Interim results at March 31, 2014
Cement and ready-mix volumes higher than in the previous year by 15.2% and 19.9% respectively
Mild weather, vs. heavy precipitation in early 2013, favored trading in Europe
In the United States of America, despite the first two months’ freezing and cold weather, deseasonalized cement demand continues to progressively improve
Net sales at €496.4 million (€444.9 million in 2013); EBITDA at €10.3 million (loss of €8.5 million in 2013)
We envisage for full year 2014 a slight improvement in operating results compared with 2013
|Jan-Mar 14||Jan-Mar 13 |
|Cement sales||m ton||4.8||4.1||+15.2|
|Ready-mix sales||m m3||2.5||2.1||+19.9|
|Net profit (loss)||€m||(53.4)||(66.9)||+20.1|
|Consolidated net profit (loss)||€m||(53.8)||(66.3)||+18.8|
|Mar 14||Dec 13||change|
The Board of Directors of Buzzi Unicem met on May 9, 2014 to examine the interim report as of March 31, 2014.
In the first quarter 2014, in all geographical areas of group operations, cement and ready-mix concrete demand increased from the same period a year earlier. In the quarter, a quite mild climate in Europe favored deliveries while in the same period of 2013 the heavy precipitation had strongly slowed down sales. The Italian situation although still difficult highlighted some progress in the domestic market and in the sales of semi finished clinker. In Russia the good level of trading attained in the first quarter 2013 was confirmed and also in Ukraine, despite the current ongoing turbulences and big uncertainties on the development of the country’s political situation, sales volumes trend was favorable. In the United States of America, activity level was similar to that of Q1-13, although many regions where we operate were hit by the coldest and harshest winter weather in the last 25 years.
In the first months of 2014 global economy and trade continued to expand, but signs of weakness appeared in some emerging countries, slowing down growth prospects. In the United States business suffered from the adverse weather conditions which impacted employment, especially in the construction sector. In Europe exports continued to be the main driver of growth which is slowly improving, while inflation drop was especially pronounced and sharper than expected. In Italy economic activity grew at a moderate pace and signs of stabilization in consumer spending emerged but labor market conditions remained difficult and inflation went down sharply, reflecting demand weakness. The impact of tensions with Russia following the events in which Ukraine is involved was so far limited; if the conflicts were to worsen, there would be repercussions for the euro area via supplies and prices of energy and on trade.
Cement sales by the group at 4.8 million tons were up 15.2% from Q1-13. The volumes favorable variance was reported in all geographical areas of operations, with an especially robust growth in Central Europe. Ready-mix concrete volumes showed an even more marked progress and totaled 2.5 million cubic meters, up 19.9% from the same period in 2013.
Price effect in local currency was positive compared with Q1-13 in the United States, Poland, Russia and Luxembourg. Conversely, net unit revenues, always in local currency, were lower in Italy, mainly as a consequence of a different mix and showed slight decreases in Germany, the Czech Republic and Ukraine.
Consolidated net sales improved by 11.6% from €444.9 million to €496.4 million, gross of a foreign exchange effect which unfavorably accounted for €18.1 million. Ebitda closed at €10.3 million, up €18.7 million from Q1-13; changes in scope of consolidation were positive for €0.2 million and foreign exchange effect was negative for €2.8 million. On a like-for-like basis, net sales would have increased by 15.7% and Ebitda would have come out at €13.1 million. The 2014 figure was penalized for €1.3 million by non-recurring costs (€1.7 million non-recurring costs in 2013). Net of non-recurring items, Ebitda went from a loss of €6.8 million to positive €11.6 million, with Ebitda to sales margin at 2.3%. After amortization and depreciation for €47.7 million (€50.1 million in Q1-13) Ebit was negative for €37.4 million (negative for €58.6 million in 2013). Net finance costs increased from the previous year (€32.7 million vs. €25.3 million in 2013), as a consequence of higher non-cash items due to the net balance from foreign exchange differences and derivative financial instruments. Equity in earnings of associates, following the retrospective adoption of the new IFRS 11, includes for the first time also the share referring to the associate Corporación Moctezuma (Mexico), which was previously consolidated at 50% by the proportional method, for a contribution €9.0 million (€7.1 million in Q1-13). Due to the impact of the factors outlined above, the first quarter 2014 closed with a loss before tax of €61.1 million vs. a loss of €76.7 million at March 2013. After taxes, net loss for the period came in at €53.4 million (€53.8 million being the share of loss attributable to the owners of the company).
Cash flow for the period was negative by €5.8 million (negative by €16.8 million at March 2013). Net debt as at 31 March 2014 amounted to €1,170.6 million, up €73.4 million over year-end 2013. Capital expenditures accounted for a total of €38.7 million of the figure (€37.7 million in Q1-13), €6.0 million thereof referring to special projects. As at March 31, 2014, total equity, inclusive of non-controlling interests, stood at €2,177.3 million vs. €2,298.7 million as at December 31, 2013. Consequently debt/equity ratio was equal to 0.54 (0.48 at 2013 year-end).
Our sales of hydraulic binders and clinker, exports included, progressed by 15.2% from Q1-13 when deliveries pace was quite depressed. Selling prices showed a good steadiness compared with the 2013 year-end level, but they decreased by 8.4% QoQ, reflecting the different mix of products sold, i.e. higher sales of semi-finished clinker, and the negative trend occurred during the previous year. In the ready-mix concrete sector output rose by 11.5% with prices down by 8.9%. Overall, net sales came in at €86.6 million, up 4.3% from €83.0 million while Ebitda closed in negative territory for €8.9 million vs. a negative figure of €10.1 million in Q1-13.
