Titan Group results recorded a significant improvement in the nine months of 2016, reflecting the growth of the US market and the improvement of results in Egypt.

Consolidated turnover reached EUR1124.2m, posting a 9.2 per cent increase compared to the same period in 2015. EBITDA increased by 24.1 per cent reaching EUR205m. Net profit, after minority interests and the provision for taxes stood at EUR121.9m compared to EUR36.2m in the nine months of 2015. Net profit was positively affected by a deferred tax recognition of EUR79.4m in the US.

The 3Q16 recorded the highest quarterly profitability of the last five years. Group turnover grew by 12.2 per cent reaching EUR400.4m. EBITDA stood at EUR85.5m posting an increase of 42.8 per cent. Net profit, after minority interests and the provision for taxes stood at EUR112.7m, versus EUR12m in 3Q15. Results were favourably affected by the recording of deferred tax benefits in the US but were negatively impacted by a EUR6.4m provision taken in Egypt for foreign currency exchange losses arising from outstanding balances in foreign currency between the Egyptian subsidiaries and other Group affiliates.

USA
In the US demand for building materials continues to grow in the regions where the group operates. In the first nine months of 2016, turnover in the US saw a 17.7 per cent increase and reached EUR584.2m while EBITDA grew by 37.8 per cent to EUR98m. Turnover and EBITDA from the US account for about 50 per cent of the respective figures for the group at this time.

Greece
In Greece private construction remains in deep recession and any limited demand for building materials comes mostly from public works. The small improvement recorded in the 3Q16 is solely due to an extremely low basis of comparison versus the respective quarter in 2015, which immediately followed the introduction of capital controls that had brought building activity essentially to a halt. Exports, which continue to absorb more than two-thirds of the production of Greek plants, mitigate, to a certain extent, the decline in demand in the domestic market.

Group turnover in the Greece and western Europe region in the nine months of 2016 declined by 1.5 per cent and stood at EUR195.6m. EBITDA fell by 10.9 per cent compared to the nine months of 2015 and stood at EUR28m.

The markets of southeastern Europe provided a mixed picture, recording an increase in total sales volumes but at lower average prices. Group turnover for the nine months posted a marginal increase of 0.8 per cent and stood at EUR156.8m while EBITDA declined by one per cent to EUR46.1m.

Egypt and Turkey
Activities in Egypt recorded an improvement for the third consecutive quarter. The recovery is due partly to increased production and sales volumes, and partly to the decline in production costs following the gradual conversion of the plants to solid fuels. Results in Egypt recorded a significant improvement, despite the devaluation of the Egyptian pound in March 2016 and the volatility of market prices. Group turnover in the nine months of 2016 recorded an 18 per cent increase in local currency, and a 4.9 per cent increase in Euro-terms, reaching EUR187.7m. EBITDA stood at €32.8m more than doubling over the corresponding period in 2016 (EUR16m).

In Turkey demand continued at healthy levels for the third quarter of the year, owing both to public and private works. Net profit attributable to Titan from our subsidiary reached EUR3.5m.

Brazilian investment
On 20 September 2016 Titan Group concluded the deal for the investment in Cimento Apodi in Brazil, which marks the expansion of group activities in Latin America. Through this investment, Titan Group enters a promising market with long-term potential, joining forces with established local partners. Titan controls 94 per cent of the vehicle which owns 50 per cent of Apodi and will account for its participation as an equity investment.

In addition to acquisitions, which amounted to a total of EUR91m in the nine months of 2016, capex for the group stood at EUR96.6m. These regard mostly the expansion of activities in the US and investments towards attaining energy self-sufficiency in Egypt.

Group operating cash flow in the nine months of 2016, reached EUR80m, versus EUR8m in the same period the previous year, owing to the improved profitability of the group and the overall lower investment activity. Mostly as a result of acquisitions spending, group net debt increased by EUR91m compared to December 2015 levels and stood at EUR713m at the end of September 2016.
 
Outlook
For the remainder of 2016, the same trends evident in the nine months are expected to continue. At this point in time, the recovering US market is the main motor of growth and profitability for Titan, while Egypt is also recovering due to the growth in market demand as well as higher utilisation and increased cost competitiveness of Titan plants. The recovery of the construction industry in the US is expected to continue beyond the current year. Mid-term trends appear positive both for the residential and commercial sectors as well as for infrastructure projects.

Demand in Greece is expected to remain at extremely low levels, similar to those of 2015. Greek cement production is expected, once again in 2016, to be largely geared towards exports.

In southeastern Europe economic recovery is still being affected by the economic weakness of eurozone neighbours, which are the region’s main trading and investment partners. Although signs of recovery are evident in certain countries, construction in the region overall lacks momentum.

In Egypt demand for building materials is projected to continue to grow. The group by completing the investments for the utilisation of solid and alternative fuels at its plants, has ensured fuel sufficiency and improved its cost structure. It should be noted however, that the anticipated agreement with the IMF, coupled with the devaluation of the currency, creates uncertainties and poses risks for the short term.

In Turkey demand currently appears unaffected by recent political events. In Brazil, which is undergoing a severe political and economic crisis, cement demand is expected to continue declining for the remainder of 2016.
 
Parent company Titan SA results
Turnover at parent company Titan Cement SA for the nine months of 2016 declined by five per cent and stood at EUR194m while EBITDA reached EUR25.7m versus EUR31.5m in the nine months of 2015. Net profit after tax reached EUR16.4m versus EUR0.4m in the same period in 2015. Compared to 2015, net profit after tax for 2016 includes EUR20.6m received in the form of dividends from subsidiaries abroad.