Financing costs rise hits Italcementi H1 2014 turnover

A sharp rise in financing costs is said to be behind 726 Italcementi's turnover decline of 6% to €2.048.4 billion in H1 2014. The running Ebitda improved by 2.2% to €304.8 million helped by a 6.2% reduction in the amortisation and depreciation charge, while the trading profit improved by 27.7% to €99.8 million.

The 66.5% hike in financing costs, largely related to interest rate derivatives and derivatives on CO2 hedging, is said to have led to a net financial charge of  €75.1 million. After contribution from associates and impairment charges the group’s pre-tax profit dropped from  €21.8 million a year ago to just €1 million. After a tax charge that was 24.2% higher at €80.6 million and a minorities charge that was 19.7% lower, there was a net attributable loss of  €113.3 million compared with an €85.1 millio loss a year earlier. 

Net debt at the end of June 2014 was 7.4% lower than a year earlier at  €1851.7 million, giving a gearing of 48% compared with 72.4% a year earlier.

Capital expenditure during the period was 96.6% higher at  €277 million, largely reflecting the two major items in Italy and in Bulgaria. 

Cement and clinker sales totalled 21.7 million tonnes, just 0.5% lower than in H1 2013 despite a slow Q2 2014. Volumes increased by 1.1% to 7.3 million tonnes in Central and Western Europe, where improvements in Spain and Greece helped to mitigate a drop in sales in France, Belgium and Italy.

Sales of cement and clinker declined by 4.8% to 1.9 million tonnes in North America as a result of harsh weather at the start of the year. In Asia sales were up 2.6% to 5.5 million tonnes, while Emerging Europe, North Africa and the Middle East recorded a slight drop of 0.5%. Positive performances were reported in Egypt, India and Thailand, with sales up 4 – 5%.

Sales volumes of ready-mixed concrete were down 8.1% to 5.7 million m³. Volumes grew in Asia but declined elsewhere, particularly in Morocco and Central Western Europe. Aggregates volumes contracted 6.3% to 15.4 million tonnes. Aside from Italy and Greece, Italcementi has reported a general slowdown in sales.

“Our results at the end of the first half are in line with our programs,” said chief executive Carlo Pesenti. “We continue to focus on containing production costs and on maintaining a solid financial position, partly in connection with commitments to complete our strategic projects, primarily in Italy and Bulgaria. The situation at the half-year stage and the projects we have planned, including the total success of the plan to strengthen the Group’s capital position and simplify its governance through which we have acquired full control of 5068 Ciments Français, mean we can confirm our expectation of an improvement in full-year Ebitda.”