Regulatory News:
- Volumes affected by poor weather conditions in Europe and Turkey
- Generally favourable pricing conditions
- Continuing brisk ramp-up of activities in India and Kazakhstan
- Very solid financial position
The Vicat Group (NYSE Euronext Paris: FR0000031775 - VCT)(Paris:VCT) has today reported sales for the period ended 31 March 2012 of ?485 million, down 5.4% or 5.6% at constant scope and exchange rates.
Consolidated sales by business:
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope and | |||||||
Cement | 255 | 267 | -4.4% | -3.7% | ||||
Concrete & Aggregates | 162 | 180 | -9.8% | -10.7% | ||||
Other Products & Services | 68 | 66 | +2.7% | +0.9% | ||||
Total | 485 | 513 | -5.4% | -5.6% |
Commenting on these figures, the Management Board stated:
"Vicat has delivered a solid performance despite particularly
unfavourable weather conditions over the quarter in Europe and Turkey.
Marked by a usual winter seasonal effect, as well as by an unfavourable
2011 comparison base, the Group's performance by region remained
contrasted. Over the first three months of the year, the Group was able
to capitalise on positive momentum in emerging markets and leverage the
slight signs of recovery in the United States, while business volumes in
the Africa and the Middle East region continued to be characterised by
the political transition currently taking place in Egypt.
Buoyed
by the continued ramp-up of Bharathi Cement in India and Jambyl Cement
in Kazakhstan, and thanks to its ever more efficient manufacturing base,
Vicat intends to further confirm this year the rightness of its
geographic expansion strategy and benefit even more from its sensible
investment policy."
In this press release, and unless indicated otherwise, all changes are stated on an annual basis (2012/2011), and at constant scope and exchange rates.
Consolidated sales for the first quarter of 2012 totalled ?485 million,
down 5.4% relative to the same period in 2011. At constant scope and
exchange rates, sales fell by 5.6%.
During the first quarter, the
Cement business sustained a 3.7% drop in sales at constant scope and
exchange rates, while the Concrete & Aggregates division suffered a
sharper fall of 10.7%. Meanwhile, sales from Other Products & Services
rose by 0.9%.
The breakdown of operational sales between the Group's various business lines during the first quarter shows a slight increase in the contribution from the Cement business, which now accounts for 54.3% of consolidated sales compared with 53.8% at 31 March 2011. The Concrete & Aggregates business represented 30.8% of consolidated sales compared with 31.7% at 31 March 2011. Lastly, the contribution from Other Products & Services remained stable at 14.9% of consolidated sales compared with 14.6% at 31 March 2011.
The development of the Group's sales during the first quarter of 2012 relates primarily to:
- a sharp decline in volumes in France, Switzerland and Turkey during January and February due to much less favourable weather conditions than last year, despite the first signs of an upturn in March;
- continuing challenging market conditions in Egypt, affected by severe deterioration in the security situation over the last nine months;
- the continued ramp-up of activities in India and Kazakhstan, where the Group saw very strong growth during the first quarter;
- a significant rebound in sales volumes in the United States, supported by more favourable weather conditions than during the same period in 2011;
- favourable pricing conditions in all regions apart from the United States, West Africa and Egypt. However, it should be noted that in Egypt, prices have risen sharply on a sequential basis;
1. Geographical breakdown of consolidated sales to 31 March 2012
1.1. France
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported | At constant scope | |||||||
Consolidated sales | 198 | 222 | -11.1% | -11.1% |
Consolidated sales in France for the period ended 31 March 2012 fell by 11.1% to ?198 million. This was as a result of weather conditions that were marked this year by a very rigorous winter.
By business:
- Consolidated sales for the Cement business fell by 13.2%. Operational sales (before intra-group sales) were down 10.9%. The period was characterised by a sharp decline in volumes (down 15.7%), reflecting above all the effects of a very difficult comparison base. Indeed, as opposed to the first quarter of 2011 when the Group's activity had benefitted from warm temperatures, activity at the beginning of the year has been marked by a rigorous winter, especially in February. However, the average selling price increased by around 2%.
- Consolidated sales for the Concrete & Aggregates business fell by 16.7%. This business line was also severely affected by the weather conditions at the start of the year, contrasting with those of an exceptional first quarter in 2011 especially in the Group's catchment area. Concrete sales volumes therefore fell by around 19% and aggregates by around 22%. Average selling prices rose by around 3% in both concrete and aggregates.
