Earnings Release • Nov 9, 2015
Earnings Release
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Cluj-Napoca 9 November 2015
"The completion of the company restructuring is defining for the evolution of Cemacon in 2015. We take pride in the fact that the decisions made and the risks calculated that we have assumed helped us become an example of success for the Romanian business environment, a turnaround best-practice case. Last but not least, we managed to implement and to reach all objectives assumed before the shareholders and the lending bank.
At present, Cemacon is a sound and solid company, mandatory premises for a sustainable increase. The commercial and financial results are significant, after the first 9 months, we exceeded the net turnover for the entire 2014. The reopening of the production facility in Zalau allowed us to increase the total sold volumes, however, the biggest success is that we have a value increase exceeding the increase in quantity, by the improvement of the average price of sale. The efforts for the improvement and the optimization of the EVOCERAMIC portfolio, the exponential increase in Cemacon's notoriety, together with the innovative commercial strategies, have facilitated us a superior price positioning, even if the price level is still low on the market.
We thus have the certainty that the operational profit will increase in 2015 compared to 2014.
At this time, the organization operates efficiently, we have sound partnerships with our network of distributors, we benefit from the attention and the trust of our customers, which offers us the basis to continue the development."
By reference to the same period of 2014, the company's net turnover has registered an increase of 17%, based mainly on the increase in the sales of bricks, thus exceeding the threshold of RON 56 million at 9 months.
The net turnover at 9 months was with 1 million more than the turnover of the entire year of 2014. The increase in the sales was possible due to the additional quantities obtained by the reoperation of the plant Cemacon located in Zalau, which has determined the increase in the total production capacity by 30%.
The plant in Recea, the newest and the most modern plant in the industry in Romania, inaugurated in 2010, has operated at maximum capacity and with competitive costs.
In the 3rd quarter, the improvement of the sale margins has continued by the consolidation of the premium positioning of EVOCERAMIC products.
| Profit and loss account Jan - Sep 2015 |
Results 2015 | Results 2014 | % 2015 vs2014 |
Budgeted 2015 |
% 2015 vs2015e |
|---|---|---|---|---|---|
| Net turnover (lei) | 56,032,939 | 48,018.698 | 17% | 62,554.662 | -10% |
| Total operational revenues (lei) | 90,233,860 | 49,799.691 | 81% | 63,369.832 | 42% |
| Total operational expenditures (lei) | -67,215,761 | -37,527,003 | 79% | (46,557,489) | 44% |
| EBITDA (lei) | 23,018,099 | 12,272,688 | 88% | 16,812,344 | 37% |
| EBITDA % | 26% | 25% | 27% | ||
| Financial result (lei) | (2,608,583) | (4,457,002) | -41% | (3,042,042) | -14% |
| Net result (lei) | 15,972,832 | 3,766,960 | 324% | 9,073,423 | 76% |
The product recipe allowed the maintenance of variable costs at the most competitive levels in the industry and the impact of fixed costs has been mitigated by the synergy of the operation of the 2 production lines and of the placement on the market of additional quantities.
The operational profit, net from the impact of the financial restructuring, has increased by 24% compared to the previous year.
By the operation in the Shareholders' Registry and the registration with the Trade Registry, occurred in September, the process of restructuring the bank debts has been entirely completed. The total direct indebtedness of the company has decreased by EUR 20 million, and the existing loan scheduled over a reimbursement period, i.e., by December 2023.
The increase in the level of the turnover and operational profit with respect to the preceding year is strong and is based on the commercial performance, where both the quantities and the average values are higher.
| Indicator | 30 September 15 30 September 14 |
| |
|---|---|---|---|
| Net turnover | 56,032,939 | 48,018,698 | 17% |
| Operational revenues | 90,233,860 | 49,799,691 | 81% |
| Operational expenditures | -67,215,761 | -37,527,003 | 79% |
| EBITDA | 23,018,099 | 12,272,688 | 88% |
| EBITDA % | 26% | 25% | |
| Restructuring-related revenues | 31,198,401 | ||
| Restructuring –related expenditures | -23,374,817 | ||
| EBITDA-R | 15,194,515 | 12,272,688 | 24% |
| EBITDA-R % | 26% | 25% | |
| Amortization and depreciation | -4,436,684 | -4,048,726 | 10% |
| EBIT | 18,581,415 | 8,223,962 | 126% |
| Financial revenues – Total | 1,350,804 | 3,925,186 | -66% |
| Financial expenditures - Total (out of which) | -3,959,387 | -8,382,188 | -53% |
| Expenditures on the interest | -3,006,570 | -6,289,055 | -52% |
| Financial result | -2,608,583 | -4,457,002 | -41% |
| Total revenues | 91,584,664 | 53,724,877 | 70% |
| Total expenditures | -75,611,832 | -49,957,917 | 51% |
| Gross result | 15,972,832 | 3,766,960 | 324% |
| Revenue / (expenditure) tax on profit | 0 | ||
| Net result | 15,972,832 | 3,766,960 | 324% |
| Net result without the restructuration impact | 8,149,248 | 3,766,960 | 116% |
By reference to the preceding year, the revenues have increased more than the expenditures and have determined an improvement of the operational profitability; the Cemacon EBITDA rate is a top rate in the industry.
