Titan: Turnover up 22.6% to € 1.3 million net profit

Titan Cement International SA recorded a significant increase in turnover in all geographical areas in the first quarter of 2022.

In particular, the company speaks of a “strong start to the year,” noting that the group’s turnover increased by 22.6% to € 454.6 million, “thanks on the one hand to the higher price levels of all products in all countries of activity and on the other hand in stable demand “, as stated in a relevant announcement.

He also announced:
• Reduction of earnings before interest, taxes, depreciation and amortization (EBITDA) by € 9.7 million to € 46.4 million, as price increases gradually offset the high costs

• Successful reduction of net specific CO2 emissions by 6.6% in the first quarter of 2022 compared to the same period last year

Estimates of strong demand in 2022 are maintained, supporting price increases

Review of first quarter results

Analytically, as mentioned in the relevant announcement, “the year started positively for the Group with stable demand in all areas in which we operate and a significant increase in prices for all products. It is reminded that the first quarter is the one with the lowest sales due to seasonality and is not considered representative for the rest of the year.

The consolidated turnover of the TITAN Group amounted to € 454.6m, recording an increase of 22.6% compared to the first quarter of 2021.

Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 17.3% to € 46.4m, as price increases applied to our products in the first months of the year gradually offset the rise in prices of energy and other components. costs.

In most markets we have already announced further price increases, which are implemented within the first half of 2022.

Net income after taxes and minority interests (NPAT) in the first quarter decreased to € 1.3 million (compared to € 15.3 million in the first quarter of 2021), due to lower EBITDA levels and the negative impact of foreign exchange fluctuations, mainly due to the devaluation of the Egyptian pound.

Regarding the free cash flows, due to seasonality, there were outflows of € 34.5m. due to the lower EBITDA, the higher investment costs of € 38.9m. and the increased needs for working capital of € 50.6m. The Group’s net debt at the end of March 2022 amounted to € 756.8m, levels corresponding to those of March 2021.

On March 17, 2022, the Board of Directors decided to return a capital of € 0.50 per share to all shareholders who were registered in the Company’s share register on Thursday, April 28, 2022 (record date). The recovery of the refund amount was set for July 5, 2022.

Purchase of own shares:

Within the framework of the own shares purchase program that started in October 2021, in the first quarter of 2022, the Group purchased 508,436 shares for a total price of € 6,763,076. On March 17, 2022, the Board of Directors decided to implement a new program for the purchase of own shares of a maximum amount of € 10,000,000 at Euronext Brussels and the Athens Stock Exchange. The estimated duration of the program is six months and its implementation began on April 1, 2022.

Geographic performance for the first quarter of 2022

USA

The US market continues to grow significantly, with cement sales rising sharply and demand already outpacing domestic production. Demand for housing construction remains high, while there has been a recovery in the commercial real estate sector. Significant federal budget funds appear in increased activity for road infrastructure projects in many states. Amid higher demand, significant price increases took place in January, but these were implemented gradually and are not fully reflected in the results of the first quarter. Profit margins were affected by rising fare prices and consequently higher costs of imported cement, as well as rising prices for energy, logistics, raw materials and other costs. A second round of price increases has already been announced for June in order to cover the cost increase and restore profit margins. Sales of lower carbon footprint cement rose in all areas of activity, strengthening Titan America’s lead.

US turnover increased by 17.8% to € 267.6 million (an increase of 9.6% in US dollars), while earnings before interest, taxes, depreciation and amortization (EBITDA) decreased to € 24 million against € 38.5 million last year.

Greece & Western Europe

The construction activity in the Greek market is maintained at high levels, as domestic demand is moving upwards and price increases have been absorbed by the market. The construction activity continues both in the urban centers with the construction of houses and real estate, as well as in the region, with many public and municipal projects in progress. On the other hand, the general increase in the cost of construction materials has slowed down the start of new projects. In terms of exports, the US remains the main export destination for Greece. As in most markets, the prices of energy and electricity as well as other cost elements create adverse conditions which the Group faces with tariff increases (at the end of the first quarter there was a new price increase) as well as with more efficient cost management through greater use of alternative fuels. At the same time, the digital transformation projects that are in progress in all the cement factories of the Group, lead to further improvement of the business operation.

