The Italian Industrial Conference Naples October 10th-11th, 2005

Transcription

1 The Italian Industrial Conference 2005 Naples October 10th-11th, 2005

2 CONTENTS About us Strategic guidelines Annex - 1H 05 results 1

3 OUR GROUP AND ITS VISION International multi-regional, heavy-side group, focused on cement, ready-mix concrete and aggregates Long term view of the business and dedicated management High quality and environmentally friendly assets Value creation through lasting, experienced know-how and operating efficiency 2

4 COMPANY MILESTONES Established: 1907 Leading Italian regional operator 1965: Enters ready-mix market in Italy 1979: Enters US market 1981: Enters Mexican market 1997: Acquisition of 21% of Unicem, followed by tender offer (1998) Established: 1872 No.2 Italian cement producer 1973: Listing on Milan Stock Exchange 1979: Enters US market 1987: Enters ready-mix market in Italy 1999: Buzzi - Unicem merger; listing on Italian Stock Exchange 2001: Establishment of Dyckerhoff alliance 2004: Buzzi Unicem takes Dyckerhoff control ~32 m tons sold 3

5 LEAN AND DIRECT OWNERSHIP % Ordinary Shares Buzzi Family Holdings CAPITAL STRUCTURE* Number of shares 197,103,572 Treasury Stock 55.3% Free Float - Ordinary 156,530,558 - Savings 40,573, % Buzzi Unicem 43.4% Saving 20.6% As of Sept. 05: 91.2% Ordinary 62.2% Preferred 76.7% Total Dyckerhoff Ordinary 79.4% (*) As of Sept 20, m convertible bond still outstanding; in case of full conversion, # ordinary shares would reach 165.4m 4

6 CEMENT PLANTS LOCATION OGLESBY INDEPENDENCE PRYOR FESTUS STOCKERTOWN GREENCASTLE CAPE GIRARDEAU CHATTANOOGA SAN ANTONIO MARYNEAL NEW ORLEANS SUCHOI LOG CERRITOS TEPETZINGO LENGERICH GESEKE NEUBECKUM DEUNA RUMELANGE AMÖNEBURG GÖLLHEIM NOWINY RIVNE HRANICE RIVA d G CADOLA TRAVESIO ROBILANTE VERNASCA S.ARCANGELO SETTIMELLO NIKOLAJEV GUIDONIA Cement plant Grinding plant SINISCOLA CASERTA AUGUSTA BARLETTA 5

7 VOLUMES CEMENT (mt) READY-MIX CONCRETE (mm 3 ) H 04 1H PF * PF* H 04 1H 05 (*) Dyckerhoff consolidated line by line 6

8 TRACK RECORD REVENUES ( m) EBITDA ( m) EBITDA MARGIN (%) CASH FLOW ( m) 25,1% 29,0% 31,1% 30,9% 31,2% 29,7% 25,2% FY 2004 restated according to IFRS 7

9 ITALY Market share: 17-18% in cement, 10-11% in ready-mix concrete; strong vertical integration compared to nonindependent players Outlook 2005 Cement consumption stable at high level Mild signs of price recovery in 3Q 05, to be confirmed, after decline in 4Q 04 and 1H 05. 2H 05 energy factors Fuel and pet coke cost down in 2H 05 versus 1H 05 and 2H 04 (due more to marine freight decline than to FOB fuel price), however FY 05 expected slightly up versus FY 04 Electrical power almost equal in 1H 05 to 1H 04, strongly up in 2H 05 to where FY 05 expected + 8% versus FY mil ton Cement Consumption Imports Domestic Shipments ROBILANTE RIVA DEL GARDA SETTIMELLO VERNASCA GUIDONIA SINISCOLA Cement plant: 12 Grinding plant: 1 Terminal: 8 Ready mix plant: 176 TRAVESIO CADOLA SANTARCANGELO CASERTA AUGUSTA BARLETTA 8

10 USA Market share: 10% -20% in served markets Outlook 2005 Cement consumption fuelled by public, commercial and residential Cement intensity ratio improving FY 05 sales moderately up, in a favourable pricing environment Katrina impact marginal on overall Buzzi Unicem USA FY 05 Stability to cement consumption in coming years from SAFETEA programme approval (US$286 m thru to 2009) INDEPENDENCE PRYOR MARYNEAL SAN ANTONIO OGLESBY FESTUS STOCKERTOWN GREENCASTLE CAPE GIRARDEAU CHATTANOOGA New Orleans mil ton Cement Consumption Imports Domestic Shipments Cement plant: 10 Grinding plant: 1 Terminal: 27 Ready mix plant: 50 9

