Titan Group Turnover for the first quarter of 2009 reached €308 m declining by 9.5% compared to last year’s first quarter. EBITDA decreased by 19%, reaching €62 m. Group Net Profit, after taxes and minority interests, reached €21 m, a decline of 50% compared to the same quarter last year.
The results were positively affected by currency fluctuations, mainly the appreciation of the US Dollar and Egyptian Pound versus the Euro. At constant exchange rates, Group Turnover would have declined by 16% and EBITDA by 24%.
The decline in the Group’s performance is due to the significant decrease of demand, in the context of the global financial crisis in our largest markets, Greece and the USA, as well as in South Eastern Europe. In contrast, our acquisitions of last year, Egypt in particular, made a significant positive contribution to the Group’s results.
It should be noted that first quarter results are not necessarily representative of full year performance, due to the significant seasonality of demand for our products. The decline of demand for building products was aggravated by the comparatively heavier and more prolonged winter this year compared to last year.
| €m | Q1 2009 | Q1 2008 | % change |
|---|---|---|---|
| Turnover | 307.9 | 340.2 | -9.50% |
| EBITDA | 62.3 | 76.7 | -18.80% |
| Pre-tax profits | 22.1 | 45.9 | -51.80% |
| Net profit* | 21.3 | 42.7 | -50.10% |
| *after taxes and minority interest | |||
In Greece, construction activity was well below last year’s levels and sales volumes declined sharply across all product lines. Operating performance (EBITDA) decreased by 49% compared to the first quarter of 2008.
In the USA, the deterioration of the economy and the continuing housing market slump led to further reduction of sales volumes. The US dollar appreciation impacted results positively and limited the EBITDA decline rate to 29%.
In January 2009, the South Florida Federal District Court issued a ruling once again cancelling all mining permits in the Lake Belt area. Titan America appealed the ruling again and is well prepared to continue operations at the Pennsuco plant and to address its customer needs, which, in any case, are much diminished in the context of current depressed market conditions. On May 1st 2009, the US Army Corps of Engineers issued, for public consultation, the Supplementary Environmental Impact Statement (SEIS) which is meant to provide the basis for new mining permits in the Lake Belt area, extending to the year 2022.
In Southeastern Europe, construction activity declined sharply due to the economic crisis faced by the regional markets, as well as due to adverse weather conditions. The Group continued to increase its business presence in Albania, in anticipation of the start up of the new greenfield plant in early 2010. Overall operating profitability in Southeastern Europe declined by 57% in the quarter.
In the Eastern Mediterranean region, where the Group has invested extensively over the last year, operating performance more than tripled. EBITDA reached €25.9 m, mainly as a result of the expansion of the Group’s operations in Egypt, but also due to the first time consolidation of Turkey. In Egypt, demand for building materials remained strongly positive. Turkey also made a positive contribution to Group’s results, despite the downturn in the market.
Beyond prevailing market trends, the Group’s results were adversely affected by increased financial expenses resulting from higher debt levels, and increased depreciation. This was partially offset by lower taxation, reflecting a higher percentage of profitability from countries with low corporate tax rates.
2009 OUTLOOK
The ongoing global financial crisis is significantly affecting demand for building materials. Management remains focused on generating positive cash flows, prudently managing liquidity, reducing debt levels and containing operating and administrative costs.
At the same time, the Group is continuing to invest in the construction of two important projects, the new plant in Albania and the new production line in Egypt, which will increase the Group’s annual cement production capacity by 3 million tons next year.
In the USA, the Portland Cement Association recently revised its projections downwards, and now expects a 17% decline in cement consumption in 2009. The economic stimulus program is only expected to meaningfully impact housing and infrastructure spending in 2010 and beyond.
In Greece, the decline of demand for building materials is expected to continue. In Southeastern Europe, demand is expected to decline significantly. On the other hand, sales growth in Egypt is expected to continue in the short term, while the operation of the new production line in our Beni Suef cement plant will positively impact results by the end of 2009.
Titan is an independent cement and building materials producer with over 100 years of industry experience. Based in Greece, the Group operates in 7 countries, owning 12 cement plants. Throughout its history Titan has aimed to combine operational excellence with respect for people, society and the environment.
In 2008, the Group sold over 17.2 m. tonnes of cement and cementitious materials, 5.4 m. m3 of ready mixed concrete, 18.6 m. tonnes of aggregates and various other building materials like concrete blocks, dry mortars etc.
Detailed financial and other information is available on the Titan Group website: www.titan-cement.com
The above announcement was notified to the Athens Exchange, the HCMC and was also posted on the Athens Exchange website.