The photocatalytic active principle formulated by Italcementi Results

Transcription

1 The photocatalytic active principle formulated by Italcementi 2005 Results

2 Executive summary Improvement in Gop led by Egypt consolidation and Turkish performance Q4 Gop recovery in Italy and North America Financial structure remains strong notwithstanding large industrial (EUR 464m) and financial investments (EUR 745m) Stable cement demand expected in 2006 in mature markets and strong growth in emerging economies Under the umbrella of sustainable development policy, the Group is implementing a 3-fold strategy, based on efficiency, growth and innovation Please refer to page 50 for disclaimer 1

3 Increase in Gop driven by Egypt consolidation and strong net profit growth due to lower financial and tax charges Key results 2005 EURm Q4 % Var Ytd % Var. % Var Net revenues 1, % 5, % Recurring gross operating profit % 1, % % on sales 23.7% 23.1% Gross operating profit - Gop % 1, % % on sales 22.5% 22.7% Operating income % % % on sales 14.4% 15.3% Net profit % % % on sales 13.3% 10.8% Group net profit Minority interest

4 Agenda 2005 Results* (IFRS) Italcementi Group Ciments Français 2006 Outlook Key strategic axis * Change in scope mainly due to Suez and Asec consolidation (Egypt), respectively from 1 st April and 1 st August

5 Strong quarterly and year-to-date increase in cement volumes due to Egypt consolidation; decrease in aggregates, ready-mix stable Sales volumes by business* Historical scope Q % % % -7.2% ITALCEMENTI GROUP % % Likefor-like Cement and Clinker (Mt) % (*) including intra-group sales Aggregates (Mt) Ready-Mix Concrete (Mmc) -3.0 % % 4

6 Volume growth driven by emerging markets, in particular ITALCEMENTI GROUP Variation in cement sales volumes (2005 vs. 2004, %) (1) by area by country European Union North America Med. Rim* Asia Italy France Belgium (2) Spain (2) Greece North America Bulgaria Turkey Morocco Egypt (like-for-like) Kazakhstan India Thailand Domestic market Trading 21.3 Total 17.0 Total historical scope 17.0 Total like-for-like 2.6 * Bulgaria, Turkey, Morocco and Egypt (1) Consolidated cement and clinker including exports (2) Excluding intra-group sales to France 5

7 Egypt consolidation boosts cement and clinker revenues, together with ITALCEMENTI GROUP Revenues by business 2005 EURm Ytd % variation Historical scope like-for-like Cement and clinker 3, Ready-mix and aggregates 1, Other business Total 5,

8 strong trends in all regions, except European Union ITALCEMENTI GROUP Revenues (1) 2005 By area, % var vs.2004 By country Ytd EURm % var. vs European Union North America Med. Rim (2) Asia Total Italy 1, France 1, Belgium Spain Greece North America Bulgaria Turkey Morocco Egypt 265 n.s. Kazakhstan India Thailand Trading of cement Other and eliminations (284) n.s. Total 5, (1) including intra-group sales (2) Bulgaria, Turkey, Morocco and Egypt 7

9 ITALCEMENTI GROUP The sharp rise in operating costs, only partially offset by price effect, hampers growth in Gop despite the larger scope, while prices and operating costs balance in Q4 Recurring Gop variation analysis 2005 EURm France/Belgium Bulgaria/Turkey Morocco/Thailand Italy/Spain/Greece North America Ytd (157) Changes in trend (vs. full year trend) Italy/Belgium Thailand Others (61) (5) Egypt EUR 124m 129 Increase Stability Decrease ,7% Italy Morocco Italy/Belgium Thailand Comprising CO 2 : (14) Q (29) (11) (6) ,6% Recurring Gop 2004 Volumes Prices Variable costs Fixed costs Other Scope and FX Recurring Gop

10 CO 2 emission rights deficit in Italy penalises the overall Group balance ITALCEMENTI GROUP CO2: allowances vs. emissions Surplus (deficit) of CO 2 allowances in 2005 by country/activity (kt) Italy Cement Other activity France Cement Other activity Belgium Cement Spain Cement Greece Total

