Financial year 2013 preliminary results
Cement volumes at 27.4 million tons; ready-mix concrete at 12.9 million cubic meters
Consolidated net sales equal to €2,754 million (-2.1%)
|Dec 13||Dec 12||Change|
The Board of Directors of Buzzi Unicem met on February 7, 2014 to examine the preliminary figures for the year 2013.
During 2013, the construction sector in the geographical areas of group’s operations showed sizeable rates of growth in the United States of America and in Russia. The main Central Europe markets reported a good recovery in the second half; conversely the trend in Mexico, Italy and some countries of the Eastern Europe division continued to be penalizing.
In the third and fourth quarter 2013 the international economic cycle strengthened. GDP accelerated in advanced economies while showed uneven trends in the emerging markets, with ongoing growth in China and slowdowns in Russia, Brazil and India. World trade was resilient, confirming the progress realized in the previous months and in the United States of America the positive signs of growth previously emerged stabilized, reflecting improvement of employment dynamics and stronger consumer spending. In the Eurozone a modest recovery began with low inflation. In Italy, which featured a prolonged drop of GDP and spending contraction, investments in construction continued to fall, thus accumulating a total decrease of over 30% from 2008 through 2013. In the United States the construction sector maintained a good pace of growth, especially in the residential and commercial building segments. In Central Europe countries, starting from the second quarter, domestic demand, favored by higher available income, sustained GDP growth after a rather negative start of the year and building activities showed a progressive recovery in the second part of 2013. In Eastern Europe, trends were diversified: in Russia the positive development of the construction sector brought to a further growth in cement consumption, higher than the peak realized in 2012; in Poland the year closed in slight improvement over the previous one, while in the Czech Republic and Ukraine building activities continued to be sluggish, with a negative variance in sales volumes. The unexpected deceleration of Mexican economy and the contraction in public investments caused a clear slowdown in construction and consequently in the country’s cement consumption.
Cement sales of the group totalled 27.4 million tons, up 0.3% over 2012. Ready-mix concrete output at 12.9 million cubic meters posted a 5.1% decrease from the previous year.
Consolidated net sales were down 2.1% from €2,813 million to €2,754 million. Foreign exchange rates negatively impacted for €50 million. Changes in scope were favorable for €6 million. Like for like, net sales would have decreased by 0.6%.
Net debt as at December 31, 2013 amounted to €1,066 million, down €59 million over €1,125 million at year-end 2012. The improvement of net financial position was obtained thanks to cash flow from operations, control of capital expenditure, disposal of non-strategic assets and a cautious dividend policy, despite an outlay of about €65 million for the purchase of equity interests to attain Dyckerhoff’s full ownership.
In the third quarter 2013, GDP stabilized, interrupting a contraction that had started in the summer of 2011. Exports and inventory changes sustained the improvement and, based on the economic indicators, a slight growth is expected in the last quarter of the year. The more positive industrial activity contrasted however with a persistent slackness of domestic demand, negatively affected by the fragility of the labor market and the lower available income. Investments in construction showed a further decline, although some signs of stabilization appeared starting from the fourth quarter and the number of house sales remained at the level of 2012 year-end.
Cement domestic consumption, which has been falling for seven years in a row, is estimated at around 21.7 million tons (-54% from the 2006 all-time peak). Our hydraulic binders and clinker volumes decreased by 3.1%. Stronger export deliveries and the supply of clinker to industry customers made it possible to report a sales contraction less negative than that of the domestic market (around -15%). Selling prices posted a 2.1% decrease mainly as a consequence of a change in sales mix, as highlighted above. In the ready-mix concrete sector, volumes trend was very negative (-18.5%), reflecting a commercial policy directed towards a strict selection of customers while prices were stable (+0.5%). Overall net sales in Italy amounted to €435 million, down 9.2% from 2012.
In Germany, which however has one of the soundest economies in the area, GDP growth levels were only moderately positive (+0.3% in the third quarter), driven by investments in construction but with industrial production showing signs of weakness and some stagnation in the two months of October and November. The construction sector, after having been negatively affected by a very harsh climate in the first part of the year, bounced back, especially in the residential building segment. Our cement deliveries posted a good recovery in the second half, closing the year slightly down (-0.8%) in a marginally favorable price environment (+1.2%). On the rise were exports and sales of oil well binders while those of white cement slowed down. Ready-mix concrete volumes were stable (-0.9%) with prices up by 1.7%. To be pointed out, however, that since the beginning of the year, following an organization restructuring, some ready-mix concrete production and sale activities have been transferred from Germany to Luxembourg. At constant scope, output would have increased by 2.3%. Thus overall net sales decreased from €604 million in 2012 to €600 million in 2013, down 0.7%.
