Financial year 2011 preliminary figures
Cement volumes at 28.2 million tons; ready-mix concrete at 15.1 million cubic meters
Consolidated net sales equal to €2,787 million (+5.2%)
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The Board of Directors of Buzzi Unicem met on February 8, 2012 to examine the preliminary figures for the year 2011.
During 2011, the construction industry, after a quite brilliant first quarter, maintained an expansion trend in the emerging markets and confirmed the growth in Central Europe. Conversely in the United States of America the sought-after business cycle recovery showed no signs of materializing and in Italy, with the deepening of the sovereign debt crisis, cement consumption continued to decline. Starting from the second part of 2011, a further slowdown of the global economy’s pace of growth occurred. Specifically, the euro zone economic prospects are still burdened by various uncertainty factors linked to the effects of public accounts consolidation and the banking sector difficulty to grant credit to the economy, which can generate a downward spiral and cause a drop in production activity.
In Italy, the domestic demand weakening and the effect on disposable income of public accounts corrective measures led to a fall in consumer spending and investments, especially from the third quarter onwards. In the United States, demand in the residential segment showed no signs of recovery, the non-residential building continued to suffer from the reductions carried out by the private sector and public spending in infrastructures was limited by the high indebtedness of many States of the union. Central Europe countries maintained the benefits deriving from foreign trade and took advantage of the mild climate they enjoyed in the first quarter of the year. In Eastern Europe markets, a double-digit increase in deliveries was reported, as an indication that the construction sector product is bouncing back to pre-crisis levels (2007-2008). Equally, sales volumes in Mexico showed a positive development throughout the year.
Cement sales of the group totalled 28.2 million tons, +6.2% over 2010. Ready-mix concrete output at 15.1 million cubic meters also increased from the previous year (+4.8%).
Consolidated net sales were up 5.2% from €2,648 million to €2,787 million. Foreign exchange rates negatively impacted for €45 million. Changes in scope were favorable for €26 million. Like for like, net sales would have increased by 6.0%.
Net debt as at December 31, 2011 amounted to €1,143 million, down €124 million over €1,267 million at year-end 2010. The improvement of net financial position was obtained thanks to cash flow from operations, control of capital expenditure, dividend reduction and disposal of some fixed assets.
In the third quarter 2011, GDP showed the first decline QoQ since the beginning of 2010, as a consequence of the weak domestic demand and the drop in consumer spending and investments. During the last quarter the business environment further worsened. Hydraulic binders’ volumes decreased by 10.5%, penalized by a plunge of exports. Domestic consumption declined for the fifth year in a row, falling to around 31 million tons (-34% from the 2006 all-time peak). Selling prices were higher by 8% compared with the previous year’s very depressed ones. In the ready-mix concrete sector, volumes trend was negative (-11.5%) with stable prices (+0,7%). Overall net sales in Italy amounted to €568 million, down 7.5% over 2010.
The German economy continued in its post-crisis expansion phase, recording one of the most brilliant performance in the euro zone. However the GDP growth dynamics cooled down in the last part of the year. The building sector benefited from this trend and, mainly in the last quarter, from quite mild weather conditions. The construction industry’s growth stemmed from the residential and commercial segment, while the public sector showed a moderate development. Our cement deliveries were up 12.8%, in a slightly unfavorable price environment (-1.5%). Thanks also to the addition in the scope of consolidation of Sibo group for the full year, ready-mix concrete volumes increased by 27.5% while prices were stable (-0.5%) Thus overall net sales increased from €548 million in 2010 to €637 million in 2011, up 16.0%. At constant scope of consolidation, a 11.3% increase would have been posted.
In Luxembourg, cement volumes sold, inclusive of internal sales, showed a very positive development (+22.3%) with average unit revenue slightly down (-1.8%). Overall net sales came in at €113 million versus €92 million in the previous year.