11 requiring a provision of EUR 14m ITALCEMENTI GROUP CO2: 2005 Group accounting policy Free-allocation allowances valued at zero and Net liability approach applied Assessment of allowance-emission deficit/surplus: Deficit: market value charged to income statement (EUR 14.0m) Surplus: no posting (market value EUR 6.8m) At the end of 2005: deficits/surpluses of different legal entities are not offset at Group level 10

12 Year-to date Gop supported by Egypt consolidation and Turkey; improving results in Q4, in Italy, Belgium and North America Recurring Gop by country 2005 Of which (11.5) CO2 provision ITALCEMENTI GROUP var. vs. var. vs. EURm Q4 Ytd Q Italy 50 (15) 196 (113) France Belgium Spain Greece 7-27 (9) North America Bulgaria Turkey Morocco 22 (2) 97 2 Egypt Kazakhstan India Thailand (11) Trading Other (3) (4) (6) - Total ,

13 Positive effect of the short term actions implemented in the second half in Italy ITALCEMENTI GROUP Italy: actions undertaken vs. achievements in H Actions Achievements Cement price trend Discount reduction and price increases Q1 Q2 Q3 Q4 H H Greater use of alternative fuels Alternative fuels (% calories out of total) Containment of fixed costs Cement fixed costs variation, % (vs. previous year same period) H H

14 and in North America ITALCEMENTI GROUP US: actions undertaken vs. achievements in H Actions Achievements From July 1st, price increase by 5-7 USD/t in East Coast and Western Pennsylvania From September 1st, price increase in Speed zone, Indiana and Cincinnati, Ohio Cement price trend 14.9% 14.4% 10.9% 12.6% Q1 Q2 Q3 Q4 Increase in domestic cement production Clinker production variation (vs. previous year same period, kt) H1-05 H2-05 (119) 19 Industrial efficiency Nazareth quarry belt conveyor start-up in Q4: Savings (USDm) Q

15 Turkey continues to see clear improvement in the overall business environment, generating increased cement demand Turkey: market scenario and Italcementi performance Market scenario Macroeconomic indicators E GDP Growth a Public debt stock: % to GDP b Consumer prices c Italcementi performance ITALCEMENTI GROUP Key drivers of improvement: Volumes (mt) Cement and Clinker % Volume growth Short term interest rate c Cement demand (mt) d a: Consensus Forecasts, January 2006 b: European Commission, Autumn forecasts, November 2005 c: Actual d: Internal estimates Italcementi s expected actions Several capacity increase projects Afyon Ankara Balikesir for approx. 1 mt/y Turnover (EURm) 18.4% Recurring Gop (EURm) % Price increase Firm control of costs CAGR

16 Major steps in the Group development process with the acquisition of the controlling stake of Suez and of Asec Group developments in Egypt in 2005 ITALCEMENTI GROUP March Italcementi Group takes control of Suez Cement Up to 52%, total cash outlay USD 471m in 2001 to 2005 August Suez Cement acquires ASEC (98.6%) Sep. to Jan. (2006) Suez capital increase (USD 420m) Asec acquisition financial structure Objectives: Leverage SCC to acquire a 100% stake in ASEC Cement s share capital Maintain control of SCC Key assumptions: Enterprise Value (USDm): 800 EV / Ebitda 2005 (expected): 8.3 EV / Ebitda 2005 (actual): 8.0 Asec Cement net financial debt: USD 216m Financing sources: (USDm) Italcementi Group*: 146 Other co-investors: 190 Bank loan to Suez Cement: 245 Use of cash availability: 4 Final Suez Cement ownership Public sector Free Float 20% Other Co-Investor 29% Italcementi Group* 51% * Through Ciments Français and its affiliates 15