- The Other Products & Services division recorded a 5.5% increase in consolidated sales. The Building Chemicals and Transport divisions each saw growth of around 5%.
1.2. Europe (excluding France)
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope | |||||||
Consolidated sales | 74 | 79 | -6.7% | -12.0% |
Consolidated sales in Europe excluding France for the period ended 31 March 2011 fell by 12.0% to ?74 million. As in France, this was as a result of weather conditions that were particularly more unfavourable than in the first quarter of 2011.
In Switzerland, consolidated sales contracted by 14.0% at constant scope and exchange rates in the first quarter of 2012, affected by difficult weather conditions, particularly in February.
- In the Cement business, sales volumes were down by nearly 18%. Selling prices remained stable during the first quarter, with the expected increase in prices not likely to be seen until the second quarter. In view of these factors, consolidated sales fell by 3.2% or 9.2% at constant scope and exchange rates. To note, operational sales are down 13.1% at constant scope and exchange rates.
- In the Concrete & Aggregates business, which is particularly sensitive to weather conditions, consolidated sales fell by 12.5% or 17.9% at constant scope and exchange rates. Sales volumes declined by around 25% in concrete and 12% in aggregates relative to a record first quarter in 2011. Average selling prices on an "ex-works" basis decreased slightly in concrete but rose sharply in aggregates.
- Consolidated sales for the Precast business fell by 7.9% or 13.6% at constant scope and exchange rates. This was as a result of a 14.4% decline in volumes due to poor weather conditions.
In Italy, sales rose by 17.2%, mainly as a result of a sharp surge in selling prices while volumes remained stable despite difficult weather conditions.
1.3. United States
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope | |||||||
Consolidated sales | 41 | 36 | +15.9% | +11.2% |
The Group achieved strong sales growth in the United States in a still fragile economic climate, but one that shows further confirmation of signs of a very gradual recovery. It is nevertheless important to note that the region benefited from much more favourable conditions during the first quarter than in 2011.
Against this backdrop, sales rose sharply relative to the first quarter of 2011.
- In the Cement business, consolidated sales increased by 9.8% at constant scope and exchange rates. In keeping with the trend observed at the end of 2011, sales volumes rose sharply (up 12%) year-on-year, with strong growth of 21% in California, supported by slight improvement in market conditions, but above all more favourable weather conditions than in 2011. In Alabama, volumes grew by over 3%. This solid increase in volumes made up for the development in prices, which remained unfavourable relative to the first quarter of 2011.
- In the Concrete business, consolidated sales increased by 11.8% at constant scope and exchange rates. This reflects significant improvement in sales volumes of around 15%, driven by strong growth in California, making up for a slight decline in the South East. Selling prices for the first quarter were down slightly in California, but stable in the South East relative to the same period in 2011.
1.4. Turkey, India and Kazakhstan
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope | |||||||
Consolidated sales | 77 | 65 | +18.1% | +25.5% |
Consolidated sales for the region as a whole totalled ?77 million, an increase of 25.5%.
In Turkey, sales fell by 20.0% at constant scope and exchange rates to ?25 million as a result of much more unfavourable weather conditions than in the first quarter of 2011.
- In the Cement business, consolidated sales fell by 21.4% at constant scope and exchange rates. This was due to severe contraction in sales volumes of over 29% relating to particularly difficult weather conditions in the first quarter of 2012. This decline in volumes was partly offset by a continuing significant increase in selling prices.
- In the Concrete & Aggregates business, consolidated sales fell by 18.4% at constant scope and exchange rates. As in the Cement business, sales volumes were down sharply (down 31%), mainly because of poor weather conditions, while selling prices also increased significantly.
In India, sales totalled ?43 million during the first quarter of 2012, an increase of 52.0% at constant scope and exchange rates. The Group's excellent performance in the region was confirmed, with the continuing ramp-up of Bharathi Cement's modern manufacturing base. During the first quarter, sales volumes came to around 670,000 tonnes of cement, an increase of more than 33%. The trend observed in selling prices in 2011 continued during the first quarter of 2012, although at a less dynamic rate, with an increase of around 5%.
In Kazakhstan, during a period characterised by a tough winter, the Group continued with the roll-out of its activities in this high-potential market. Sales for the first quarter totalled ?8.9 million, with a progression in volumes in line with the Group's objectives, under very favourable pricing conditions despite the winter season.
1.5. Africa and Middle-East
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope | |||||||
Consolidated sales | 96 | 111 | -13.4% | -13.4% |
In Africa and the Middle East, consolidated sales fell by 13.4% to ?96 million.