11 GERMANY and LUXEMBOURG Market share: 15% in cement, substantial readymix coverage: 6.5% share in a fragmented market mil ton Outlook 2005 Construction still disappointing in Germany, cement consumption further declining Price recovery continuing, albeit at a slow pace, despite weak market FY 05 profitability slightly improving Further clinker capacity restructuring plans by Dyckerhoff adds to competitiveness Cement Consumption in Germany Imports Domestic Shipments Esch RUMELANGE LENGERICH NEUBECKUM GESEKE Neuss DEUNA Neuwied AMÖNEBURG GÖLLHEIM Cement plant: 7 Grinding plant: 3 Ready mix plant:

12 POLAND Market share: 9% in cement, commensurate readymix concrete market share Outlook 2005 Good cement demand. Negative 2004 VAT effect on construction gradually being absorbed 2005 sales policy more profitability than volumes oriented Outstanding operating performance at Nowiny plant Wysoka Warsaw NOWINY mil ton Cement Consumption Imports Domestic Shipments Cement plant: 1 Terminal: 2 Ready mix plant: 31 11

13 CZECH REPUBLIC Market share: 14% in cement, outstanding vertical integration in ready-mix: 20% and 13% respectively in Czech and Slovak Rep. Outlook 2005 Slight decrease in volumes, also due to higher imports from cheaper surrounding countries Significant Zapa Beton growth in ready-mix concrete Bratislava HRANICE 4,5 4 3, Cement Consumption ,5 mil 2ton , Imports Domestic Shipments Cement plant : 1 Ready mix plant: 72 12

14 UKRAINE Market share: 17% in cement Outlook 2005 Significant need for construction investments Cement consumption growing at double digit, supporting sound pricing improvement 600,000 ton/y capacity upgrade project under way at Nikolajev, fully available in early 2006 RIVNE KIEV NIKOLAJEV Cement Consumption mil 3 ton Imports Domestic Shipments Cement plant: 2 Terminal: 1 Ready mix plant: 2 13

15 RUSSIA Market share: 5% in cement, #1 in Jekaterinburg region; specialized in oil well s production Outlook 2005 Economic growth boosted by energetic sector as well as private consumption Both volumes and prices on a positive trend, with remarkable profitability SUCHOI LOG 10,5 11,5 12,5 13,5 14,5 15,5 16,5 17,5 18,5 19,5 20,5 21,5 22,5 23,5 24,5 25,5 26,5 27,5 28,5 29,5 30,5 31,5 32,5 33,5 34,5 35,5 36,5 37,5 38,5 39,5 40,5 41,5 42,5 43,5 1,52 2,53 3,5 4,5 5,56 6,57 7,58 8,59 9,5 44 mil ton 4 1 Cement Consumption Imports Domestic Shipments Moscow Cement plant: 1 14

16 MEXICO Market share: 10-15% in served areas; sizeable ready-mix operations Outlook 2005 Construction investment still strong; public spending likely to be influenced by 2006 presidential election Moctezuma sales growing at higher pace than market, thanks to Cerritos 1st line full 2005 operation; 2nd line construction on track Operating results favourably affected by Cerritos and new fuel mix at Tepetzingo CERRITOS 31,5 32,5 30,5 28,5 29,5 27,5 25,5 26,5 23,5 24,5 22,5 20,5 21,5 19,5 17,5 18,5 15,5 16,5 14,5 12,5 13,5 11,5 10,5 9,5 7,58 8,5 33 mil ton 9 6,5 4,5 5, ,5 1,5 2, Cement Consumption Domestic Shipments TEPETZINGO Cement plant: 2 Ready mix plant: 31 15

17 CONTENTS About us Strategic guidelines Annex - 1H 05 results 16

18 STRATEGIC GUIDELINES High level operating performance and outstanding financial condition Strengthening of the industrial system Growth record and future opportunities Adequate shareholders investment return 17

19 OPERATING PERFORMANCE VS. INDUSTRY 2003 EBITDA Margin 2004 EBITDA Margin 35% 35% 29.7% 29.4% 31.1% 30% 30% 26.8% 24.8% 24.4% (2) 25.2% 27.5% 25% Avg 23.9% (1) 24.2% 25% (2) Avg 22.4% 20.8% 20.6% 20% 17.8% 20.9% 20.9% 20% 18.6% 15% 15% 10% 10% 5% 5% 0% 0% Buzzi Unicem Cemex Holcim Italcementi BU/DY PF Consol Dyckerhoff Lafarge HeidelbergCement Buzzi Unicem Cemex Cemex+RMC Holcim Italcementi Lafarge HeidelbergCement Medium Term Target Regain a leading position, towards high end of peers In normal market condition, EBITDA margin target 27% - 28% (1) Average not including Buzzi Unicem, Dyckerhoff and Buzzi Unicem/Dyckerhoff Pro Forma (2) Proforma estimate (3) Average not including Buzzi Unicem and Cemex 18

