Titan Cement reported that in the USA the positive momentum in US fundamentals continued in the first half of the year. Revenue in the USA recorded a 10.2 per cent increase in US dollar terms in the 1H21 but was almost flat in euro terms (+0.8 per cent) at EUR479.3m.
US EBITDA reached EUR81.2m, up by 1.9 per cent in US dollar terms but down 6.8 per cent in euro terms when compared with the 1H20. The discrepancy is due to higher maintenance costs in the 1H21 as well as increased logistics and labour costs.
In Greece the encouraging trends of demand recorded in 2020 continued in 1H21 as demand increased in the second quarter. Total revenue for the Greece and western Europe region in the 1H21 grew by 17.4 per cent to EUR133.5m while EBITDA came in at EUR17m, versus EUR8.2m in the 1H20.
Performance in southeastern Europe continued strongly across markets, with robust volume development. Although rising energy prices, electricity in particular, have softened profitability margins, thanks to higher levels of utilisation of the cement plants overall performance remained at high levels. Revenue for the region as a whole increased by 14.1 per cent to EUR132.3m while EBITDA increased by 7.5 per cent to EUR42m in the 1H21.
In Egypt cement consumption was flat in the first half of the year. However, the drive from private residential and New Cities development remained in place, and the pricing environment has significantly improved since the beginning of the year.
In Turkey Adocim domestic sales volumes surged YoY, along with prices also reflecting the supply tightness of the market. The weakening of the local currency in addition to exposure to foreign currency-denominated input costs limited Turkey’s profitability to a low contribution.
Total revenue in the eastern Mediterranean reached EUR75.9m, a decline of 6.4 per cent YoY, though there was a 8.6 per cent growth in local currencies. EBITDA reached EUR2.4m posting a 1.4 per cent increase versus the 1H20.
The market in the northeast of Brazil continued to grow, posting a 15 per cent increase versus the 1H20, continuing the upswing recorded for the last four quarters. Sales of the Apodi joint venture increased, and in the first half of the year Apodi posted a raise in revenue to EUR36.7m (vs EUR29.9m in 1H20) as well as in EBITDA at EUR8.8m vs EUR3.5 m in 2020.
Outlook
Construction activity has proved resilient to the challenging circumstances posed by COVID-19. Operating profitability has been held back by the spike in energy and freight costs, as well as by broader supply bottlenecks, in part a reflection of the sudden buoyancy of activity. In the US housing and infrastructure spending should continue to drive demand growth.
In Greece demand is also on a growth path, driven by the recovery in housing in the key urban centres, along with the many peripheral infrastructure projects across the country. In Egypt the production quotas imposed on 1 July by the authorities, applicable to all cement producers, aim to address the long-standing structural imbalance in the country. Meanwhile, in Turkey supportive government policies seem set to continue driving construction demand growth despite the precarious state of the economy.
In Brazil the National Union of Cement Industry expects that in 2021 cement demand will increase by six per cent compared to 2020 levels with home renovations and new construction projects driving demand.