17 providing the Group with a leading and profitable position in Egypt ITALCEMENTI GROUP Current Group position in Egypt Egypt: 2005 pro-forma (12 months) Suez Asec Total Cement capacity (mt) Volumes sold (mt)* Market share - Grey cement 22% 8% 30% - White cement - 55% 55% EURm Sales Tourah Helwan El Minya Quattamia SCC 1&2 Recurring Gop % on sales 46.8% 46.1% 46.5% Gop % on sales 40.1% 46.1% 42.6% Operating Profit % on sales 23.2% 34.1% 27.7% * Cement and clinker 16

18 Restructuring charges limit Gop growth but ITALCEMENTI GROUP Other income and expenses EURm Var Recurring gross operating profit 1,153 1, % on sales 23.1% 24.1% Other income / (expense) (16) 5 (22) Gross operating profit - Gop 1,137 1, % on sales 22.7% 24.2% Amortisation and depreciation (368) (306) (63) Impairment variation (2) (2) - Operating income (23) % on sales 15.3% 17.4% Other income and expenses Net gains on assets disposals Restructuring provisions (France-Belgium) (20) - Voluntary retirement schemes (Egypt) (17) - Other (3) (14) Total (16) 5 17

19 the positive trend in financial income and charges, mainly due to Egypt dilution and forex effects Financial income and charges EURm Var ITALCEMENTI GROUP Operating income % on sales Financial income and charges Result of companies valued with the equity method Profit before Tax - Pbt % on sales Financial income and charges (23) 15.3% 17.4% (49) (82) (1) % 16.1% Income from equity investments Capital gain on equity investment disposal Egypt dilution effect Net financial interests (81) (80) - Net forex gains and losses Other income and charges Total (9) (49) (15) (82) 6 33 Volume effect 6 Interest rate effect 10 Egypt effect (16) 18

20 and the one-off reduction in income tax expense ITALCEMENTI GROUP Income tax expense EURm Var Profit before Tax - Pbt % on sales 14.7% 16.1% Income tax expense (195) (262) 67 Net profit % on sales 10.8% 10.3% Group net profit Minority interest Income tax expense TSDI fiscal treatment (mainly deferred taxes reversal) 43 - Other (238) (262) Total (195) (262)

21 led to a strong increase in net profit ITALCEMENTI GROUP Income statement EURm Q4-05 Var. % Var. % Net revenues 1, % 5, % Recurring gross operating profit % 1,153 Other income / (expense) (15) (16) 5.7% Gross operating profit - Gop % 1, % Amortisation and depreciation (102) (368) Impairment variation (2) (2) Operating income % % Financial income and charges 2 (49) Result of companies valued with the equity method 2 19 Profit before Tax - Pbt % % Income tax expense (18) (195) Net profit % % Group net profit Minority interest

22 Higher industrial investment and the acquisitions in Egypt add to Group net financial debt, but ITALCEMENTI GROUP Cash flow EURm * As at 1 st January (Full Year) 2004 (Full Year) Cash flow Change in working capital (62) (77) Capital expenditure (464) (320) Comprising: Italy (155) France (82) North America (71) Spain (48) Cash flow after industrial investments Equity investments (745) (58) Comprising: Egypt - Suez (106) Egypt - Asec (491) Italy (70) Ciments Français (54) Ciments Français treasury shares (17) Dividends (142) (124) Suez capital increase (minority interest) 231 Net financial debt of acquired companies (174) (5) Other Change in net financial position (479) 289 Net financial position (year end) (2,215) (1,736)* 21

23 do not impact the still sound financial structure ITALCEMENTI GROUP Financial ratios 76 Gearing (%) Indebtedness / Shareholders equity Leverage Indebtedness / Recurring Gop (12 months) Coverage Recurring Gop (12 months) / financial income-charges (12 months) * IFRS Local GAAP 31 DEC DEC 03 1 JAN DEC 04 * Financial income-charges without dilution and forex effect linked to Egypt acquisition and capital increase 30-Jun 31 DEC 05 22

24 Agenda 2005 Results* (IFRS) Italcementi Group Ciments Français 2006 Outlook Key strategic axis * Change in scope mainly due to Suez and Asec consolidation (Egypt), respectively from 1 st April and 1 st August

