Titan Cement 1Q net -50%, warns of weak Greek demand


Updated Mon, 01 Jun 2009 00:00:00 GMT

Titan Cement Co. SA (TITK.AT) said Thursday that its first-quarter net profit fell 50% as the company was hit by the continued U.S. housing slump and a slowdown in demand in Greece and southeastern Europe. The company also warned of further weakness in Greece.

Net profit fell to EUR21.3 million from EUR42.7 million a year earlier, while revenue fell to EUR307.9 million from EUR340.2 million. Earnings before interest, tax, depreciation and amortization, or Ebitda, fell to EUR62.3 million from EUR76.7 million.

"Beyond prevailing market trends, the group's results were adversely affected by increased financial expenses resulting from higher debt levels, and increased depreciation," the company said in a statement.

In a presentation to analysts, Titan said consolidated net debt increased by EUR40 million and reached EUR1.15 billion at the end of the first quarter due to the dollar's strength against the euro as well as "front-loaded" capital expenses, which included its expansion in Egypt.

The figures were broadly in line with analysts' expectations of an 49% drop in net profit and an 8.7% fall in revenue.

"The results are overall satisfactory," said Elias Katsikalis, analyst at Euroxx Securities, who has an equalweight rating on the stock.

The company has been hurt by the ongoing housing sector lump in its key markets which has affected its sales volumes across all lines of products.

Looking ahead, the company said the US outlook remains negative, while in Greece it expects the demand for building materials will slow further in 2009. It said in southeastern Europe volumes will decline and warned in Turkey the immediate outlook remains challenging.

Titan Cement also reiterated its pledge to reduce debt levels and contain operating and administrative costs.

In southeastern Europe, operating profitability----as measured by Ebitda - declined by 57% to EUR7.5 million in the first quarter, while in Greece it fell 49% to EUR19.6 million. In Eastern Mediterranean, which also includes Egypt, Ebitda rose to EUR25.9 million from EUR7.7 million, mainly driven by the acquisition of an outstanding 50% stake held by France's Lafarge SA (LFRGY) in a joint venture Egyptian cement company for EUR330 million in May last year.

In April last year, the company completed the acquisition of a 50% stake in Turkey's Adocim Cimento Beton Sanayi ve Ticaret AS for EUR127 million -including Adocim's borrowings.

The first quarter is not fully indicative for the full year performance, the company said, as it is also affected by the poor cement demand due to unfavourable weather conditions.