20 FINANCIAL CONDITION 4,0x 2003 Net Debt /EBITDA 4,0x 2004 Net Debt /EBITDA 3.4x (2) 3,0x 3.2x 3,0x 3.0x Avg 2.3x (1) 2.3x 2.5x (2) 2.5x 2.5x 2.6x Avg 2.2x (3) 2.1x 2.2x 2,0x 2,0x 1.8x 1.9x 1.5x 1.6x 1.4x 1.6x 1,0x 1,0x 0,0x 0,0x CRH Italcementi RMC BU/DY PF Consol Cemex Holcim Lafarge HeidelbergCement CRH Italcementi Buzzi Unicem Holcim Lafarge Cemex HeidelbergCement Cemex+RMC Medium Term Target Net Debt / EBITDA towards low end of peers, range 1.5x - 2.0x Net Interest Cover 10x (1) Average not including Buzzi Unicem, Dyckerhoff and Buzzi Unicem/Dyckerhoff Pro Forma (2) Proforma estimate (3) Average not including Buzzi Unicem and Cemex 19

21 STRENGTHENING THE INDUSTRIAL SYSTEM ALAMO CEMENT - Houston terminal Under construction, in operation mid 2006 Joint venture with Ash Grove Cement Co. In Houston Cement Co. The largest deep-water import terminal in the US, 80 acres site along the Houston Channel, 170,000 sht storage capacity, 3.0 million+ sht/y expected throughput 20 US$m Alamo investment share Permit application at advanced stage for major Festus (MO) plant renovation project 5 stage preheater/precalcyner kiln to replace existing two long dry 2.4 million sht/y cement equivalent, +1 million sht/y over existing 1.4 million, at unchanged total emissions level A 10% increase on overall Buzzi Unicem USA production capacity Plant location allows for competitive barging distribution on the Mississippi water system and by rail BUZZI UNICEM USA - River 7000 Project Gardner San Antonio Houston (in progress) (in progress) 20

22 STRENGTHENING THE INDUSTRIAL SYSTEM MEXICO - Cerritos 2nd line 2nd 1.25 mt/yr line under construction Capital budget 100US$m, start up early st line solid performance at comfortable utilization rate UKRAINE - Revamping Nikolajev Plant serves from Kiev to Odessa and Crimea m 15 to fully revamp one of the two lines, effectively increasing cement capacity by 600,000 tons/yr 21

23 GROWTH RECORD & FUTURE OPPORTUNITIES CURRENT SIZE IS GOOD Critical mass adequate to compete Cement plants Cement sales M tons Good geographical diversification and stable market shares Revenues EURm 295 1,446 2,772 EBITDA EURm Allows for direct management - in depth knowledge of markets and people - effective control over capital spending GROWTH OPPORTUNITIES WILL BE PURSUED Selective and performance rather than size oriented Priority to - synergies with current system - emerging markets 22

24 SHAREHOLDERS INVESTMENT RETURN Ordinary share dividend ( ) CAGR +13.0% Savings share dividend ( ) CAGR +12.0% Total shares m EPS (1) Total dividend Pay-out ratio (2) m % 17.6% 19.9% 27.7% 29.4% 24.1% (1) Net income / End of period total shares EPS based on IFRS restated P&L (2) Buzzi Unicem Spa only 23

25 CONTENTS About us Strategic guidelines Annex - 1H 05 results 24

26 1H 05 EXECUTIVE SUMMARY VOLUMES Recovery in Italian sales after bad weather and less working days in 1Q; Germany & Luxembourg in line with 2004 Mixed picture in Eastern Europe. Czech Rep. and Poland down, also due to strong statistical effect; significant increase in Ukraine and Russia Strong sales in USA and Mexico (Cerritos effect) PRICES FX RATES COSTS RESULTS Significant improvement in USA, Russia and Ukraine Italy declining versus 1H04 despite good volumes; first signs of mild recovery since July, to be confirmed Poland and Czech Rep. slightly better. German prices stable after 1Q recovery Still negative impact, although milder: m in revenues and - 4,7 in EBITDA Fuel cost rising in all European countries, with significant impact on Italian operations. Mexico improving thanks to Tepetzingo switch to pet-coke, USA pet-coke price up Both top and bottom line improving: revenues +5.2%, EBITDA +5.5% (net of non recurring items) Financial charges on the decline thanks to retirement of high-interest bonds 25