In Luxembourg, cement volumes sold, inclusive of internal sales, were affected by export decrease and contracted by 3.7% with stable average prices. Overall net sales came in at €109 million vs. €104 million in the previous year (+4.9%). To be noticed that since the beginning of the year, following an organization restructuring, some activities in the ready-mix concrete sector have been transferred from Germany to Luxembourg, whose contribution to net sales for the year is equal to €10.6 million.
In the Netherlands, the economic recession continued with the construction industry being especially hit. Our ready-mix concrete volumes sold decreased by 15.3% while average price level declined by 3.7%. Net sales, including also aggregates business, came in at €73 million, down from €88 million in 2012 (-16.4%).
In Poland GDP realized a growth estimated at 1.3% for full year 2013. Although the investments in the construction sector cannot be compared with periods when activities peaked, since the summer months cement deliveries have shown a good pace. Sales volumes increased by 2.5%, with average prices in local currency slightly down (-1.8%). Ready-mix concrete output declined by 17.4%, reflecting a commercial policy very selective about job profitability, with prices down 7.6%. Net sales decreased from €109 million to €101 million, on which zloty devaluation negatively accounted for €0.3 million.
The Czech Republic still featured a macro-economic recession scenario which translated into a contraction of GDP (-1.5%). For the third consecutive year investments in construction fell and building-related activities faced difficulties. Our cement sales decreased by 15.5% while average prices in local currency were almost stable (-1.0%). The ready-mix concrete sector, which includes also Slovakia, showed a weak trend with volumes down 4.5% and slightly higher prices (+1.7%). Consequently net sales decreased from €150 million to €132 million (-11.9%). The devaluation of the local currency negatively impacted net sales for €3.7 million.
In Ukraine economy kept a low profile with GDP growth in line with 2012 and equal to a mere +0.3%. Construction investments showed a remarkable decline which brought to a drop in cement demand. In 2013 cement volumes, thanks to some recovery in the last quarter, when the weather was quite mild for the season, decreased by 7.3% in a slightly positive price environment (+2.4% in local currency). Net sales thus stood at €124 million vs. €134 million in 2012 (-7.8%). The translation of turnover into euro was penalized by the depreciation of the local currency (-€5.2 million).
In Russia, GDP growth (+1.5% in 2013) contracted, showing a remarkable slowdown compared with the result posted in the previous year (+3.5%). The construction sector, however, maintained a favorable trend, as did cement domestic consumption which broke the record realized in 2012. The pace of deliveries progressively accelerated in the second part of the year, posting a progress of 7.3% with average selling prices in local currency higher by 5.8%. The category of oil well cements, used in the extractive industry, reported a beyond the average positive variance. Net sales increased sizeably, from €235 million in 2012 to €249 million (+6.0%). Net of negative foreign exchange effect, the increase would have been of 12.4%.
United States of America
In the last months of 2013 additional positive economic signs emerged, which consolidated the GDP acceleration realized in the third quarter. Employment dynamics improved and consumer spending as well as investments strengthened. GDP growth for 2013 is estimated at 1.9%. As for construction investments, residential building was buoyant, the non-residential and commercial segments confirmed their strength while public spending in infrastructure was still declining. Hydraulic binders sales maintained a quite constant pace of growth throughout 2013, closing the year on the rise by 8.7% with the best performance realized in the North Eastern, South Eastern and South Western regions. Also selling prices confirmed their progress, posting a 3.2% increase in local currency. In the ready-mix concrete sector, volumes trend was less dynamic (+5.0%) but price environment was more favorable (+6.4%). Overall net sales at €730 million were up 7.3% from €681 million in the previous year. The improvement was penalized by the dollar weakening: at constant exchange rate, a 10.9% increase would have been posted.
Mexico (50% consolidation)
The country’s rate of economic growth significantly slowed down, standing for 2013 at +1.2% vs. +3% realized in 2012. The delay in the implementation of the development plan for the years 2013-2018 launched by the new President curbed public spending in infrastructure and residential building sector was penalized by the financial distress of the major players. Corporación Moctezuma’s cement volumes were down 9.0% and prices in local currency decreased by 7.2%, penalized by poor demand and keener competition. Ready-mix concrete output posted a less marked decline (-3.4%) with stable prices (+1.0%). Net sales came in at €235 million, down 12.9% over 2012. The figure was negatively impacted by the modest devaluation of the Mexican peso, net of which sales revenues would have decreased by 12.5%.
Based on the preliminary information available, we expect that the consolidated financial statements for the year 2013 will close with a recurring Ebitda in improvement with respect to last year, thanks also to a quite mild climate in the first part of winter.
The Board of Directors for the approval of the statutory and consolidated financial statements is scheduled to meet on March 27, 2014.
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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