Secil 1Q15 boosted by Angola operations

Semapa, the Portuguese holding company that controls Secil, said turnover in its Cement and Derivatives Business unit for the first quarter of 2015 increased by 2.4 per cent YoY to EUR99.9m. The growth is mostly attributed to the performance of the ready-mix business unit in Portugal and Angola operations.

EBITDA during the three month period rose by four per cent to EUR17.1m. Operating income was down by 25 per cent to EUR4.7m due to the increase in depreciation. Consolidated net income for the period fell to EUR2.3m versus EUR2.7m a year earlier.

Portugal accounted for 54.1 per cent of Secil’s turnover (compared with 56.8 per cent in 1Q14), followed by Lebanon and Tunisia with 18.9 and 17.3 per cent, respectively.

Portugal
Turnover in Portugal was down by 6.5 per cent YoY to EUR38.1m. Domestic turnover and volumes advanced by 4.7 and nine per cent, respectively. However, the increase was not enough to offset the decline in export activity which fell by 16.8 per cent.

Semapa noted that Portuguese cement consumption rose by eight per cent in 1Q15 after many years of trending downwards. According to Portugal's National Institute of Statistics (INE), the confidence indicator for the construction and public works showed an increase in March, continuing the upward trend started in late 2012 and setting a record high since February 2010.

In other business segments in Portugal (ready-mix concrete, aggregates, mortars, precasts, etc), turnover rose by 48.6 per cent to reach around EUR18.7m. Turnover in the ready-mix unit jumped by 67.7 per cent to EUR13.1m.

Tunisia
In Tunisia, Semapa noted that market competition is becoming "increasingly pronounced, given the large number of competitors," with consequent pressure on sale prices. Turnover was up by 3.9 per cent to EUR15.5m, with the export performance “strong,” according to the company. Despite a decline in sales prices seen in recent month, the average price in 1Q15 was higher than the previous year following the liberalisation of prices in 2014 and the respective increases carried out in January and July, allowing Secil to compensate for a drop in domestic sales volumes. On the export front, despite increased supply and competition (mainly in shipments destined for Algeria), Secil recorded a 48.8 per cent YoY increase in turnover.

Lebanon
In Lebanon, the cement business saw turnover down by 12.6 per cent YoY to 17.1m, essentially due to a 28.5 per cent decline in sales volumes which were affected by a slowdown in construction activity and adverse weather conditions. According to data by Blominvest Bank, construction activity was down by 26.8 per cent in the first two months of the year, leading to the cement market being down by 26 per cent.

Angola
Turnover in Angola during the 1Q15 reached EUR5.5m, up 22.6 per cent YoY. The performance was primarily attributed to an increase in volumes which rose by 11.2 per cent to 43,5000t, partially offsetting a drop in the average selling price in local currency terms.

Going forward, Semapa expects that the drop in Angola’s state revenue – resulting from lower oil prices and its subsequent effect on investment and public spending plans – is likely to negatively impact the construction industry and public works projects. This is despite several social housing, dam and road construction projects being awarded last year and due for implementation in 2015.

Brazil
In Brazil, total operations by local subsidiary the Supremo Group generated a turnover of EUR12.7m, up by 4.1 per cent YoY. EBITDA was down by 72.5 per cent to EUR403,000. During the reporting period, the cement business unit was impacted by imported cement sales, an increase in personnel costs due to employees being hired for a new cement plant, and increased fuel and energy costs.

In the southern region, where the Supremo Group operates, cement consumption is expected to have reached 2.6Mt in the first three months of this year – increasing similarly to the nationwide advance of three per cent, according to data obtained by Semapa.

Supremo Cimentos has just completed the construction of a new integratedplant in Adrianópolis, in the state of Paraná, taking the company's total installed capacity to 2Mta.