Cimpor's 1H volumes down 2.7 per cent

Cimpor reported that first-half 2017 EBITDA growth in Argentina, Paraguay and South Africa, and to a lesser extent Portugal, mitigated adverse operating environments in the company’s other group regions.

Sales of EUR921m (US$1.096bn) rose 2.6 per cent YoY. An average price adjustment of 10 per cent offset lower volumes.  EBITDA of EUR166m was 2.6 per cent lower compared to 1H16 on the back of non-recurring costs. Excluding these items, EBITDA remained stable.

Cement and clinker volumes totalled 11.5Mt in the 1H17 benefitting from rising consumption in Argentina, increasing market share in Paraguay and South Africa, and a recovery in Portuguese operations. However, volumes were down by  2.7 per cent YoY on the back of market conditions in Brazil, Egypt and Mozambique.

In Brazil Cimpor’s exposure to highly-competitive regions resulted in cement and clinker volumes falling by 11.1 per cent YoY to 3.8Mt. Argentina saw growth in cement and clinker volumes of 6.1 per cent YoY to 2.9Mt while EBITDA rose by 43 per cent.  In Paraguay the new commercial approach by subsidiary Yguazu Cementos boosted volume growth by 37 per cent to 277,000t.

Cimpor's business in Egypt mirrored the local ongoing economic adjustment and exchange rate impact. Volumes declined by 11.6 per cent to 1.38Mt and sales fell by 53.3 per cent. A recently-installed coal mill partially offset the steep increase of energy costs.

In South Africa volumes were up by 15.1 per cent YoY to 750,000t while sales were also up by 15 per cent.

In Mozambique the challenging political and economic environment since late 2016 has led to local cement demand declining by more than 30 per cent. This resulted in Cimpor’s sales being dragged down by 28 per cent and volumes contracted by 34 per cent YoY to 516,00t.

In Portugal local demand continued to recover (estimated to be close to 20 per cent, according to Cimpor) while the company’s exports (mainly clinker) were triggered, resulting in volumes increasing by 17 per cent YoY to 1.78Mt. Sales increased by 14 per cent YoY. In Cape Verde volumes contracted by 11.1 per cent to 93,000t, but the start to delayed major new projects are expected to result in a gradual market recovery.