Cimpor books larger loss in 2016

With declining volumes in Cimpor's three most important markets. In Brazil, Argentina and Portugal, the turnover fell by 26.1 per cent in 2016 to EUR1842.8m and EBITDA came off by 32.9 per cent to EUR352.6m.

After a EUR584m impairment charge against the goodwill carried in Brazil, the total depreciation and amortisation charge was more than trebled to EUR781.5m, giving a trading loss of EUR428.9m compared with a profit of EUR313.3m in the previous year. After a net financial charge 8.7 per cent lower at EUR370.7m, the pretax loss jumped from of EUR92.8m to EUR799.6m. A 9.7 per cent higher tax credit of EUR13.6m tax credit gave a net attributable loss of EUR787.6m compared with a loss of EUR71.2m in the previous year. Net debt at the end of 2016 stood at EUR3381m, an increase of 10 per cent, while shareholders' funds dropped from EUR268m to a negative EUR446m. Capital expenditure was increased by 9.3 per cent to EUR117m, having been reduced by 45.2 per cent in the previous year.

The group cement and clinker volume sold in the year amounted to 24.06Mt, a decline of 14.4 per cent. Brazil represented 35 per cent of the consolidated cement volume, compared with 37 per cent a year earlier and 41.7 per cent the year before. Argentina accounted for 24.2 per cent, Egypt 13.1 per cent, Portugal 12.3 per cent, Mozambique 6.8 per cent and South Africa 5.9 per cent.

Brazil remains, by far, the largest market for the group for cement, concrete and mortar, and the company is the second-largest cement producer in Brazil, behind Votorantim, with an installed cement capacity of 18.3Mta. Primarily influenced by falling domestic demand, turnover fell by 35.6 per cent to EUR525m and EBITDA dropped by 65.6 per cent to EUR59.7m. Cement and clinker sales volume dropped by 19.1 per cent, on top of a 16.3 per cent reduction in the previous year, to 8.51Mt. As the clinker capacity utilisation declined, further kiln capacity was mothballed. The company is expecting to see a further decline in volumes of around six per cent in 2017, but the EBITDA margin should improve, but sufficiently to entirely offset the reduction in volume.

Argentina's Loma Negra saw cement volumes decline by 10.3 per cent to 5.89Mt from the previous year’s record figure of 6.57Mt. The cement capacity stands at 8.7Mta and the company has a market share of around 45 per cent. Demand is currently on the increase and volumes are expected to increase by almost 8 per cent this year. The EBITDA margin increased and stands in excess of 24 per cent. Yguazu Cementos in Paraguay saw its cement volume increase at a faster rate than the market and the new integrated works is now operating at capacity. The cement volume rose by 16.4 per cent and reached a new record of 0.46Mt as its new cement works came on-stream with a cement capacity of 0.8Mta. The turnover in Paraguay advances as did the EBITDA margin. Between them, Argentina and Paraguay generated a turnover 21.1 per cent lower, primarily reflecting exchange rate movements, at EUR645m and an EBITDA 18.7 per cent down at EUR163.3m. 

The Portuguese cement deliveries registered a 32.5 per cent drop to 2.99Mt reflecting a weak domestic market and a 44 per cent drop in exports. As a result, production at the Loulé kiln was suspended. One of the kilns at the Alhandra works is working at a fuel substitution rate of 50 per cent, using shredded tyres and other waste-derived fuels. The Portuguese domestic demand is now picking up. In Cape Verde cement volumes recovered, helped by an increased investment in the tourist sector. Total EBITDA from Portugal and Cape Verde improved by 18.1 per cent to EUR37.1m on a turnover that declined by 18.1 per cent to EUR260m. The international trading activities generated a turnover 39.4 per cent lower at EUR211m and the EBITDA contribution dropped from EUR8.5m to EUR6.6m.

Turnover in Africa declined by 19.1 per cent to EUR412m and EBITDA fell by 22.1 per cent to EUR85.8m, as the local currencies weakened against the euro. In Egypt Amrayah saw cement and clinker volumes decline by a further 5.7 per cent to 3.19Mt. The new EUR46m coal mill came on-stream in September, giving a substantial energy flexibility and eliminate the dependence on oil and gas. In Mozambique a successful commercial strategy and reduced import pressure led to a 4.3 per cent volume growth to 1.65Mt, a new record, in a declining market. South Africa produced a one per cent reduction in the volume sold to 1.42Mt as competitive pressures increased. The use of alternative fuels was increased by starting to burn whole tyres at one of the Simuna kilns.