Months Sales. Mr Guy Sidos, Mr Jean-Pierre Souchet, M Stéphane Bisseuil. 4 November Chief Executive Officer. Chief Financial Officer

Transcription

1 Months Sales 4 November 2008 Mr Guy Sidos, Chief Executive Officer Mr Jean-Pierre Souchet, Chief Financial Officer M Stéphane Bisseuil Investor Relations

2 Outstanding points Sales down at 1.3%: a resilient performance in what is today a much tougher environment Cement business: a solid performance with 3% growth Our financial position is today very strong Our Performance 2010 Investment is on track, with the necessary adjustments We have implemented a set of measures to reduce operating expenses Confidence in our ability to make the most of the markets in which we operate 2

3 Breakdown of consolidated sales by business (millions of euros) Nine months 2008 Nine months 2007 Change (%) At constant scope and exchange rate Cement % +2.8% Concrete & Aggregate % -5.7% Other Products & Services % -0.4% Total 1,582 1, % -1.3% Breakdown of sales: relatively stable Cement: 45% of total consolidated sales, versus 43% Concrete & Aggregates: 41%, down 2 percentage points 3

4 Geographical breakdown of sales : France (millions of euros) Nine months 2008 Nine months 2007 At constant scope Consolidated sales % +2.0% Cement sales up 2% in the first nine months of the year Very slight rise in volumes Higher prices in the domestic market Concrete & Aggregates up 2% Concrete volumes stable at constant scope, whereas volumes were down in Aggregates Selling prices remained solid throughout the period in both Concrete and Aggregates Other Products and Services posted a firm increase in sales at constant scope, particularly in construction chemicals Looking forward, the slowdown in the French market is expected to continue for the rest of the year : Lower activity in the newbuild residential and commercial property markets Maintenance/ refurbishment and public works segments should remain stable overall 4

5 Geographical breakdown of sales Europe (ex France) (millions of euros) Nine months 2008 Nine months 2007 At constant scope and exchange rate Consolidated sales % +3.1% In Switzerland : Cement : strong growth in sales thanks to substantial rises in both volumes and selling prices Concrete & Aggregates : higher sales, underpinned by good volume growth and price increases Precast business : decrease in revenue due to delays in some projects, with deliveries postponed until 2009 In the fourth quarter, sales should continue to grow firmly. However : Growth will be limited : cement production is running at full capacity Depending on weather conditions In Italy : Sales rose in the first nine months of 2008 despite tough market conditions Slight increase in volumes in selling prices. In the third quarter, although prices remained firm, volumes fell significantly 5 In the fourth quarter, the third-quarter trend is likely to continue, with falling volumes partly offset by solid prices

6 Geographical breakdown of sales United States (millions of euros) Nine months 2008 Nine months 2007 At constant scope and exchange rate Consolidated sales % -23.9% Difficult environment over the period : Macroeconomic weakness, affecting both the residential property sector, and industrial /commercial property Bad weather conditions in the Southeast region In California In Cement : consolidated sales fell by around 7% In Concrete : revenue fell sharply, by just over 28% In the Southeast, consolidated Cement sales fell by just below 26% and concrete sales fell by around 12% in the first nine months of the year. The US operating environment will remain tough in the fourth quarter The Group will pursue its plan in Cement to enhance the efficiency of its manufacturing facilities 6

7 Geographical breakdown of sales Turkey and Kazakhstan (millions of euros) Nine months 2008 Nine months 2007 At constant scope and exchange rate 7 Consolidated sales % +2.7% Turkish market is affected by over capacities, and the change in the macro economic environment In Cement : Significant decrease in pricing in a tough competitive environment Volumes were supported by firm exports, particularly to Russia However, exports to Russia fell sharply in the third quarter, due to logistical problems arising from the local geopolitical crisis and declining activity in Russia Volumes delivered in the domestic market decreased in Q3 affected by the current macro economic environment In Concrete : Solid volumes growth, fully compensating pricing decrease For the rest of 2008, the situation is likely to remain difficult Competition will be especially stiff since exports to Russia are likely to recover only very gradually As a result, in Turkey, exports will fail to offset the fall in volumes that was seen in the third quarter

8 Geographical breakdown of sales Africa and Middle-East (millions of euros) Nine months 2008 Nine months 2007 At constant scope and exchange rate Consolidated sales % +11.3% In Senegal, sales grew by more than 10% : Volumes were up year-on-year, and prices continued to rise Despite bad weather conditions In Egypt, nine-month sales rose sharply Dynamism of the Group on the domestic market and pricing were significantly up during the period Compensating for the export ban, weaker construction activity (Ramadan), and the anticipated shutdown in July, in order to commission the new kiln For the rest of 2008, the operating environment should remain robust across Africa and the Middle East In Egypt : the authorities have lifted the export ban and scrapped the export tax 8