In the Netherlands, ready-mix concrete volumes sold increased by 3.6% while average price level declined by 3.0%. Net sales, including also aggregates business, came in at €110 million, slightly down from €113 million in 2010 (-3.0%).
In Poland, the activity in the construction sector maintained a robust pace of growth, thanks also to the civil engineering projects referred to the 2012 Soccer European Championship. The country confirmed the soundness of its economy, growing more than 4%. Cement sales volumes increased by 7.8%, with a high utilization of our production capacity. However average prices in local currency were virtually unchanged from the previous year (+0.8%). Ready-mix concrete volumes progressed by 17.2% with prices up by 10.2%. Net sales increased from €129 million to €144 million, on which zloty devaluation negatively accounted for €4.5 million.
The Czech Republic continued to post a more modest growth rate (around 2%) and building-related activities featured persisting difficulties. However, our group succeeded in improving sales by 26.2%, taking advantage of the vertical integration in the country and increasing exports towards Poland. Average prices in local currency suffered from the competitive pressure coming from neighboring Slovakia and were penalized by higher distribution costs (-11.5%). The ready-mix concrete sector, which includes also Slovakia, showed an overall positive trend with volumes up 11.9% and prices lower by 3.9%. Consequently net sales increased from €159 million to €172 million. The revaluation of the local currency positively impacted net sales for €4 million.
In Ukraine economic growth was interesting, posting a progress rate of over 6% in the third quarter and nearly 4% for the whole 2011, with the construction sector having a driving effect. Consequently cement and ready-mix concrete volumes sold were up 24.0% and 22.6%. Selling prices in local currency showed a progressive development, increasing by 16.8% and 12.7% respectively. Net sales thus stood at €113 million versus €82 million in 2010 (+37.9%). The translation of turnover into euro was penalized by a depreciation of the local currency (-€6.1 million).
In Russia, GDP growth is expected to be higher than 4% for the full year. The construction sector featured a robust growth and cement sales volumes were buoyant (+33.7%), The good trend in demand favored the resilience of selling prices which in local currency were 6.6% higher than the 2010 average. Net sales posted a significant increase, from €124 million in 2010 to €176 million (+41.4%). Net of negative foreign exchange effect, the increase would have been of 43.6%.
United States of America
Persistent slackness of real estate market, federal budget problems, consumer spending weakened by lower disposable income flattened economy’s dynamism. The gradual recovery under way has not so far reached the construction investments sector. Residential building remained at the rock-bottom levels reached after the bubble and no resilience occurred in commercial building and infrastructures. Cement sales declined by 1.6% and poor demand continued to affect the level of selling prices in local currency (-5.3%). Ready-mix concrete volumes showed a similar trend (-1.3%) but in a more favorable price environment (+1.9%). Overall net sales at €558 million were down 7.2% from €601 million in the previous year. The decrease was amplified by the dollar weakening. At constant exchange rate, a 2.5% contraction would have been posted.
Mexico (50% consolidation)
The country maintained a positive and constant rate of progress, with a GDP growth of over 4%. Construction investments were driven also by some major projects of civil engineering. Corporación Moctezuma’s cement volumes, thanks to the positive contribution of the new plant in Apazapan, were up 13.6% with favorable prices in local currency (+5.9%). Ready-mix concrete output posted a slight decrease (-2.6%), with selling prices higher by 5.6%. Net sales came in at €238 million, up 11.5% over 2010. The figure was negatively impacted by the devaluation of the Mexican peso, net of which net sales would have increased by 15.2%.
Based on the preliminary information available, we expect that the consolidated financial statements of the year 2011 will close with a recurring Ebitda of about €420 million, in line with the outlook already disclosed to the market on previous occasions.
The Board of Directors moreover complemented the Committee for the Internal Control by appointing independent director Aldo Fumagalli Romario and the Committee for transactions with related parties by appointing independent director Gianfelice Rocca, to replace Elsa Fornero.
The Board of Directors for the approval of the statutory and consolidated financial statements is scheduled to meet on March 30, 2012.
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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