Titan's regional success
Titan announced its 2020 financial results this week, reporting its highest EBITDA since 2010 at EUR286.2m. The solid results come despite a challenging year amid the effects of the COVID-19 pandemic in its regional markets.
Regional market overview
The group's US operations were supported by market resilience as construction works were allowed to continue as an essential activity. Cement consumption in Florida benefitted from increased housing demand, partially offset by a downturn in non-residential construction due to the struggling tourism and service industries. However, consumption in the New York metropolitan area saw a downturn as it was heavily impacted by the pandemic. Overall, revenue declined by 1.5 per cent YoY to EUR937.7m and EBITDA dipped 1.8 per cent to EUR176.1m. The combination of pent-up demand and an anticipated fiscal stimulus is also expected to boost the country’s economy going forwards. This, alongside Titan America's solid backlogs, point to the company maintaining healthy activity levels and profitability in the country.
In Greece, municipal infrastructure works, logistics projects and the residential housing segment drove domestic demand for building materials. Overall export volumes recorded a small decline in 2020, but results were enhanced by increased operational efficiencies from digital optimisation projects, lower fuel prices and an increase in alternative fuel utilisation. Therefore, total revenue for Greece and western Europe edged up 0.7 per cent to EUR246.6m and its EBITDA increased by EUR5.3m to EUR17.2m. The market fundamentals seen in 2020 are expected to continue into this year, as the housing and infrastructure segments continue to drive demand. The company has also announced an EUR25m investment for its Kamari cement plant in Greece. The project will see a new precalciner in operation by 2022.
After the slowdown in the second quarter of the year, the construction market in southeastern Europe recovered and ended on a strong basis. Although there was a reduction in regional exports, this was offset by positive pricing and domestic volumes. The group’s southeastern Europe revenue reached EUR271m, up 3.2 per cent YoY, and EBITDA advanced 24.6 per cent to EUR96.2m.
The challenging circumstances of the Egyptian cement market had an effect on the company’s eastern Mediterranean region. Structural market pressures were exacerbated by the government’s imposition of a six-month suspension on residential construction permits during the year. As a result, cement consumption fell around 6.5 per cent YoY. Although the eventual relaxation of restrictions in the final quarter of 2020 resulted in a pick-up in demand. Domestic oversupply of cement saw prices remain stagnant. Despite the current difficulties, Titan retains confidence as the country records a consistently positive GDP growth and a strong urbanisation trend.
In Turkey the group’s Adocim subsidiary saw its sales boosted by sharply growing demand from private housing and public infrastructure projects. The depreciation of the lira against the euro was not fully offset by increases in domestic cement prices, but profitability increased on the back of improved export activity. Going forwards, the country’s construction sector is anticipated to maintain its positive trend, despite the uncertain economic outlook.
The Brazilian cement market enjoyed growth for a second year in a row, with demand growing 10.7 per cent YoY to 60.5Mt in 2020. The markets of the group’s Apodi joint venture, the north and northeast, also grew by 14 per cent. Driven by the increased demand and prices, net profit attributable to the group reached EUR2.6m compared to a EUR1m loss in 2019. The demand is not likely to fall away soon either, as the National Union of Cement Industry (SNIC) forecasts another strong year for consumption in 2021.
Digitalisation and optimisation webinar
Titan will be presenting its digital transformation plans at Cemtech’s special two-part webinar on digitalisation and cement plant optimisation. Register now to attend both sessions for free.