EVOCERAMIC range of products, the main engine of the increase in sales, has determined the improvement of the sales margins. The sale of ceramic lintels has increased in 2015 and has contributed to the reaching of the level of RON 56 million of the net turnover.
The production cost has remained very competitive, both in terms of energy consumption and of raw materials costs, and the synergies obtained by the operation of the 2 production facilities has resulted in the increase in the production margins.
The operational revenues and expenditures include values related to the implementation of the financial restructuring: related to the non-productive transfer of assets between Cemacon SA and Cemacon Real Estate, administrative costs with the implementation of the new loan agreements, as well as revenues related to the debt forgiveness in the amount of EUR 2.03 million.
Thus, given the performant operational result and the accounting reflection of the loan restructuring, CeMACON has concluded the first 9 months with a net profit of RON 15.97 million.
| Indicator – values in RON | 30 September 15 | 31 December 14 | |
|---|---|---|---|
| Fixed assets - Total (out of which) | 117,343,323 | 119,400,620 | -2% |
| Tangible assets | 114,424,332 | 116,490,340 | -2% |
| Other assets | 2,918,991 | 2,910,280 | 0% |
| Current assets – Total | 45,529,046 | 56,681,357 | -20% |
| Inventory | 14,652,168 | 13,889,916 | 5% |
| Assets held for sale | 0 | 22,833,650 | -100% |
| Debts – Total | 18,015,814 | 6,567,750 | 174% |
| Other financial assets | 974,962 | 1,051,380 | 100% |
| Cash and equivalent in cash | 11,886,101 | 12,338,661 | -4% |
| Total assets | 162,872,369 | 176,081,977 | -8% |
| Total current liabilities (out of which) | 16,334,394 | 92,199,048 | -82% |
| Loan | 3,591,851 | 56,579,081 | -94% |
| Loan interest | 221,245 | 26,804,624 | -99% |
| Commercial liabilities and similar | 10,249,596 | 6,349,126 | 61% |
| Other current debts, provisions | 2,271,702 | 2,466,218 | -8% |
| Current assets/ net current debts | 279% | 61% | |
| Total assets minus current debts | 146,537,975 | 83,882,930 | 75% |
| Long term liabilities (out of which ) | 54,494,559 | 65,842,610 | -17% |
| Loan | 53,241,170 | 64,532,490 | -17% |
| Other commercial liabilities and similar | 0 | 0 | 0% |
| Grants and deferred tax | 1,253,389 | 1,310,120 | -4% |
| Share capital | 20,613,371 | 17,433,454 | 0% |
| Own capitals – Total | 92,043,415 | 18,040,320 | 410% |
The total fixed assets have dropped together with registration of the amortization, an added value being, however, registered as a result of the implemented investments.
The changes in the level of the current assets held for sale purposes are related to the transfer of nonproductive assets from Cemacon SA to Cemacon Real Estate SRL at the same time with the novation of an amount of EUR 5 million from the banking debt.
The expansion of the turnover together with the amendment of the average payment terms has determined a temporary increase in the debts. The structure of the debts according to their length show that more than 91% of the amounts to be collected are related to certain invoices not matured.
At the level of the debts, by the execution of the new loan agreements and by the conversion of the debt transferred by the bank, registered in September, an immediate reduction in the debt on long term has been obtained as well as the balance sheet balancing, the debt of the company being a financial sustainable one.
The signing of the new loan agreements in March and the conversion into shares of a debt in the amount of RON 58 million have represented the completion of the restructuring of the Cemacom debts, complex process further to which the company's banking debts have been reduced from EUR 33 million to 13 million, scheduled over a 9-year period.
The restructuring of Cemacon is a restructuring of reference by its complexity and scale and has entailed an agreement between the bank, the company and the shareholders based on win-win principles.
The operational efficiency together with the implementation of the restructuring of the bank debts have positively determined the financial indicators, the rotation speed of the total assets, the indebtedness and the liquidity being improved.
| Relevant financial indicators | 2015 | 2014 |
|---|---|---|
| 1. Indicator of the current liquidity | 2.79 | 0.42 |
| 2. Indicator of the indebtedness level | 58% | 215% |
| 3. Debt rotation speed – clients (days) | 54 | 52 |
| 4. Total assets rotation speed | 48% | 42% |
During the first 9 months of the year, the signals from the market reveal an increase in the consumption of ceramic blocks. The statistical data provided by the National Statistics Institute at 8 months inclusively indicate an increase of 9.1% in the residential constructions and an advance of 10.3% in the new constructions.
I have assisted to a much more dynamic market than in the last years; new products and promotional campaigns dedicated to the clients have been launched, existing the pressure of the increase in the market shares of large producers, to the detriment of the sale prices, that have been maintained at a low level.
For 2015, Cemacon proposes to reach the following objectives:
***
CEMACON SA is the second largest producer of ceramic masonry systems in Romania and one of the leaders on the Transilvania market.
The company operates the most modern and the highest production capacity in Romania with premium quality products obtained at very competitive production costs.
CEMACON SA is a company listed at the Bucharest Stock Exchange and held mainly by institutional shareholders, Romanian and foreign investment funds; the company management is a professional, independent one and it has a solid sector expertise.
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