and excess production capacity. Increased exports limited the volume decline to 6.4 per cent, while ready-mixed concrete deliveries were off by 1.2 per cent while prices fell. Morocco is now the largest profit earner in the region, in spite of a 0.3 per cent reduction in turnover to €180m and the EBITDA being 2.3 per cent lower at €76.5m. Domestic deliveries edged ahead by 0.1 per cent, but clinker sales were down as were prices in an increasingly competitive environment. In the rest of the Black Sea and Middle Eastern markets showed a 10.3 per cent recovery in turnover to €56.8m, but the EBITDA fell by 36.4 per cent to €13.4m. In Bulgaria, cement volumes recovered by 29.0 per cent in the domestic market and by 39.4 per cent including exports, boosting turnover by 27.2 per cent, but profits fell because of lower gains from the sale of emission certificates. In Kuwait, turnover was 1.1 per cent lower at €30m, with volumes down by 9.0 per cent in cement but up by 4.9 per cent in ready-mixed concrete.

Asian cement sales improved by 4.3 per cent to 5.1Mt, with turnover increasing by 8.2 per cent to €258.7m but the EBITDA declined by 20.5 per cent to €41.6m. The Indian turnover rose by 12.8 per cent to €131.0m but the EBITDA was 14.5 per cent lower at €28.9m because of higher energy costs, though prices were increased. Cement and clinker sales rose by 10.2 per cent. The Thai turnover was 4.1 per cent higher at €108.3m but the EBITDA fell by 33.5 per cent to €11.1m as prices were pushed lower by competitive pressures. Domestic deliveries improved by 3.6 per cent, but including exports the volume increase was just 2.2 per cent, and ready-mixed concrete deliveries decreased by 14 per cent. In Kazakhstan, turnover improved by 2.6 per cent to €18.8m, but the EBITDA was some 8 per cent lower at €2m. Cement volumes declined by 10.3 per cent in the domestic market and by 15.3 per cent overall.

The North American turnover recovered by 19.0 per cent to €204.6m and the previous year’s €9.4m loss at the EBITDA level was turned into a €6.7m profit, helped by better prices and lower distribution costs. This improvement was also helped by better climatic conditions that enabled an 8.7 per cent increase in cement shipments to 2.0Mt. Ready-mixed concrete deliveries rose by 24.6 per cent to 0.4m m³ and shipments of aggregates were up by 17.9 per cent to 0.7Mt.The international cement and clinker trading activities saw volumes recover by 35.8 per cent to 1.8Mt. These were mainly clinker exports from Spain and Egypt, but also cement exports from Egypt to Libya. The trading turnover increased 22.3 per cent to €111.6m but the EBITDA declined by some 19 per cent to €4.9m.