Adverse weather and foreign currency exchange affect Titan's 1Q18
Τitan Group 1Q18 results suffered from adverse weather conditions in the US and southeastern Europe, coupled with the strengthening of the euro against the US dollar and other currencies. Consolidated turnover reached EUR322.5m, recording a EUR39m decline compared to the previous year. EBITDA declined by EUR7.6m reaching EUR43.5m. Net profit after minorities and the provision for taxes was EUR0.9m, versus a EUR3.9m loss recorded in the 1Q17.
Wet weather on the eastern coast of the US during 1Q18 curtailed growth volumes. In US dollar-terms, turnover and EBITDA were unchanged compared to the 1Q17. In euro terms, turnover in the US declined by 14 per cent in the 1Q18 and reached EUR190.6m. EBITDA declined by 15 per cent compared to the 1Q17 to EUR29.1m.
In Greece housing construction remained dormant, while the commencement of major public and private works has been further delayed. Cement exports faced unfavourable exchange rates limiting profitability margins. Total turnover in Greece and western Europe in the 1Q18 declined by eight per cent and stood at EUR52.9m. EBITDA reached EUR2.1m, versus EUR4.4m in the 1Q17.
Adverse weather conditions impacted southeastern Europe, where total turnover declined by 10 per cent and stood at EUR34.2m while EBITDA increased slightly by four per cent reaching EUR3.9m. In Turkey cement demand was at high levels, driven by major infrastructure projects. However, the weakening of the Turkish lira prevented the improvement in results in euro terms.
Performance in Egypt improved significantly compared to the 4Q17 mainly due to the increase in prices during the 1Q18. The market recorded an approximately three per cent increase in demand compared to the previous year. However, the weakening of the Egyptian pound against the euro negatively impacted results. Turnover in the 1Q18 reached EUR44.8m, recording a one per cent decline while EBITDA reached EUR8.4m, a six per cent decline compared to the 1Q17.
In Brazil the positive performance of the economy led to an increase in both volumes and prices, resulting in improved results for Cimento Apodi against the 1Q17. Group net debt at the end of the first quarter stood at EUR738m, EUR15m higher compared to the end of 2017. Capital expenditures in the 1Q18 stood at EUR19m versus EUR33m in the respective quarter of 2017 and reflected, by and large, investments undertaken in the company's US operations.
Outlook
In the US building activity is anticipated to recover the ground lost in the first quarter and register positive growth for the full year. Indicators for residential building activity and infrastructure spending remain positive.
Major public works are not expected to commence in Greece in the short term and private building activity remains at very low levels.
In Egypt the entry into operation of a new state-owned cement plant with 12Mta capacity will exacerbate the current capacity surplus, impacting utilisation rates at existing plants.
