Financial year 2009 preliminary figures
Cement sales volume at 25.5 million tons; ready-mix concrete at 13.9 million cubic meters
Consolidated net sales equal to €2,672 million (-24.1%)
| || |
|Cement sales||m ton||25.5||32.1||-20.4|
|Ready-mix sales||m m3||13.9||17.0||-18.4|
|Dec 09||Dec 08||Change|
The Board of Directors of Buzzi Unicem met on February 9, 2010 to examine the preliminary figures for the year 2009.
Cement sales total 25.5 million tons, -20.4% over 2008. During 2009 the real economy contraction negatively impacted the construction industry in all geographical areas of group’s operations. Among the mature markets the United States was the most penalized one, mainly due to the very weak demand in the residential segment. Central Europe countries, underpinned by public investment plans, in the second half only partially recovered the slow-down accrued in the first six months of the year. In Italy, the weakening of domestic demand combined with a strong reduction of exports to the other Med-rim countries, also hard hit by the international crisis. Eastern Europe emerging countries, which up to 2008 had contributed to the continuous improvement of results, significantly downsized their activities (especially Russia and Ukraine); also Mexico, which in the first half had reported a positive growth, closed the year with slightly lower sales volumes.
Ready-mix concrete output at 13.9 million cubic meters was in line with cement volumes (-18.4%) due to very difficult trading conditions in Ukraine, the Czech Republic and Slovakia, the Netherlands and Germany.
Consolidated net sales were down 24.1% from €3,520 million to €2,672 million; changes in scope positively impacted for €38 million while foreign exchange accounted for a decrease of €87 million. Like for like, net sales would have decreased by 22.8%.
Net debt as of December 31, 2009 amounted to €1,212 million, up €152 million over €1,060 million at year-end 2008. The net debt increase was attributable both to the contraction of cash flow from operations and to the capital expenditures referred to the progress or completion of some capacity expansion projects in the United States (Selma, MO), Russia (Suchoi Log), Luxembourg (Esch-Sur-Alzette) and Mexico (Apazápan), which totalled approx. €230 million.
Cement and clinker volumes, exports included, decreased by 16.4%, in line with the group’s trend in the first nine months. Domestic consumption was down for the third year running, after the particularly long positive cycle (1997-2006) the construction industry had enjoyed. New house starts recorded a sharp decline following the supply surplus available on the market. In the non-residential segment the slowdown worsened compared with the previous year due to the country’s economic environment; public investments were downsized by restrictive budget policies. Despite a higher pressure on production costs, average unit revenues increasingly declined during the year (-6.0%) due to a very strong competition on volumes. In the ready-mix concrete sector too, volumes trend was negative (-13.7%) but prices remained virtually stable (-0.4%). Overall net sales in Italy amounted to €707 million, down 16.9% over 2008.
The German economy gradually stabilized during the year, showing the first signs of improvement in the third and fourth quarter. However, the reduction in employment rate and in foreign trade strongly curbed consumer spending power, with obvious repercussions on residential and non-residential building. Conversely, infrastructure spending progressed in the second half of the year thanks to the stimulus plans carried out by the central government and destined mainly for the development of the road and rail network. Cement deliveries were down 13.3%, while the sales policies implemented allowed to improve pricing by 7.0%. Likewise, ready-mix concrete volumes decreased by 19.8% against an average prices growth of 8.5%. Overall net sales decreased from €595 million in 2008 to €528 million in 2009, down 11.2%.
Luxembourg too was penalized by the international economy turmoil, mainly in the first six months of the year. The second part of 2009 showed a progressive improvement of trading conditions, with a growth of cement volumes in the last quarter compared with the same period a year earlier. However total volumes sold decreased by 8.3% with average unit revenues up 4.8%. Net sales came in at €83 million versus €89 million in 2008.
In the Netherlands, exports slowdown restrained economic growth, negatively affecting also the construction sector. Ready-mix concrete volumes sold decreased by 22.8% while prices were up 4.9%. Net sales, including also aggregates business, stood at €113 million (€133 million in 2008, down 15.2%). The change is attributable for about €5 million to the decrease of the scope of consolidation.