25 Fourth quarter strong increase in operating profit and net profit has reinforced CIMENTS FRANÇAIS Income statement 2005 EURm 2005 (Q4) 2004 (Q4) % Var Net Revenues % Recurring Gop % Other income / (expense) (22) (2) Gross operating profit - Gop % Amortisation and depreciation (78) (56) Impairment variation (0.3) (0.2) Operating income % Financial income and charges (7) Result of companies valued with the equity method 2 Profit before Tax - Pbt % Income tax expense (5) (33) Net Profit % Group net profit Minority Interest 15 9 (21) 2 Cash flow

26 a significant growth in the 2005 results due to positive market trend, Egypt consolidation and lower financial charges and taxes Income statement EURm 2004 % Var. (Full Year) (Full Year) Net Revenues 3,595 3, % Recurring Gop % Other income / (expense) (39) (2) Gross operating profit - Gop % Amortisation and depreciation (272) (213) Impairment variation (1) (1) Operating income % Financial income and charges (47) Result of companies valued with the equity method 18 Profit before Tax - Pbt % Income tax expense Net Profit (142) 473 (166) % Group net profit Minority Interest (72) 19 CIMENTS FRANÇAIS Cash flow

27 Higher net financial position mainly due to the acquisitions in Egypt CIMENTS FRANÇAIS Cash flow EURm * As at 1 st January (Full Year) 2004 (Full Year) Cash flow Change in working capital (65) (6) Capital expenditure (298) (199) Comprising: France (82) North America (71) Spain (48) Egypt (19) Cash flow after industrial investments Equity investments (602) (52) Comprising: Egypt - Suez (106) Egypt - Asec (491) Dividends (99) (71) Suez capital increase (minority interest) Net financial debt of acquired companies (174) (5) Other Change in net financial position (328) 281 Net financial position (year end) (1,541) (1,213)* 26

28 Sound financial structure CIMENTS FRANÇAIS Financial ratios Gearing (%) Indebtedness / Shareholders equity Leverage Indebtedness / Recurring Gop (12 months) Coverage Recurring Gop (12 months) / financial income-charges (12 months) * IFRS Local GAAP 31 DEC DEC 03 * Financial income-charges without dilution and forex effect linked to Egypt acquisition and capital increase 1 JAN Jun 31 DEC DEC 04 27

29 Agenda 2005 Results 2006 Outlook Key strategic axis 28

30 Robust GDP growth still expected in 2006 in Group countries, though decelerating slightly from buoyant performances of Macroeconomic outlook 2006 GDP growth in Group countries* ** 2006*** Euro Area North America Emerging * Weighted by IMF shares of world GDP in PPP; ** Preliminary; *** Italcementi forecasts Persistently high oil prices, with most forecasts pointing to levels above 60$ per barrel Continued uncertainty for the $/ exchange rate with interest rates set to increase further Group Total Sources: national accounts; national institutions, Consensus Forecasts, Global Insight, EIU, Deutsche Bank. Expected 12-month range for oil prices: USD/b Expected 12-month range for US$/ rate:

31 Some slowdown, but construction activity still vigorous in the emerging economies, with construction output once more outstripping GDP growth Construction outlook ** 2006*** Construction growth in Group countries* Euro Area North America Emerging Group Total * Weighted by Group's cement volume sales in 2005; ** Preliminary; *** Italcementi forecasts Sources: national accounts; national institutions, Consensus Forecasts, Global Insight, EIU, Deutsche Bank, our estimates based on national accounts data. 30

32 Stable cement demand expected in mature markets and growth in emerging economies Domestic cement market outlook (2006 vs. 2005) Italy France Belgium Spain Greece North America (Group regional markets) Bulgaria Turkey Morocco Egypt India Thailand Kazakhstan Volumes Prices (local currency) Increase Stability Decrease 31

33 Key drivers for 2006 Italy: favourable price effect Egypt: full year consolidation effect US: transition phase Costs challenge: Fuels: expected stability after escalating for three years Power: increase due to oil prices CO2: allowances shortage to be managed Firm control of fixed costs 32