The total turnover for Greece and Western Europe in the first quarter of 2022 increased by 23.0% and amounted to € 69.9m, while earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 4.7% and amounted to € 6.3m

Southeast Europe

The region of South East Europe continues to grow and construction continued at a good pace in the first quarter of 2022. Price increases were successfully implemented in all markets and largely offset cost increases. In this area there have been large increases in energy and electricity costs, as energy needs are largely covered by imports and the Group recently proceeded to further price increases to regain profit margins. In addition, the Group is constantly on the alert to manage the challenges aiming at continuous operational improvement, through the increased use of alternative fuels, through investments in solar energy projects and through other initiatives.

During the first quarter of 2022 the turnover in the region increased by 30.0% and amounted to € 63.7m, thanks to the increase in sales and prices, while earnings before interest, taxes, depreciation and amortization (EBITDA) decreased from € 11 , 3cm. to € 10.7m. due to the sharp rise in energy costs.

Eastern Mediterranean

The cement market in Egypt continues to move in a growth trajectory and in the first quarter of 2022 increased by 4.7%. The rationalization of production imposed by the government last summer has reduced the gap between supply and demand and has led to improved operating profitability and higher price levels. Despite the macroeconomic challenges, during the quarter the market continued to rely on extensive public investment for workers’ housing and infrastructure projects.

In Turkey, the macroeconomic challenges and implications of the war in Ukraine are reflected in the country’s real economy. Demand fell in the first quarter and sales fell as inflation exceeded 60%, government investment fell, costs skyrocketed and a very heavy winter prevailed. Cement prices rose as producers reacted quickly to offset inflationary pressures.

The total turnover in the geographical sector of the Eastern Mediterranean amounted to € 53.4m, recording an increase of 41.9% compared to the corresponding period last year, while earnings before interest, taxes, depreciation and amortization (EBITDA) jumped to € 5.4m. against € 0.2 million in the first quarter of 2021.

Brazil (Consortium)

The Brazilian market reflects growing inflationary pressures and rising interest rates, as well as the impetus for investment in workers’ housing and infrastructure, especially in the run-up to the October elections. In the first quarter of the year, the demand for cement in the country as a whole fell by 2.4%. At the same time, the significant increase in prices was not sufficient to offset the increase in cost items.

ESG performance

The Group accelerated its efforts to reduce the carbon footprint and, in the first quarter of 2022, net specific CO2 emissions were 6.6% lower compared to the same period last year. The installation of a pre-calculator at the Kamari plant, which will allow for the increased substitution of fossil fuels by alternatives, is progressing according to plan and will be completed by 2023. In addition, TITAN America has increased cement sales at a reduced
carbon footprint (Type IL), which is now available in both New Jersey and the New York metropolitan area.

In Greece, TITAN has launched ENVIRA, an innovative ready-mixed concrete that reduces the likelihood of flooding, reduces the loss of valuable water resources and helps curb rising temperatures in the urban environment. In addition, a pilot plant for the capture and utilization of carbon dioxide (carbon capture storage and utilization) was installed at the Kamari plant as part of the EU-funded “RECODE” project. The project concerns the production of chemicals and value-added materials through the utilization of CO 2 committed by the factory.

Perspectives

Global macroeconomic challenges have not abated since our last communication in March 2022. The world is still being held hostage by the tragic developments in Ukraine, which not only result in the loss of lives and the suffering of many people, but also have adverse effects. in the global economy in the form of inflationary pressures, supply chain problems and growing geopolitical uncertainty.

In the US, in the construction materials sector, the construction sector maintains its strong momentum, despite macroeconomic uncertainties. Activity in the housing market continues to boost demand. The infrastructure industry is expected to steadily boost demand from 2023 onwards, as the stimulus from large-scale infrastructure investment in the US will begin to be felt.

In Europe at the moment, the outlook for the markets in which we operate remains positive. In Greece, EU-funded projects are expected to boost demand in the coming years. In all geographical areas, cost pressures are estimated to be maintained and the Group will continue to cope by adjusting the prices of its products accordingly, in order to shield and improve its performance.