Titan reports recovery in the first quarter of 2015

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Greece: Titan Group has reported that in the first quarter of 2015 its consolidated turnover grew by 12.7% year-on-year to Euro284m. Its earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 23.7% year-on-year to Euro23.2m. Its net profit after minority interests and the provision for taxes grew to Euro6.6m compared to a Euro11m loss in the prior year period.

The continuing recovery in the US and the improvement in the Greek market due to the continuation of public works and the higher profit margins on exports had positive effects on operating results. However, profitability declined significantly in Southeastern Europe and Turkey due to the heavy winter, as well as in Egypt, where prolonged gas shortages necessitated the production of cement through imported clinker in order to meet domestic demand. The group is currently undertaking significant investments in Egypt which will enable the utilization of solid and alternative fuels and allow for the gradual recovery of the plants' operating capability.

Group net debt at the end of the first quarter stood at Euro660m, increased by Euro119m compared to 2014 year-end. Group debt levels reflect the increased investments undertaken primarily in the US and in Egypt, increased working capital requirements in growth markets, the seasonality in demand, as well as the negative effect on US Dollar and Egyptian Pound-denominated debt owing to foreign exchange movements.

Total turnover for Greece and Western Europe in the first quarter of the year declined by 2% to Euro65.3m. EBITDA grew to Euro9.4m compared to Euro3.9m in the same period in 2014.

In the US, despite the severe weather witnessed in the first two months of the year, the construction industry continued to recover, resulting in a tangible improvement in Titan America's results. The strengthening of the US Dollar also contributed to results. Total turnover in the US for the first quarter of 2015 grew by 37.5% to Euro130m while EBITDA reached Euro5.8m compared to Euro0.9m in 2014.

In Southeastern Europe, the harsh winter considerably affected building activity, resulting in a significant decline of results compared to the favourable winter experienced in 2014. Turnover declined by 31.2% to Euro28.2m while EBITDA reached Euro4.2m compared to Euro9.7m in 2014.

In Egypt, demand remained stable. The utilisation rate of production facilities improved compared to the second half of 2014 low levels due to the completion of the investment in solid fuels grinding at one of Titan's production lines at Beni Suef. However, the continuing disruptions in natural gas supply at other production lines led to the need for lower margin imports in order to meet demand. Overall, turnover in Egypt increased by 21.9% to Euro60.2m. Compared to the first quarter of 2014, when sales were met by domestic production, EBITDA declined from Euro15.9m to Euro3.9m.

In Turkey, due to the heavy winter, demand for building materials declined. Adoçim Çimento (in which Titan Group holds a 50% stake) posted lower volume sales and results versus the first quarter of 2014.

The market trends recorded in the beginning of the year are consistent with the group's positive outlook for 2015, despite significant uncertainties and challenges. This reserved optimism can be attributed to the expectation of improved operating results from the group's two most important markets: the US and Egypt. The recovery of the US market continues unabated within the context of a broader US economic recovery. In order to meet higher demand and improve competitiveness, the group is increasing capital spending. In Egypt, demand for building materials is expected to remain at high levels, supported by both private and public construction. The group expects to recover production and sales volumes in 2015, following the investments undertaken in order to ensure the gradual self-sufficiency of the plants, in terms of their fuel needs.

In Greece, private construction continues to decline with no recovery expected in 2015 due to the dire economic conditions prevailing in the country. Cement consumption in 2015 is expected to remain at the same levels as in 2014, mainly supported by roadwork activity. Construction activity in Southeastern Europe appears stable, although cement demand is considerably below the group's capacity. No significant improvement is expected in the short-term since the region continues to be affected by the weakness of Eurozone neighbour countries.

Last modified on 13 May 2015

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