- In Egypt, consolidated sales fell by 32.5% to ?28 million. This was due to contraction in volumes of over 25% relative to the first quarter of 2011, which had been only partially affected by political events. During the first quarter, the Group's performance was still severely affected by particularly difficult operating, logistical and selling conditions, similar to those observed since the second half of 2011. Selling prices were down relative to the first quarter of 2011, although up significantly on a sequential basis.
- In West Africa, consolidated sales fell by 1.7% at constant scope and exchange rates. The Group's performance during the first quarter was characterised by less buoyant market conditions than usual in Senegal due to the election period, as well as events in Mali. In the region as a whole, cement volumes contracted by around 3% relative to the first quarter of 2011, against the backdrop of slightly strained pricing conditions. However, the aggregates business posted solid growth over the period.
2. First-quarter 2012 sales by business
2.1.Cement
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope | |||||||
Volume (thousands of tonnes) | 3,794 | 4,020 | -5.6% | |||||
Operational sales | 299 | 316 | -5.5% | -5.0% | ||||
Intra-group sales | (44) | (49) | ||||||
Consolidated sales | 255 | 267 | -4.4% | -3.7% |
The Cement business sustained a fall in consolidated sales of 4.4% or 3.7% at constant scope and exchange rates.
2.2Concrete & Aggregates
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope | |||||||
Concrete volumes (thousands of m3) | 1,477 | 1,772 | -16.6% | |||||
Aggregates volumes (thousands of tonnes) | 4,293 | 5,039 | -14.8% | |||||
Operational sales | 170 | 186 | -8.8% | -9.7% | ||||
Intra-group sales | (8) | (6) | ||||||
Consolidated sales | 162 | 180 | -9.8% | -10.7% |
Consolidated sales for the Concrete & Aggregates business fell by 9.8% or 10.7% at constant scope and exchange rates.
2.3.Other Products & Services
(? million) | 31 March 2012 | 31 March 2011 | % change | |||||
Reported |
At constant scope | |||||||
Operational sales | 82 | 86 | -4.2% | -5.5% | ||||
Intra-group sales | (14) | (20) | ||||||
Consolidated sales | 68 | 66 | +2.7% | +0.9% |
Consolidated sales recorded by the Other Products & Services division rose by 2.7% or 0.9% at constant scope and exchange rates.
3. Changes in the Group's consolidated financial position at 31 March 2012
The Group points out that historically, the first quarter has not been representative of the Group's full-year financial performance.
Net debt represents 48.6% of consolidated equity at 31 March 2012 compared with 43.8% at 31 December 2011, confirming the solidity of the Group's balance sheet.
Given the level of Group's net debt, bank covenants do not pose a threat to either the Group's financial position or its balance sheet liquidity. At 31 March 2012, Vicat comfortably met all the ratios in the covenants laid down in financing agreements.
4. Outlook for 2012
For the 2012 financial year, the Group wishes to provide the following information concerning its various markets:
- In France, the Group anticipates, excluding weather condition effects, a very slight downturn in volumes during 2012 in a more favourable pricing environment.
- In Switzerland, the environment is likely to remain broadly positive, excluding weather condition effects, with stable volumes and prices expected to firm up slightly.
- In Italy, the Group expects the situation to improve after a very tough year in 2011. Even so, given current levels of cement consumption, volumes should gradually stabilise and selling prices should pick up.
- In the United States, the Group anticipates very gradual improvement in its markets, in terms of both volumes and pricing.
- In Turkey, excluding weather condition effects, the improvement in the industry environment in 2011 is likely to continue into 2012 despite tighter macroeconomic conditions. Against this backdrop, the Group should be able to take full advantage of its efficient production facilities resulting from its investments under the Performance 2010 plan.
- In Egypt, despite a situation that should remain fragile especially during the first half, the market remains upbeat in terms of volumes and prices are expected to be more favourable, but operational conditions will remain complex. In the short-term, the re-establishement of fuel supply to the plant should have a stabilising effect on operational conditions. The Group remains confident about the positive performance of the Egyptian market in the medium and long term.
- In West Africa, in a market environment that is likely to remain broadly favourable, the Group will continue to build up its commercial positions across the region, drawing on a fully modernised and efficient manufacturing base, given that a new competitor is expected to arrive in Senegal during the second half of 2012, which may have a negative impact on the market.
