Buzzi Unicem's Board of Directors gave an outlook for 2021 with expected sales recovery in Italy and an economic recovery in the USA, while forecasting higher industry inflation forces for building material production going forward.
In Italy construction investments are expected to grow moderately, mainly favoured by the residential building renovation sector and by a gradual recovery of activity in the commercial and public segments. In this context, Buzzi Unicem believe that a recovery in its volumes is likely, also thanks to the comparison with a 2020 that was strongly conditioned (especially during the first half) by the COVID-19 pandemic. The company expects a positive development of selling prices, but energy costs are clearly increasing.
In central Europe Buzzi Unicem expect sales volumes to decline slightly. In a general context of increasing costs, especially those relating to energy factors and CO2 emission rights, selling prices should continue to strengthen. In short, Buzzi Unicem estimates that operating results will decline moderately.
In Poland the company believes it probable that the demand for cement, after the decline recorded in 2020, will remain stable, with prices still strengthening and, therefore, that the operating results may close marginally progressing.
On the contrary, in the Czech Republic and Slovakia, Buzzi Unicem expects an unfavourable change in volumes sold, with stable selling prices. Therefore, it believes that the economic trend in this area will be penalised compared to 2020.
With Ukraine's macroeconomic context being still particularly uncertain, an ongoing pressure on cement imports though the Black Sea is foreseen. Operating performance should be characterised by sales volumes moderately declining, stable prices and costs increasing. These dynamics suggest a negative change in the operating results.
In Russia Buzzi Unicem believe that the resilience of cement demand and the increase in oil prices can reflect on the dynamics of its sales. The expected market conditions should allow selling prices to hold well, while the main cost items should remain stable. Therefore, EBITDA in local currency could show a modest positive change. However, the ongoing weakness of the ruble, which has already arisen in the 2H20, will cause a decline from last year's result.
The forecast US economic recovery for the current year should only partially reflect on the growth in construction investments, which are expected to develop moderately. Net of some probable difficulties in the ready-mix concrete sector, Buzzi Unicem expect a pretty differentiated improvement of prices, according to the local competitive situations.
Unfortunately, the picture of industry inflation that is emerging for all the main cost items is more certain. EBITDA, in local currency, should show a negative development compared to the figure recorded last year, returning to the levels of 2019. The weakness of the dollar, if confirmed, would lead to a further decline in results.
In conclusion, at a consolidated level, Buzzi Unicem believe it is likely for 2021 a decrease in recurring EBITDA, compared to the excellent results achieved in the previous period. The slowdown may be more or less significant depending on how the pandemic will evolve in the coming months, as well as its impact on economic activity in the geographic areas where the group operates.
The capital expenditure programme approved for 2021 is more meaningful than the one of the year just ended and includes several projects aimed at the continuous improvement of the operational efficiency as well as at the challenging CO2 emission reductions that the group is targeting.
