Buzzi Unicem's 1H20 cement and clinker sales fall 3%
Buzzi Unicem reports that group cement and clinker sales declined 3.4 per cent in the 1H20. The drop in volumes was concentrated in Italy and eastern Europe, due to the spread of the pandemic and to the associated restrictions on economic activity. In central Europe shipments were only slightly below the level reached in the same period of 2019. There was strong performance in the USA, despite the increasing challenges presented by COVID-19.
Net sales achieved in the half year were substantially stable (+0.1 per cent over 2019), amounting to EUR1.5201bn compared to EUR1.5187bn in 2019, while EBITDA increased by 8.8 per cent from EUR288.6m to EUR313.9m.
Cement sales of the group in the first six months of 2020 stood at 13.4Mt, down 3.4 per cent compared to the same period of 2019. Ready-mix concrete output recorded a more marked decline, reaching 5.5Mm3, down 6.3 per cent compared to the previous year.
Italy
Sales of hydraulic binders and clinker closed the first six months, inevitably declining over the same period of the previous year (-12.2 per cent). However, there was a favourable change of selling prices. The ready-mix concrete sector recorded an even higher contraction (-22.6 per cent) but with prices improving. Net sales in Italy stood at EUR220.8m, down 12.9 per cent from EUR253.4m in 2019. EBITDA of the first six months reached EUR8.8m, decreasing compared to EUR32.1m of 2019.
Central Europe
In Germany, after the slight progress in sales volumes achieved during the first quarter, shipments of hydraulic binders slowed down considerably during April and May, while in June there was a promising recovery. Overall, in the first six months of 2020, group’s cement plants posted sales that were down 1.2 per cent, compared to 2019, with average prices strengthening. The ready-mix concrete sector showed output expandding by 5.6 per cent compared to the same period of 2019, thanks to the additional contribution of the plants acquired last year in Düsseldorf, and further supporte by improving prices. Overall net sales came in at EUR339.4m (EUR322.4m in 2019), up 5.3 per cent, while EBITDA increased 23.1 per cent to EUR51.8m (EUR42.1m in 2019).
In Luxembourg and The Netherlands, the half year closed down four per cent, despite the recovery in demand in May and June, which allowed a good pick-up, albeit partial. Prices maintained a favourable performance.
Production volumes in the ready-mix concrete sector declined 13.3 per cent but with prices progressing. Net sales amounted to EUR91.2m, slowing down compared to the previous year (EUR96.7m). EBITDA decreased by EUR2.6m, from EUR9m in 2019 to EUR6.4m in the period under review.
Eastern Europe
In the Czech Republic, cement sales recorded in the first six months of the year were up 1.7 per cent. The ready-mix concrete sector, which includes Slovakia, also showed production levels edging up by 1.6 per cent, with prices in local currency improving. Overall net sales, marginally penalised by the negative exchange rate effect, stood at EUR75.2m, compared to EUR74.9m in 2019 (+0.4 per cent), while EBITDA increased by EUR2.1m, from EUR17.7m in 2019 to EUR19.7m in the period under review.
In Poland 1H cement volumes closed down by -9.6 per cent compared to the volumes achieved in the same period of the previous year. Particularly in May and April, this figure was influenced by the containment measures adopted, which caused some difficulties in the supply of raw materials, as well as by unfavourable weather conditions in some areas of the country. However, the average price level in local currency markedly progressed.
Ready-mix concrete output showed an even more marked decrease of 19.2 per cent but saw a recovery in prices in local currency. Net sales came in at EUR55.2m, down 5.2 per cent compared to EUR58.2m in 2019 and EBITDA increased from EUR12.5m to EUR15.4m (+23.4 per cent).
In Ukraine in the first six months of the year cement volumes showed a sharp -11.5 per cent decline, the causes of which are due to both the COVID-19 pandemci and the sudden increase in imports from Turkey, particularly in the south of the country. Overall net sales amounted to EUR51.7m, down 2.3 per cent from EUR52.9m in 2019, while EBITDA stood at EUR6.7m compared to EUR7.1m in the 1H19 (-5.4 per cent).
In Russia the sales recorded in the first half showed a negative trend of 6.8 per cent compared to the volumes reached in the previous year, due to the evident contraction that occurred in April and May, as a consequence of the measures to contain the infections, although some signs of recovery emerged in June. Average unit prices, in local currency, showed a favourable change. The decline in oil prices led to a marked contraction in the demand for special oilwell cements, being particularly evident in the second quarter. Net sales stood at EUR92.9m, down 7.7 per cent from EUR100.6m in the same period of 2019, while EBITDA was substantially stable at EUR24.8m (EUR24.6m in 2019).
USA
The 1H20 showed volumes up 4.5 per cent compared to the levels of the previous year. Ready-mix concrete output, mainly present in Texas, closed the first half slightly down by two per cent compared to the same period of 2019, with selling prices in local currency improving. In this context, net revenues came in at EUR611.6m, up six per cent compared to EUR577.1m in the first six months of 2019, positively influenced by the strengthening of the dollar (+2.5 per cent). EBITDA increased by 25.9 per cent, from EUR143m to EUR180.1m.
Mexico
The first half cement sales volumes edged up by one per cent, with selling prices in local currency showing a small decline. On the other hand, ready-mix concrete output significantly decreased, with a change in prices in local currency negative too. Net sales and EBITDA in local currency decreased by 3.3 and 4.9 per cent, respectively.
Brazil
In the 1H20 cement and clinker sales volumes advanced by 7.7 per cent compared to 1H19. Net sales, with reference to 100 per cent of the associate, stood at EUR61.2m, down 6.5 per cent compared to EUR65.5m in 2019, while EBITDA came in at EUR16.5m versus EUR7.5m in 2019.
Outlook
In Italy in the second half of the year, Buzzi Unicem believes that the demand will continue to recover moderately, although this will only partially offset the loss in volumes suffered during the so-called lockdown period. In central Europe the group expects a marginal slowdown in demand in the second half of the year, while in eastern Europe the development of operating results is expected to worsen. Sales in the USA are also expected to contract in the second half of the current year.
Recurring EBITDA is expected to close the year down between 5-10 per cent compared to the 2019 result.