In Germany, the comparison between especially cold and snowy weather conditions in Q1-13 and quite mild ones in the current year helped attain a growth of 32.6% in cement sales and 42.9% in ready-mix concrete volumes in the first quarter 2014. Cement selling prices were virtually stable (-0.7%) while ready-mix concrete ones slightly increased (+0.7%). Overall net sales stood at €127.8 million vs. €94.5 million in Q1-13 and Ebitda at €0.2 million went back to positive territory (loss of €9.9 million in the previous year). The 2014 figure includes €1.3 million non-recurring costs due to restructuring expenses.
In Luxembourg as well, thanks also to favorable weather conditions, our cement and clinker volumes reported a sizeable increase (+26.7%) with resilient prices (+1.6%). Net sales at €24.8 million, were up 28.8% from €19.2 million in 2013. Ebitda was positive for €0.3 million (loss of €1.1 million in the previous year).
In the Netherlands, ready-mix concrete volumes sold in the first three months were up 5.9% with prices declining by 3.8%. Net sales at €13.2 million were virtually stable (€13.3 million in 2013) and Ebitda, although improving, remained negative for €0.8 million (-€2.8 million in 2013).
In the Czech Republic, cement sales volumes increased by 27.1% and average prices in local currency were slightly down (-1.2%). The ready-mix concrete sector, which includes also Slovakia operations, as well opened the year with volumes in strong progress (+52.5%) but with no advantage for prices so far. Overall net sales, which were penalized for €1.4 million by a negative foreign exchange effect, amounted to €22.8 million, up 31.1% from €17.4 million in the previous year. Ebitda remained negative but improved to -€0.7 million vs. -€2.7 million in Q1-13.
In Poland, winter trading was very lively and cement deliveries reported a 57.3% increase, along with a sizeable improvement of ready-mix concrete output (+34.1%). Average prices in local currency showed an upward trend for cement (+5.8%) and a non-material negative variance in the ready-mix concrete sector. Net sales, only marginally impacted by foreign exchange fluctuation, reached €17.1 million from €11.7 million in 2013 (+45.6%). Ebitda stood at €0.3 million (negative for €2.3 million in 2013).
The serious domestic political problems that trouble Ukraine and escalated into the street riots of the last months, raise concern on the future of the Country and its level of economic activity but, for the time being, have not had any significant effect on our industrial operations. On the opposite, thanks to the mild climate, in the first three months cement sales volumes advanced by 21.3% in an environment of declining prices (-1.5% in local currency). Net sales at €16.9 million, were up 9.4% from €15.4 million in 2013 and Ebitda increased from -€5.2 million to -€2.4 million, both affected by an abrupt devaluation of the currency (-17.4%). To be reminded that the 2013 figure included non-recurring costs for €1.7 million. Consequently, net of non-recurring items, Ebitda increased by €1.1 million.
In Russia, where the economic situation began suffering from the political frictions with Ukraine and growth prospects were downsized, our cement sales remained at the same level as in the previous period (+0.4%) with strengthened average selling prices (+1.9%). The translation of results into euro was strongly penalized by the ruble devaluation (-19.7%). Net sales stood at €40.6 million vs. €47.7 million in 2013, down by 14.9%. Expressed in local currency they would have posted a 1.9% increase. Ebitda decreased from €15.3 million to €15.1 million (-1.5%) while in local currency it would have improved by 16.5%.
United States of America
Despite a challenging comparison with the positive results of Q1-13 and the harsh temperatures which hampered building activities also in the South-West of the Country, our cement sales, increased by 3.1% with average selling prices in local currency higher by 4.0%. Ready-mix concrete output closed the quarter down by 5.8% but with prices in clear improvement. Overall net sales thus came in at €152.5 million from €148.8 million in 2013 (+2.5%). Foreign exchange effect was unfavorable for €5.7 million. Ebitda stood at €7.0 million vs. €10.2 million in 2013, including a negative foreign exchange effect for €0.3 million. Compared with Q1-13, the result was negatively influenced by a higher concentration of maintenance programs and the destocking of clinker.
Mexico (valued by the equity method)
The first part of 2014 confirmed the turnabout occurred in the last quarter of 2013, showing a satisfactory rate of improvement in cement sales. Average prices in local currency were still declining vs. Q1-13 but they showed some resilience from year 2013 exit ones. Ready-mix concrete sales decreased by few percentage points, a project having been undertaken to revise and streamline the operating structure of that business. Net sales and Ebitda in local currency increased by 12.9% and 17.4% respectively. The Mexican peso depreciation negatively impacted the translations of the results into euro. With reference to 100% of the associate, net sales in euro were up 4.0% from €113.6 million to €118.1 million and Ebitda improved by 8.2% and came in at €44.1 million vs. €40.7 million in 2013. The equity earnings referring to Mexico, included in the line item that encompasses the investments valued by the equity method, amount to €9.2 million.
In Central Europe and in most Eastern European markets, the first quarter 2014 featured a quite mild climate which enhanced construction sites operations. Moreover, also the general economic activity is showing a gradual recovery. As for the Italian market we think that the improvement plans currently underway will bring some benefits, in a sector’s outer environment (volumes, prices, production structure) troubled by still unsolved crucial points. Operating trend in the United States has shown a progressive improvement from March onwards, after the first two months penalized by bad weather. The unforeseeable developments of the political and media conflict between Ukraine and Russia instead fuel growing uncertainties and less favorable prospects. Overall the likely trend of the current year will thus be better defined only after the second quarter results. On the occasion of this first interim report, we can confirm for the full year 2014 our expectations of operating results similar or in slight improvement over those posted in 2013.
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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