Robust demand and pricing support 23% revenue advance for Titan in 1Q22
Titan Cement International SA has announced a 22.6 per cent YoY increase in revenue to EUR454.6m in the opening quarter of 2022. This has been attributed to strong pricing across all products and countries, and resilient demand. EBITDA over the same period came in at EUR46.4m, down 17.3 per cent YoY as the phasing in of higher prices only gradually absorbed the increase in energy and input costs. According to the company, further price increases have already been announced in most markets and will be effective within the 1H22. Net profit after taxes and minority interests declined by 91.4 per cent YoY in the 1Q22 to EUR1.3m, compared to EUR15.3m in the same period a year earlier, mainly due to lower EBITDA levels and negative foreign exchange variances, primarily the devaluation of the Egyptian pound. Group net debt ended the quarter at EUR756.8m, equivalent to the end of the 1Q21.
On a regional basis, Titan saw its US revenue expand from EUR227.3m in the 1Q21 to EUR267.6m in the same period this year, while EBITDA contracted from EUR38.5m to EUR24m. Although demand for residential construction remains strong and commercial projects are seeing a resurgence, margins were impacted by high freight costs, the increased cost of imported cement, and rising input costs. Significant price increases were introduced in January with a second round of increases already announced for June.
Total revenue for the Greece and western Europe market improved by 23 per cent YoY to EUR69.9m, while EBITDA advanced by 4.7 per cent to EUR6.3m. Domestic demand across all sectors is growing in the Greek market with price increases well absorbed. The US continues to be Greece’s biggest export destination. Rising input costs have been dealt with not only through price increases but also greater use of alternative fuels and further operational efficiencies resulting from the ongoing digitalisation projects taking place across all Titan plants.
Healthy construction activity and the successful introduction of price increases led to a 30 per cent YoY uptick in revenue in the southeastern Europe market in the 1Q22 to EUR63.7m. However, with the region heavily dependent on imported energy, electricity costs have risen significantly with further price increases implemented to help recover margins. As a result, EBITDA declined from EUR11.3m in the 1Q21 to EUR10.7m in the same period this year. Investment in alternative fuels and solar projects continues.
Total revenue in the eastern Mediterranean region reached EUR53.4m in the 1Q22, up 41.9 per cent YoY, while EBITDA rose from EUR0.2m in the first quarter of 2021 to EUR5.4m this year. The Egyptian market saw growth of 4.7 per cent YoY, driven by public housing projects and national infrastructure projects. Meanwhile, Turkey, struggling with the fallout of the Russia-Ukraine war and soaring inflation on top of a harsh winter, saw volumes decline. Cement price increases have now been introduced as a countermeasure.
Despite growing inflationary pressure and interest rates, the general elections in October this year are driving investment in public housing and infrastructure projects in Brazil. The total cement market in Brazil in the 1Q22, however, declined by 2.4 per cent with prices showing a significant increase in a bid to cover the impact of cost inflation.
From a sustainability point of view, the company successfully reduced its net specific CO2 emissions by 6.6 per cent in the first quarter of 2022, compared to the same period last year. In Greece the installation of a new precalciner at the Kamari plant will enable greater use of waste-derived fuels and is due to complete in 2023. The Kamari works has also welcomed a pilot carbon capture unit with the aim of producing value-added chemicals and material from CO2 captured from the plant. Titan has also launched ENVIRA in the Greek market, an innovative ready-mixed concrete that reduces the possibility of flooding, conserves water resources and controls the increase in average temperatures in urban built environments. Meanwhile, Titan America continues to grow its sales of its lower carbon Type IL cement, which is now available in New Jersey and the New York metropolitan areas.
Looking ahead, Titan expects the US market to remain strong with solid residential activity and infrastructure investment. Europe is also forecast to remain positive with EU-funded projects in Greece in particular helping to support demand going forward. Across all regions, cost pressures are expected to persist, leading to further price adjustments.