Poland proved to be the country with the soundest economy in the area, thanks to a higher industry diversification. The slowdown recorded in residential and non-residential building was countered by a sizeable increase of infrastructure and public works spending, favored by the funds allocated by the EU. After a rebound in the second quarter, cement sales volumes settled at levels little below the previous year’s ones, posting a 10.1% decrease with prices in local currency quite stable (-1.2%). Ready-mix concrete volumes instead declined by 15.8% with prices falling by 9.2%. Net sales decreased from €184 million to €121 million, €28 million thereof due to zloty devaluation.
In the Czech Republic, building activities slowed down, after a number of years of uninterrupted growth, from 2000 to mid 2008. The major investment decline was recorded in the non-residential market, which accounts for over 38% of the construction sector. Our sales contracted by 23.9% for cement and 31.6% for ready-mix concrete, Slovakia included. Cement prices in local currency were slightly up (+0.6%) while ready-mix ones declined by 1.3%. Net sales decreased from €261 million to €176 million. The local currency devaluation negatively impacted net sales for €8 million.
In Ukraine, the dire economic crisis had a strong impact on our activities, which underwent a radical downsizing. Despite a progressive improvement during the year, after an outset penalized by harsh weather conditions, cement and ready-mix concrete volumes sold declined by 44.6% and 67.5%. Selling prices in local currency were down 4.3% and 6.6% respectively. Net sales stood at €75 million versus €209 million in 2008. The translation of net sales into euro was strongly penalized by the over 44% depreciation of the local currency (€34 million).
In Russia, nation which was also hard hit by the international financial crisis, the economic stimulus plans were not sufficient to boost building materials demand. Unlike in the previous year, the plants located in the Urals and in Siberia were those which had to reduce the most the production output. The year closed with cement sales volumes down 40.4% and prices in local currency 28.1% lower than the 2008 average; in absolute value prices went back to international levels after the exponential growth of the years 2007-2008. In such a scenario, net sales posted a significant decline, from €267 million in 2008 to €99 million (-63.0%). Net of foreign exchange effect, the decrease would have been of 55.2%.
United States of America
The contraction in residential investments, which began in 2006, likely reached its negative climax in 2009. Commercial building recorded a 18.5% decline, while infrastructure public spending was cut by 5%. The funds allocated for the economic stimulus were mainly earmarked to minor and maintenance works, with a consequent still very limited impact on cement demand. Cement sales declined by 24.2%, less than the overall domestic market (-27%). The demand weakness affected the level of selling prices (-4.5%), especially in the last quarter of the year. Ready-mix concrete volumes reported a lower decline (-10.5%) thanks to a wider scope of consolidation, while prices remained stable (-0.2%). Overall net sales at €613 million showed a sizeable decline from the previous year (-18.3%). The decrease was mitigated by the dollar strengthening and the enlargement of scope of consolidation. Like for like, a 27.0% decrease would have been posted.
Mexico (50% consolidation)
Cement sales showed a positive trend in the first six months of 2009 compared with the same period a year earlier, but starting from the second half of the year the effects of the economic crisis spread to the construction sector. Corporación Moctezuma cement sales were slight down (-0.7%), while prices in local currency showed a 3.2% improvement. Ready-mix concrete output declined by 4.3% with prices up 3.6%. Net sales came in at €180 million, down 12.1% over 2008, mainly due to the Mexican peso devaluation. At constant exchange rate, net sales would have increased by 1.5%.
Based on the preliminary information available, at group’s level, for the full year 2009, we expect a sharp decline in operating results and net profit, to a slightly greater extent than what we assumed when releasing the interim management report as of September 30, 2009.
The Board of Directors for the approval of the statutory and consolidated financial statements is scheduled to meet on March 23, 2010.
The manager responsible for preparing the company’s financial reports, Silvio Picca, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.
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