Displaying items by tag: Greece

Europe: The European Court of Justice (ECJ) has ruled that a Greek law that requests employers to receive approval by the Labour ministry before making bulk redundancies is incompatible with European Union law. The judgement was made in relation to the layoff of a group of workers at the Halkida cement plant when Lafarge purchased the plant from AGET Heracles in 2013, according to the Athens News Agency. The Labour ministry blocked the request, citing conditions in the labour market, the financial situation of the company and the interest of the national economy. Lafarge then appealed to the Council of State, which then referred the case to the ECJ.

Greece: Titan has reported a loss of Euro18.6m for the first quarter of 2016. The figure is a loss compared to the net profit of Euro6.6m it made in the same period in 2015. However, its sales turnover rose by 19% to Euro338m from Euro284m and its earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 86% to Euro43.3m from Euro23.2m. The company blamed the loss on currency exchange variations particularly from the devaluation of the Egyptian pound against the Euro by 19%.

The group noted that its sales had increased in the quarter in all regions with the exception of Greece. By region it saw strong growth in the US with a 34% in turnover to Euro174m. In Greece construction was mostly limited to government projects limited by the continued economic problems and capital controls. In the group’s south-eastern Europe regions turnover rose by 27.6% to Euro35.8m. In Egypt demand for cement continued to grow helped by the use of solid fuels at its plants. Turnover in the quarter increased by 8.3% to Euro65.3m.

Greece: Titan’s turnover grew by 20.7% year-on-year to Euro1.14bn in 2015 from Euro1.16bn in 2014. Its net profit rose by 9.1% to Euro33.8m from Euro30.9m. The cement producer attributed the result to growth in the US market.

Despite rising turnover in the fourth quarter of 2015 the group reported a net loss of Euro2.4m down from a net profit of Euro0.4m in the fourth quarter of 2014. This was due to its subsidiary Titan America suspending construction of a cement plant in Castle Hayne, North Carolina, resulting in a Euro12.4 impairment charge due to the suspended investment.

By region the group reported that its total turnover for Greece and Western Europe in 2015 fell by 5.6% to Euro269m, mainly due to the continued depression in the construction market in Greece. Turnover in the US grew by 45% to Euro680m, supported by a growing residential housing market particularly in the south east of the country. In Southeastern Europe turnover remained static at Euro209m. In Egypt cement demand grew by 5% but low prices in the second half of the year reduced profits. Turnover increased by 22.3% to Euro241m in this territory.

Group net debt rose by Euro81m in 2015 to Euro621m, due to high capital expenditure in 2015, the acquisition of a minority stake in Antea in Albania and the strengthening US Dollar.

Greece: George Michos has been appointed CEO of Heracles, member of LafargeHolcim Group, assuming his duties as of 1 October 2015. He succeeds Pierre Deleplanque, who after seven years in Heracles, moves to become Area Manager Emerging Europe of LafargeHolcim Group, while remaining on the board of Heracles as a non-executive member.

George Michos had previously been Senior Vice President RMX Concrete for Lafarge since January 2013 and in parallel, since July 2014, leader of the Operating Model & Organisation workstream for the LafargeHolcim merger. He joined Heracles General Cement in Greece in 2004 and held various executive positions before moving to India in early 2008 and becoming the COO of Lafarge India. In mid-2011 he became Senior Vice President Cement Strategy and M&A for the Lafarge Group in Paris.

He began his career in the construction industry in Greece in 1994 and from 1998 until 2003 he worked in consulting companies in London, Paris and Athens. Michos is 45 years old and married with one daughter, is a graduate of the National Technical University of Athens in Electrical & Computer Engineering (Dipl. Eng) and holds an MBA from Harvard Business School.

Greece: Titan Cement has posted a 26% year-on-year rise in its net profit to Euro17.6m for the first half of 2015, helped by a strong performance in the US. Its sales increased by 25.8% to Euro389m, boosted by higher demand for building materials and a stronger Dollar in the US, according to Reuters.

The Greek debt crisis directly hit the local cement industry on Tuesday 30 June 2015 when Titan Cement reported that it was unable to pay a dividend to its shareholders. The leading local cement producer blamed the capital controls introduced by the government.

It is worth looking at the effects on the domestic cement industry as the Eurozone bureaucracy and the Greek government play 'chicken' with each other while Greece starts the default process, having failed to pay the latest International Monetary Fund (IMF) payment on 30 June 2015. Greece will now join a group, possibly even more select than the European Union, of countries that have failed to pay back the IMF, including current defaulters like Sudan and Zimbabwe.

