Cimpor takes massive provisions in Brazil

Cimpor's first-half turnover dropped by 31.1 per cent to EUR897.3m, while EBITDA declined by 39.1 per cent to EUR170.1m. The amortisation and provision charge jumped from EUR100.6m to EUR527.9m as a result of a EUR433m good-will impairment charge relating to Brazil. This led to the trading result falling from a profit of EUR178.6m to a EUR357.7m loss and after a 9.2 per cent increase in the net financial charge to EUR182.2m there was a pretax loss of EUR539.9m against a profit of EUR11.8m. After a EUR11.2m tax credit, the interim net loss jumped from EUR7m to EUR526.7m. The net debt at the end of June was 7.5 per cent lower than a year earlier at EUR3415m. 

Group cement deliveries declined by 16 per cent to 11.79Mt.  Cement volumes rose by 17.8 per cent in Mozambique but dropped in Portugal, Brazil, Argentina and Egypt. EBITDA fell in all five areas, led by the 64.5 per cent decline in Brazil to EUR29.2m.

Brazil still remains the largest contributor, accounting for 36.1 per cent of the group total, compared with 38.7 per cent a year earlier. Cement shipments here declined by 20.3 per cent to 4.29Mt. The turnover fell by 45.8 per cent to EUR257m and EBITDA dropped by 64.5 per cent EUR29.2m, reflecting the continued economic and political uncertainty in the country and construction activity was reduced yet again. The operating margin declined from 17.4 per cent a year earlier to 11.4 per cent. In the medium term the scope for growth in both civil engineering and housebuilding remains considerable.

In Argentina volumes declined by 14.1 per cent to 2.77Mt after the previous year’s record and the turnover came down by 26.2 per cent to EUR269m. In Paraguay the much smaller cement tonnage was 2.8 per cent ahead at 0.20Mt, but the turnover declined by 14.9 per cent to EUR23m. EBITDA from Argentina and Paraguay was off by 26 per cent to EUR70.9m, giving an operating margin of 24.3 per cent, compared with 24.6 per cent a year earlier, and was more than double that of Brazil. 

Portugal, which has been be dominated by exports, saw cement shipments drop by 35.7 per cent from 2.37Mt op 1.52Mt, with domestic deliveries declining by nine per cent and exports falling by some 40 per cent, in part reflecting a shortage of hard currency in some African countries.  Turnover came off by 24 per cent to EUR114m and EBITDA, which also includes small Cape Verde Islands operation with a EUR17m turnover, declined by 31.7 per cent to EUR24.3m.

Egyptian cement deliveries declined by 11.8 per cent to 1.56Mt and the turnover shrunk by 22.5 per cent to EUR96m. The EBITDA margin improved in the second quarter thanks to an improved energy mix and should improve further from September as a new coal mill comes online. In South Africa the tonnage improved by 5.2 per cent to 0.66Mt, but the turnover declined by 19.3 per cent to EUR49m and EBITDA suffered from higher raw materials and maintenance costs as well as a less favourable exchange rate. The cement deliveries in Mozambique improved by 17.8 per cent to 0.78Mt, but the turnover decreased by 12.8 per cent to EUR64m, reflecting exchange rate movements, but EBITDA did improve. Overall African EBITDA declined by 26.5 per cent to EUR43m.