Titan Group records turnover of EUR1.4bn in FY18

Titan Group recorded consolidated turnover for 2018 at EUR1490.1m, recording a marginal one per cent decline compared to 2017. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell by five per cent to EUR259.7m. Group net profit after minority interests and the provision for taxes reached EUR53.8m, posting a 26 per cent increase compared to 2017.

In 4Q18 group turnover increased by 7.5 per cent reaching EUR388.2m and EBITDA increased by 6.6 per cent to EUR62.8m. Group net profit after minority interests and the provision for taxes reached EUR3.6m, against EUR9.6m in 2017.

USA
In 2018 the US market was the main profit generator for the group with turnover rising by three per cent to US$1015m. Improvements in Florida counter balanced the lower profitability of the mid-Atlantic region, which was affected by protracted inclement weather and increased competition in the border New York area.

Greece and western Europe
Building activity in Greece remained low and operating margins came under pressure in 2018. Cement exports were close to 2017 levels, with the USA the leading destination. Total turnover for Greece and western Europe amounted to EUR237.1m, a 4.7 per cent fall compared to 2017. EBITDA stood at EUR10.9m compared to EUR18.3m in 2017.

Southern Europe
Southern Europe recorded an increase in building activity although energy costs rose. Turnover in 2018 increased by 5.7 per cent reaching EUR238.6m and EBITDA improved by 4.9 per cent to EUR59.7m.

Eastern Mediterranean
Egypt and Turkey saw turnover decline to EUR154.3m down 2.5 per cnet on 2017, while EBITDA stood at EUR11.4m, 13.8 per cent down on 2017. In Egypt cement consumption is estimated to have dropped by six per cent and the 12Mt Beni Suef plant entered the market. Profitability was wiped away with overcapacity, lower utilisation of Titan Cement Egypt and the inability to pass on steep rises in electricity prices as well as the imposition of levies per tonne of cement produced.

The subsidiary in Turkey also had a difficult year with the contraction in construction activity in 2H18 and a 38 per cent fall in the value of the Turkish lira. Group turnover in Turkey in 9M18 was a loss of EUR2.9m against a EUR0.5m profit in 2017.

Brazil
Brazil's market stabilised after four years of decline. However, the Cimentos Apodi joint venture contributed a loss of EUR2.6m against a loss of EUR9.5m in 2017.

Group capex stood at EUR119m in 2018, EUR4m less than in 2017 and half of the amount was directed to improvements in the USA. In October 2018 Titan Group agreed with Cem Sak Group to acquire 75 per cent of Adocim Cimento Beton Sanayi ve Ticaret which own the 1.5Mta integrated Tokat cement plant and three ready-mix plants.

Group operating cash flow stood at EUR148m, up by EUR30m compared to 2017. Group net debt stood at EUR772m up by EUR49m.

Outlook
The USA has a favourable outlook with the PCA forecasting  a cement consumption increase of 2.3 per cent in 2019 and by 1.6 per cent per annum between 2019-23. In Greece the restart of major construction projects are anticipated in 2H19. In southeastern Europe continuing economic growth is expected to drive construction activity, while in Egypt demand levels will remain similar to those in 2018. Operating results will be challenged by limited pricing power. In Turkey there is expected to be a reduction in cement demand in the short term, but longer-term prospects are attractive.

Finally, in Brazil political stability increases the expectations of a new growth cycle in the cement market. Cement demand in the northeast is driven by demographic growth and private building activity in particular.