Titan Cement Group posts 12% sales rise

Greece-based 719 Titan Cement Group saw first quarter 2019 sales worth €363 million - a 12% increase compared to the same period of 2018. The sales rise is said to be largely due to the robust U.S. market and growth in south-eastern Europe. Titan Cement Group’s improvement in Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) was limited to 2%, reaching €44 million, as challenging conditions in both Egypt and Turkey impacted operational profitability. The group’s net result after minority interests and the provision for taxes was a €6 million loss, reflecting higher depreciation charges and unfavourable foreign exchange movements, versus a €1 million profit in the first quarter of 2018.

Titan Cement Group’s overall outlook for 2019 is favourable. The group points to positive demand dynamics in the U.S., in south-east Europe, in Brazil and albeit somewhat delayed in Greece. Countering these, conditions should remain challenging in Egypt and Turkey.

In the USA, construction trends remain favourable in the regions where the group is active. The 4353 Portland Cement Association (PCA) forecast that cement consumption will increase by 2.3% in 2019 and by approximately 1.6% per annum over the period 2019-2023. Titan Cement Group believes it is well positioned to take advantage of this growth, having a strong presence in expanding metropolitan areas and the operating leverage to meet growing demand.

In Greece, expectations of a medium-term pickup in construction activity are maintained, despite anticipated further delays in the start of major projects. Works pertaining to tourism-related activities should maintain their positive evolution, thereby aiding cement consumption. On the other hand, private residential activity will remain at low levels in 2019 as well.

In the countries of south-east Europe, continuing economic growth is having a positive effect on construction activity. Τhe group says its plants have the capacity to meet significantly higher demand levels and thanks to recent investments are increasing their competitiveness through the expansion of the use of alternative fuels, to the benefit of the group’s operations as well as of the local communities.

In Egypt, Titan Cement Group says demand should remain at levels similar to those of 2018. Despite initiatives to further reduce costs, downward pressures on operating results are likely to continue, at least in the short-term, as long as price levels fail to improve. In Turkey, the deterioration in macroeconomic indicators, in tandem with the pressure on the banking system, is expected to lead to a significant reduction in demand for building materials in the short term. The longer-term prospects of the construction sector, however, remain attractive. Adocim is well prepared to face the sharp downturn, owing to its modern asset base, competitive cost structure and low gearing.

Finally, in Brazil, political stability increases Titan Cement Group expectations for the launch of a new growth cycle in the cement market. Cement demand in north-east Brazil, where the group is present, is the prospect of higher demand driven by demographic growth and private building activity.