Italcementi improves margins

Italcementi's 2014 turnover declined by a further 1.8 per cent to EUR4155.6m but the underlying EBITDA did improve by 3.2 per cent to EUR649.1m.

The depreciation charge declined by 3.1 per cent to EUR408.3m and impairment charges dropped by a further 70.9 per cent to EUR9.2m and the trading profit advanced by a further 42.3 per cent to EUR226.7m. Net financial charges rose by 14.3 per cent to EUR136.5m while the contribution from associates rose by 57.1 per cent to EUR11.7m to give a pre-tax profit of EUR72.4m compared with EUR27.55m in 2013. The tax charge was 4.6 per cent higher at EUR121.3m while the minorities charge declined by 24.3 per cent to give a net attributable loss of EUR107.1m, down from EUR165m in 2013.

Capital investment was increased by 54 per cent to EUR522.8m, including spending on acquisitions of EUR4.1m. Net debt at the end of the year was 11.5 per cent higher at EUR2156.7m, with the gearing level increasing from 51.3 per cent to 55.4 per cent. Shipments of cement and clinker edged ahead by 0.6 per cent to 43.4Mt. The aggregates tonnage declined by 5.6 per cent to 30.8Mt while ready-mixed concrete deliveries were down by 6.5 per cent to 11.5Mm³. There was a EUR12m profit from the sale of emission rights compared with nothing in 2013, and half of that gain was made in Italy.

Italy
The Italian turnover declined by 8.3 per cent to EUR600.5m, but the underlying EBITDA went from a loss of EUR15.2m to a profit of EUR19.3m and the trading loss was reduced by 47.8 per cent to EUR66.9m. Cement deliveries were off by 0.6 per cent and the average cement price was in decline throughout the year. Production was suspended at some plants and one further grinding centre was closed, while the new kiln at the Rezzato works came on-stream in November. Volumes rose by 19.3 per cent in aggregates, but fell by some 19 per cent in ready-mixed concrete. Losses in ready-mixed concrete increased as impairment charges exceeded cost savings achieved.

Rest of Europe
The French and Belgian turnover emerged 7.6 per cent lower at EUR1362.5m and the underlying EBITDA declined by 15.8 per cent to EUR222.2m. Cement and clinker sales declined by 7.2 per cent, though there was a 1.9 per cent improvement in Belgium. Cement prices came under pressure and declined in the relatively highly priced French market. Aggregates shipments declined by 5.2 per cent, while in ready-mixed concrete volumes fell by 6.7 per cent in France but were relatively stable in Belgium.

Spanish domestic deliveries showed a one per cent recovery, following years of declining sales, and exports continued to increase, giving an overall cement and clinker volume 22.4 per cent higher, but overall pricing was lower as a result of fierce competition. Aggregates shipments fell by a further 32.5 per cent and ready-mixed concrete deliveries came off by another 26.7 per cent on top of the previous year's 63.4 per cent fall. The Spanish turnover did improve by 8.2 per cent to EUR107.6m and the EBITDA went a EUR2.6m loss to a profit of EUR10m.

Greek cementitious volumes staged a 22.5 per cent recovery. Aggregates deliveries recovered by 20.4 per cent and there was a 15.5 per cent advance in ready-mixed concrete deliveries. The Greek turnover improved by 21.1 per cent to EUR29.3m and there was a EUR0.1m profit at the EBITDA against a EUR3.8m loss in the previous year.

Bulgarian cement and clinker sales volume improved by 8.4 per cent in the domestic market, but lower higher export volumes to Russia led to an overall volume decline of 7.9 per cent, while turnover eased by 3.4 per cent to EUR57m but the EBITDA improved by some 32 per cent to EUR11.9m.

North Africa & Middle East
The Egyptian turnover showed an 18 per cent increase to EUR588.8m, in spite of negative currency movements and the EBITDA did fall by 4.2 per cent to EUR105.5m, but and at the trading level there was a 7.3 per cent improvement to a EUR55.8m profit. Irregular gas supplies continued to pose a problem, but a 5.5 per cent volume improvement was still achieved. The first of the coal grinding facilities are now on stream, reducing the dependence of irregular gas supplies. Ready-mixed concrete deliveries improved by a further 6.7 per cent.

Moroccan volumes declined by a further 2.7 per cent as domestic deliveries came down by 5.1 per cent but clinker exports increased and turnover declined by 4.8 per cent to EUR309.3m while the EBITDA came off by 4.3 per cent to EUR136.9m. Aggregates volumes fell by 28.8 per cent and ready-mixed concrete deliveries by 26.5 per cent. as competitive pressures increased. In Kuwait, cement volumes improved by 6.1 per cent and ready-mixed concrete deliveries advanced by 9.4 per cent as infrastructural investments increased. Turnover increased by 3.4 per cent to EUR59m while the EBITDA declined by 46 per cent to EUR2.7m.

USA
Turnover across the USA, Canada and Puerto Rico increased by 6.0 per cent to EUR454.2m but the EBITDA declined by 7.2 per cent to EUR51m as adverse weather hit the first half results. Cement volumes did improve by 5.8 per cent to 4.5m tonnes as the US improvement led to a 20.6 per cent volume gain in the final quarter. Aggregates deliveries declined by a further 5.3 per cent to 1.3m tonnes, still reflecting the end of the power station contract in Canada, while ready-mixed concrete deliveries advanced by 4.1 per cent to 0.8m m³.

Asia
The Asian turnover declined by 1.3 per cent to EUR538.3m, but the EBITDA did advance by 8.5 per cent to EUR85.4m. The Thai turnover advanced by 0.7 per cent to EUR271.2m and the EBITDA moved ahead by 22.1 per cent to EUR64.1m. Domestic cement shipments were 0.5 per cent ahead, while increased in exports saw the overall volume up by 4.7 per cent. Domestic prices improved. Ready-mixed concrete deliveries rose by 3.7 per cent.

The Indian turnover also improved by 0.7 per cent to EUR228.4m, but the EBITDA fell by 32.0 per cent to EUR18.34m, as cement consumption in southern India declined again. Domestic cement deliveries were 1.8 per cent lower but the overall level of cement and clinker shipments rose by 1.4 per cent. Domestic price were ahead on the previous year. Prices came down as a result of increased competitive pressure and higher operating costs led to a reduction in the EBITDA.

Italcementi's Kazakhstan cement and clinker shipments declined by 5.6 per cent, though including exports the decline was a more modest 3.5 per cent. Deliveries of ready-mixed concrete again declined by 20.5 per cent following the previous year’s 45.8 per cent advance. Turnover declined by 21.1 per cent to EUR39m, mainly reflecting the currency devaluations but the EBITDA was boosted by an insurance claim and jumped from EUR0.4m to EUR3.1m. The new dry process clinker lime should come on stream during the first half of 2016.

Trading
The international trading operations handled 27.6 per cent more cement and clinker in 2014 at 3.8m tonnes. This included increased exports from Spain, Morocco and Thailand, while shipments from Bulgaria were lower. The turnover increased by 19.7 per cent to EUR202.3m and the EBITDA advanced by 28.4 per cent to EUR10.4, but the trading profit from these activities declined by 25.4 per cent to EUR3.8m.