9 Nine-month sales by business Cement (millions of euros) Nine months 2008 Nine months 2007 Volume (thousands of tons) 10,845 10, % - Operational sales % +1.7% Elimination (164) (173) - - Consolidated sales % +2.8% Concrete & Aggregates (millions of euros) Nine months 2008 Nine months 2007 Concrete volume (thousands of cubic meters) Aggregate volume (thousands of tons) 6,501 6, % - 16,106 16, % Operational sales % -5.2% Elimination (7) (7) - - Consolidated sales % -5.7% Other Products & Services (millions of euros) Nine months 2008 Nine months 2007 Like-forlike Like-forlike Like-forlike Operational sales % +0.4% Elimination (58) (57) - - Consolidated sales % -0.4% 9

10 Financial performance in the first nine months of 2008 Operating margin The operating margin trend in the first nine months of 2008 was: In line with that recorded in the first half of the year Despite a worse-than-expected deterioration in the operating environment in the third quarter Change in the financial position relative to 30 June 2008 The Group's financial position did not record any substantial change between 30 June and 30 September 2008 Consolidated net worth rose and gearing (net debt/shareholders' equity) fell to 35% This low gearing, together with confirmed credit facilities, mean that Vicat's financial position is very strong The Group s current financial covenants do not constitute a risk for the balance sheet s liquidity and the Group s financial situation 10

11 Recent events (1) The Performance 2010 plan is running to schedule: Egypt: Sinai Cement's new kiln has started production in July 2008 France: new cement mill at the Montalieu site has started Senegal: new cement mill to be commissioned in the fourth quarter of 2008 and new 1.4m-tonne-capacity kiln should come into operation in mid-2009 Some aspects of the Performance 2010 plan will be adjusted to take account of the changing economic situation: Switzerland: investment is being stepped up : In order to respond to strong demand and to the lack of clinker capacity at Vicat's plant The project to increase cement capacity by 200,000 tonnes per year has been brought forward to the second half of 2009 (vs late 2010) United States: Vicat has decided to postpone investments in the Southeast region As a result of the worsening market environment. The new kiln, initially planned for 2010, will not be commissioned until late 2011 or early 2012 This decision has no financial consequences 11

12 Recent events (2) Kazakhstan: India: Vicat's investment was financed on very good terms Construction has started Annual capacity of 1.1m tonnes being brought into service in H Joint venture between Vicat and India's Sagar Cements, Construction of a greenfield plant is progressing according to schedule Annual cement production capacity of 5.5m tonnes The first kiln is expected to start production in late 2011 Mauritania: Acquisition of a 65% stake in BSA Ciment Cement mill with capacity of 450,000 tonnes per year This move into the fast-growing Mauritanian market strengthens Vicat's position in Western Africa 12

13 Outlook The macroeconomic situation has deteriorated substantially in the last few months, and the resulting lack of visibility has prompted Vicat to take a more cautious approach as regards its targets for the fourth quarter and full-year 2008 The Group now expects 2008 sales to fall slightly relative to In addition, the target of increasing EBITDA margin in the second half relative to the first half will be harder to achieve, due to the recent worsening of conditions in the economy in general and in the Construction Sector in particular. As a result, the Group still expects full-year 2008 EBITDA margin to be below the level recorded in However, the decline is likely to be larger than anticipated when first-half 2008 results were published on 4 August. In response to these conditions, Vicat has decided to take measures to reduce operating expenses in all countries. These measures will have a gradual positive impact on the Group's performance, and will in time limit the consequences of the current sharp economic downturn 13

14 A complementary cost reduction plan : «Performance Plus» Improvement and optimisation of cost-structure to respond to the current macro-economic situation Credit crunch Reduction in visibility Targeted savings are currently being estimated in each country and will be announced early 2009 A three-pronged approach 1. Increase in effectiveness of industrial performance Reinforcement of purchasing policy Energy performance plan to maximise use of alternative fuels 2. Adaptation of cost structure to levels of activity Modulation of production rhythms of plants Reduction in maintenance costs, through an optimisation of scheduled plant shutdowns to reflect production levels Wage bill (interims and overtime) G&A Reduction objectives in Working Capital in all Group entities 3. Postponement of non-strategic investments i.e. all investments except those with short-term ROI such as alternative fuels external growth (India, Kazakhstan) when devoted to security, the environment 14

15 Investment Case Very solid financial position Sustained strong margin generation Extensive experience and proven resilience in economic slowdowns Cost-reduction measures to enhance flexibility Strong local market positions Efficient vertical integration Performance 2010 plan to optimize cost-base Cautious external growth strategy 15