A better comparison might be made with Argentina which defaulted upon its foreign debts in 2001. Its construction industry fell by 12% year-on-year in 2001 and by a further 30% in 2002. Cement consumption and cement production utilisation rates hit 23% in 2002. One key difference with Greece is that the country has had major financial difficulties for far longer than Argentina. Argentina ran into financial depression in 1998 and defaulted in 2001. Greece ran into financial trouble following the 2008 financial crisis and then received its first bailout in 2010.

As the capital controls show, even initial responses to the financial situations are impacting upon the standard transactions a limited company conducts. The Financial Times ran an article in May 2015 examining the potential effects on businesses of a debt default and Greek exit from the Eurozone (Grexit). In short, business and commerce will continue where possible reacting to whatever comes their way. For example, an olive oil producer reported switching to exports to make profits. Crucially though, another company interviewed, a construction contractor, worried about potential cuts to government or EU-led infrastructure projects.

As Titan reported in its first quarter results for 2015, its Greek market has been dependent on road building. In February 2014 Titan Cement reported its first improved operating results in seven years followed by profit in 2014 as a whole. The other major cement producers, Lafarge subsidiary Heracles General Cement and Italcementi subsidiary Halyps Cement, reported an improved construction market in 2014 with rising cement volumes. However, it was noted by Lafarge that it was developing exports to 'optimise kiln utilisation.' Titan also noted the benefits of exports in its first quarter report for 2015, focusing on a strengthening US Dollar versus the Euro. Given on-going events, one suspects there is going to be a lot more 'development' of this kind.

To set some sense of scale of the crisis Jim O'Neill, former head of economics at Goldman Sachs, famously calculated that, at the height of its growth, China created an economy the size of Greece's every three months. What happens next is down to the crystal balls of economists, although the path of least resistance now seems to be pointing at further default, departure from the Eurozone and Euro and further significant financial pain for Greece.

It looks likely that the local construction market will stay subdued and exports will offer a lifeline. How much the EU is prepared to let Greece default on its bills and then try and undercut its own over-capacity cement industries remains to be seen. However, since the main cement producers in Greece are all multinational outfits, it will afford them some flexibility in their strategy in coping with the fallout. Meanwhile a cement production capacity of around 14Mt/yr for a population of 11m suggests over capacity by European standards. If exports can't help then the situation looks grim.

UPDATE: Here is Global Cement's previous take on Greece from June 2012

Greece: According to Reuters, Greece's Titan Cement has postponed its 2014 dividend payment, due on 1 July 2015, because of the bank holiday announced by the Greek government on 28 June 2015. "There will be a new announcement regarding the new date and the method of payment," said Titan Cement about the dividend.

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.

Greece: Titan Group has reported a return to profit in 2014 after two loss-making years. The Greece-based cement producer has reported a profit before tax of Euro46.8m up from a loss of Euor9.4 in 2013. Turnover rose by 2.7% to Euro1.16bn from Euro1.13bn. However, earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 2.6% to Euro182m from Euro168m. Titan attributed the turnaround to continuing recovery in the US, improvement in the Greek market and better performance in Turkey and Southeastern Europe. Despite this, gas shortages in Egypt hit results negatively.

By region, Titan Group saw demand for building materials in Greece grow in 2014 due to low levels in 2013 and the re-launch of a road building campaign. The company reported that utilisation rates at its cement plants in Greece depend on exports to countries with low energy costs and no constraints on carbon dioxide emissions. Total turnover for the Group's Greece and Western Europe region in 2014 increased by 14% to Euro285m. In Southeastern Europe construction activity remained subdued. Turnover fell by 3.5% to Euro208m in 2014.

The US led turnover, supplying over one-third of the Group's total turnover. Sales were led by high growth rates in Florida. Turnover rose by 14% to Euro469m in 2014. In Egypt cement demand grew by 2.4% in 2014 but gas shortages and permit application delays for alternative fuels reduced production and shrunk plant utilisation rates below 50%. Turnover fell by 22% to Euro197m although imports helped cushion profit margins.

Development activities in 2014 saw an investment in solid and alternative fuels particularly in Egypt. The first solid fuels grinding mill was brought on stream at the Beni Suef cement plant at the end of 2014.

Greece: The Supreme Court of Greece has ordered the Heracles' General Cement Company, a subsidiary of Lafarge, to pay the residents of Agia Marina, Halkida Euro78,000 as compensation for pollution from its cement plant.

The court upheld the settlement's arguments that the cement plant had failed
to adhere to the environmental terms in its operating licence in order to avoid the relevant costs and refused to take measures for the proper maintenance and modernisation of its facilities. They said this resulted in all outdoor areas in the village being covered in a layer of cement dust up to 1.2cm thick, including the nearby coastline.

The village residents had originally sued for a total of Euro1.14m but the court awarded the residents a much lower sum, even though it found that the company's omissions fully justified their claim to moral damages resulting from their deprivation of environmental benefits and the threat to their health from exposure to environmental pollution.