27 CEMENT VOLUMES AND PRICES 1H 05 vs. 1H04 Volumes % change Prices per ton, local currency % change Italy 1.3% -4.3% USA 4.9% 10.8% Germany -3.9% 13.0% Mexico 30.2% -4.8% Luxembourg 18.3% -8.0% Czech Rep. 10.3% μ 3.8% μ Poland Ukraine Russia -29.2% 14.1% 15.5% Central Eastern Europe +1.4% 4.2% 13.9% 16.2% Central Eastern Europe +12.1% TOTAL 4.6% like-for-like 26

28 REVENUES BY MARKET EURm 1H 05 1H 04 Italy Mexico / 04 abs. (5.6) / 04 % -1.2% USA % Germany (4.5) -2.0% % at constant fx rate 19.0 % 22.5% Luxembourg % Czech Rep % Poland Ukraine (0.1) % 29.0% 8.7% -14.1% 31.8% at constant fx rate Russia % 26.8% TOTAL 1, H 04 1, % 8.0 % at constant fx rate & scope of consolidation 27

29 EBITDA BY MARKET EURm 1H 05 1H 04 Italy thereof non-recurring / 04 abs. (28.2) 05/ 04 % -21.8% USA % thereof non-recurring Germany (3.6) -13.9% Mexico % at constant fx rate +71.9% net of 10.0 m from Glens Falls disposal +49.9% +26.2% Luxembourg (2.4) -16.3% Czech Rep % Poland Ukraine (1.5) % n.s % -27.7% +81.0% at constant fx rate Russia TOTAL H thereof non-recurring % 8.2% +10.8% at constant fx rate & scope of consolidation +5.5% excluding non recurring items 28

30 1H 05 INCOME STATEMENT 1H 05 1H 04 change EURm IAS/IFRS IAS/IFRS abs. % NET SALES 1, , Non-recurring income/expenses EBITDA % of revenues 23.7% 23.1% Depreciation (98.2) (99.4) 1.2 Amortization (1.5) (3.7) 2.2 OPERATING INCOME % of revenues 16.5% 15.2% Finance costs (69.0) (92.5) Equity earnings PROFIT BEFORE TAX Income taxes (62.5) (48.2) (14.2) COMBINED NET PROFIT Minorities 99.9 (17.4) (13.1) 63.1 CONSOLIDATED NET PROFIT

31 EURm FUNDS FLOW ANALYSIS 1H 05 IAS/IFRS 2004 IAS/IFRS CASH FLOW - adjustments for non-recurring (10.5) (3.5) CASH FLOW, net of non-recurring % of revenues 13.7% 15.2% Change in working capital, current (26.0) (8.6), extraordinary (1) Ordinary Capex AVAILABLE CASH FLOW % of revenues (74.4) % (162.9) % Rights issue Dividends paid (65.9) (2) (55.4) Expansion Capex (14.1) (25.8) Equity investment in Dyckerhoff (2004) (111.2) Equity investment in Dyckerhoff (2005 put) (418.5) Other equity investments (5.9) (15.2) Disposal of Glens Falls Lehigh Cement Co Other Change in net financial position (19.7) (73.0) NET FINANCIAL POSITION (end of period) (1,223.5) (1,275.4) (1) Of which m 90 last cash in from 50% AZ sale (March 2003) (2) Of which 57.5 Buzzi Unicem SpA 30

32 NET FINANCIAL POSITION EURm Jun 04 IAS/IFRS Dec 04 IAS/IFRS Jun 05 IAS/IFRS Cash and Equivalents Short-term debt (846.7) (662.2) (161.3) Net short-term cash (debt) (188.7) Long-term assets Long-term debt (1,528.6) (1,504.4) (1,501.0) NET FINANCIAL POSITION (1,703.6) (1,275.4) (1,223.5) EURm 1,662.3 Gross Debt Breakdown S/T 10% US$ 22% Floating 30% L/T 90% 78% Fix 70% 31

33 CONSOLIDATED BALANCE SHEET EURm Jun 04 IAS/IFRS Dec 04 IAS/IFRS Jun 05 IAS/IFRS Tangible and intangible fixed assets 3, , ,464.1 Equity investments Working capital Net invested capital 4, , ,175.6 Shareholders equity 1, , ,872.3 Provisions and employee benefits 1, , ,079.8 Net financial position 1, , ,223.5 Total financing 4, , ,