34 Agenda 2005 Results 2006 Outlook Key strategic axis 33

35 Under the umbrella of sustainable development policy the Group is implementing a 3-fold strategy, based on efficiency, growth, and innovation Group 3-fold integrated strategy S u s t a i n a b l e D e v e l o p m e n t 1 Organic growth and industrial strategy 2 3 Non-organic growth Innovation 34

36 Our current country portfolio already delivers sound organic growth, laying the basis for further development Expected organic growth 11 Group organic volumes (expected mid-term CAGR) Mature markets Emerging markets Total 1.0% 2.0% 3.0% 4.0% 5.0% 35

37 supported by strong industrial investments in mature markets Efficiency and capacity investments update (1) Spain North America 11 Capitol (Martinsburg) Current phase: Works in progress New line (cement capacity: 1.2 mt/y, + 15%) replacing 2 old lines Investment: EUR 73m Commissioning: early 2007 Current phase: - main permits achieved - preliminary works started - MoU with West Virgina (providing USDm benefits, NPV) State-of-the-art facility, replacing 2 small-scale wet process plants Cement capacity: 1.6 mt/y (+40%) Investment: USD 320m Commissioning:

38 and in emerging markets Efficiency and capacity investments update (2) Agadir Morocco Opportunity for a new, state-ofthe-art greenfield cement plant (replacing the former revamping project) Possible increase in cement capacity: up to 2 mt/y Project under assessment Commissioning: 2009 India Industrial investments in progress Second line at Yerraguntla New grinding centre in Chennai Total production capacity: 2.0 mt/y Total investment: about EUR 90m Commissioning: 2008 Sitapuram Yerraguntla Chennai Cement capacity (kt/y) 1,000 1,500 2,000 Steam coal power plant Power production 40 MW Investment: EUR 30m Work is in progress 11 37

39 which, together with several other measures, will help to manage CO 2 emissions 11 Group action to manage CO 2 Technical measures alternative fuels and biomass energy efficiency raw materials not containing carbonates (slag and fly ashes) Industrial investments new state-of-the-art facilities plants revamping increase in clinker production capacity (free allowances for new entrants ) Commercial action export reduction clinker import from extra-eu countries Trading in allowances and credits Intra-Group Clean Development Mechanism projects (CDM) Subscription of Italian and Spanish Carbon fund 38

40 The Group is ready to reinforce and expand its global presence Non-organic growth: our strategy 22 Strengthen our leadership in the Mediterranean rim Achieve leading position in the Middle East Reinforce and expand our India presence Develop a strong production network in East Asia 39

41 Entering the Middle East; strong potential for the cement market Middle-East 22 Description ITC is well placed to enter a region not yet dominated by the big players Network of important relationships established in the recent past Important Arab investors among Suez shareholders Region characterised by a very sharp rise in demand Our goal is to become one of the main players in the region 40

42 Improve Group's production network in India India Indian scenario 22 Strong economic progress Cement market continuing consolidation Sitapuram Yerraguntla Chennai Cement capacity (kt/y) 1,000 1,500 2,000 Increasing cement demand and prices The Group continues to seek opportunities to further consolidate its presence in the market through various non-organic means 41

43 Reinforce our East Asia presence East Asia Description Group presence limited to Thailand Strategic objective to increase exposure in the region by entry into other countries Target to create an integrated network in the region China is under consideration, among other Overall to enlarge our production footprint, enhancing long term profitability 22 42

44 To meet new needs of the market, Italcementi s Innovation project combined with integrated use of resources, new products and know how 33 Research, Development and Innovation New market trends and needs Group s answers to market needs Resources and achievements Environment friendliness Resources optimisation Safety Innovation project : Tailoring high performance products Driving the industrialization of building sector Investments: 25 (EURm) Basic patents: 50 Innovation rate (%)*: Today: 2.5 Medium-long term target: * Total innovative project sales / Total sales 43