- In India, the ramp-up of Bharathi Cement is set to continue, in line with the Group's expectations. In addition, the gradual start-up of the Vicat Sagar plant's lines during the second half of the year will give rise to two major players in southern India, serving complementary markets, able to draw on substantial business synergies, with total nominal capacity of over 7 million tonnes.
- In Kazakhstan, thanks to its ideal geographical location and highly effective production base, the Group should gradually be able to take full advantage of a market poised for solid growth in the construction and infrastructure sectors in what is expected to be a supportive pricing environment.
Finally, regarding the Group's expected evolution in profitability for 2012, Vicat's EBITDA margin will be adversely affected by the following factors:
- difficult weather conditions encountered during the first quarter in Europe and Turkey;
- start-up and build-up costs at the Vicat Sagar plants in India;
- the impact on operating expenses of the events in Egypt in 2011, which are likely to continue for the short term.
Positive factors for EBITDA margin include:
- generally more favourable pricing conditions;
- continuing strong momentum in India and Kazakhstan;
- ongoing efforts to raise productivity and limit fixed costs.
In this environment, Vicat will pursue its development strategy combining growth in its sales and operating results, while gradually reducing its debt burden.
5. Conference call
To accompany the publication of its first-quarter 2012 sales, the Vicat Group is organising a conference call that will be held in English on Thursday, 3 May 2012 at 3pm Paris time (2pm London time and 9am New York time).
To take part in the conference call live, dial one of the following
numbers:
France: +33 (0)1 70 48 01 66
United Kingdom: +44(0)20
3364 5381
United States: +1 718 971 5738
To listen to a playback of the conference call, which will be available
until midnight on 10 May 2012, dial one of the following numbers:
France:
+33 (0)1 74 20 28 00
United Kingdom: +44 (0) 20 7111 1244
United
States: +1 347 366 9565
Access code: 4918247#
Next date for shareholders:
4 May 2012 (2pm): annual general shareholders' meeting
Next publication: 6 August 2012 (after the stock market closes): first-half 2012 sales and results
ABOUT VICAT
The Vicat Group has close to 7,400 employees working in three core divisions, Cement, Concrete & Aggregates and Other Products & Services, which generated consolidated sales of ?2.265 billion in 2011.
The Group operates in eleven countries: France, Switzerland, Italy, the United States, Turkey, Egypt, Senegal, Mali, Mauritania, Kazakhstan and India. Nearly 59% of its sales are generated outside France.
The Vicat Group is the heir to an industrial tradition dating back to 1817, when Louis Vicat invented artificial cement. Founded in 1853, the Vicat Group now operates three core lines of business: Cement, Ready-Mixed Concrete and Aggregates, as well as related activities.
Disclaimer:
This press release may contain forward-looking statements. Such
forward-looking statements do not constitute forecasts regarding results
or any other performance indicator, but rather trends or targets.
These
statements are by their nature subject to risks and uncertainties as
described in the Company's annual report available on its website (www.vicat.fr).
These statements do not reflect the future performance of the Company,
which may differ significantly. The Company does not undertake to
provide updates of these statements.
Further information about Vicat is available from its website (www.vicat.fr).
Vicat group - Financial data - Appendices
Breakdown of sales by business and geographical region at 31 March 2012
(in thousands of euros) | Cement | Concrete & Aggregates | Other Products & Services | Intra-group sales | Consolidated sales | |||||
France | 90,281 | 90,125 | 58,831 | (41,630) | 197,607 | |||||
Europe (excluding France) | 34,307 | 27,505 | 20,646 | (8,670) | 73,789 | |||||
United States | 18,408 | 29,668 | (6,756) | 41,320 | ||||||
Turkey, India & Kazakhstan | 66,829 | 15,328 | 2,584 | (8,155) | 76,586 | |||||
Africa and Middle East | 89,169 | 7,244 | (310) | 96,102 | ||||||
Operational sales | 298,994 | 169,870 | 82,061 | (65,521) | 485,404 | |||||
Intra-group sales | (43,864) | (7,884) | -13,773 | 65,521 | ||||||
Consolidated sales | 255,130 | 161,986 | 68,288 | - | 485,404 |
Investor relations contact:
Stéphane Bisseuil, + 33 1 58 86
86 13
s.bisseuil@vicat.fr
or
Press
contacts:
Clotilde Huet / Catherine Bachelot-Faccendini, +33 1
58 86 86 26
clotilde.huet@tbwa-corporate.com
catherine.bachelot-faccendini@tbwa-corporate.com