45 will drive the supply evolution to stimulate the industrialization of the construction industry Innovation path Products 33 Effectiveness Commodities: Cement Ready-Mix Sistema Project* Specific applications Innovation * Integrated offer of products and services Efficiency 44

46 The Group s commitment to sustainable development and the progress of our Innovation Project provide a genuine industrialised solution to pollution in cities TX Active : a high value-added product 33 Self-cleaning De-polluting 45

47 Conclusions Major steps in Group development process with the acquisitions in Egypt in 2005 while maintaining a sound financial structure Egypt consolidation and Turkey performance led to favourable 2005 results Favourable 2006 outlook and Egypt consolidation effect should bring improved operating results Sustainable development drives the Group strategy based on efficiency, growth and innovation 46

48 The photocatalytic active principle formulated by Italcementi 2005 Results Ciments Français appendix

49 Ciments Français appendix Sales volumes by business* Historical scope Q % % % -7.8% % % Likefor-like Cement and Clinker (Mt) + 3.5% (*) including intra-group sales Aggregates (Mt) Ready-Mix Concrete (Mmc) -1.5 % % 48

50 Ciments Français appendix Ciments Français recurring Gop* variation analysis Increase Stability Decrease EURm 149 (89) (42) Egypt EUR 124m Ytd Q France Belgium Spain/Greece/North Am. Emerging countries (14) 43 (12) Belgium/Thailand Others % % 252 Recurring Gop 2004 Volumes Prices Variable costs Fixed costs Other Scope and FX Recurring Gop

51 Disclaimer This presentation contains forward-looking statements regarding future events and future results of Italcementi and its affiliate Ciments Français that are based on the current expectations, estimates, forecasts and projections about the industries in which Italcementi and Ciments Français operate, and on the beliefs and assumptions of the management of Italcementi and Ciments Français. In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs, return on equity, risk management, competition, changes in business strategy and the acquisition and disposition of assets are forward-looking in nature. Words such as expects, anticipates, scenario, outlook, targets, goals, projects, intends, plans, believes, seeks, estimates, as well as any variation of such words and similar expressions, are intended to identify such forward-looking statements. Those forward-looking statements are only assumptions and are subject to risks, uncertainties and assumptions that are difficult to predict because they relate to events and depend upon circumstances that will occur in the future. Therefore, actual results of Italcementi or of its affiliate Ciments Français may differ materially and adversely from those expressed or implied in any forward-looking statement and neither Italcementi nor Ciments Français does assume any liability with respect thereto. Factors that might cause or contribute to such differences include, but are not limited to, global economic conditions, the impact of competition, or political and economic developments in the countries in which Italcementi and Ciments Français operate. Any forward-looking statements made by or on behalf of Italcementi or of Ciments Français speak only as of the date they are made. Neither Italcementi nor Ciments Français does undertake to update forward-looking statements to reflect any change in their expectations with regard thereto, or any change in events, conditions or circumstances which any such statement is based on. The reader is advised to consult any further disclosure that may be made in documents filed by Italcementi with Borsa Italiana S.p.A (Italy) and by Ciments Français with the Autorité des Marchés Financiers (France). This presentation has been prepared solely for the use at the meeting/conference call with investors and analysts held on 8 March Under no circumstances this presentation can be deemed to be an offer to sell, a solicitation to buy or a solicitation of an offer to buy securities of any kind in any jurisdiction where such an offer, solicitation or sale should follow any registration, qualification, notice, disclosure or application under the securities laws and regulations of any such jurisdiction. 50

52 Investor relations 2006 main events* Contacts 9 th May 2006, h CET: 2006 First Quarter Results (Conference Call) 6 th September 2006 h CET: 2006 First Half Results (Analyst meeting in Paris) 6 th November 2006, h CET : 2006 Third Quarter Results (Conference Call) * Full calendar available on Investor Relations Department Via G. Camozzi, Bergamo - Italy Andrea Arrigoni, IR Tel Fax a.arrigoni@italcementi.it Giancarlo Berera, Head of IR Tel Fax g.berera@italcementi.it Fabienne Moreau, IR Tel Fax fmoreau@cimfra.com 51