Titan S.A.

Earnings Release • Nov 12, 2020

Nine Months 2020 Results

Brussels, 12 November 2020, 08:30 CET – Titan Cement International SA (Euronext Brussels, ATHEX and Euronext Paris, TITC) announces the nine month 2020 financial results.

Earnings growth supported by operational resilience and volume recovery in key markets in Q3 2020

• Group revenue steady at €1,202m
• Increase of profitability, EBITDA up 10% to €229m benefiting from lower energy prices, cost control and resilience of pricing
• Strong cash flow generation; decrease of Group net debt by €74m vs end of 2019 and by €125m vs end September 2019
• Performance supported by underlying strength of the US, solid performance in Southeastern Europe and recovering Greek market while Egypt was disappointing
• Acceleration of de-carbonization efforts and first submission to CDP

In million Euros, unless otherwise stated	Nine months 2020	Nine months 2019	%yoy
Revenue	1,202.4	1,208.5	-0.5
EBITDA	229.4	208.4	10.1
Net Profit after Taxes & Minorities	58.0	45.2	28.1

Dimitri Papalexopoulos, Chairman of the Group Executive Committee:

''We are successfully addressing several challenges at the same time: taking care of our people and those around us, delivering improved operating results and accelerating progress against our sustainability ambitions. Despite the uncertain context, we remain confident in the solidity of our business model, based on the nature of construction activity, our track record in facing the pandemic and the resilience and dedication of our people.''

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TITAN Group - Overview of the nine months 2020

In the first nine months of 2020, TITAN Group recorded a stronger financial performance compared to the previous year supported by resilient sales volumes across most of our markets, as exhibited by the underlying strength of the US, a solid performance in Southeastern Europe, further signs of recovery in Greece, strong domestic and export growth in Turkey and improving demand in Brazil. Performance in Egypt was disappointing due to the persisting challenges of that market. Resurgent demand levels also underpinned solid pricing dynamics, which coupled with a very favorable energy cost environment and successful management of the Group's cost base, supported profitability.

Over the first nine months of 2020, Group consolidated Revenue at €1,202.4m posted a marginal drop of 0.5%. The impact of the Covid-19 pandemic on our Group was clearly less severe than what was initially feared. Following the suppression of activity in the second quarter of the year, construction activity rapidly came back once lockdown restrictions were eased, testifying to the underlying resilience of market fundamentals across geographies. Operating profitability (EBITDA) in the January-September 2020 period rose by a solid 10.1% to €229.4m benefiting from resilient revenues and pricing while lower operating costs and especially fuel costs resulted to cost savings. The Group 9M 2020 net result after taxes and minority interests was a profit of €58m compared to a profit of €45.2m in the same period of 2019, hence higher by 28.1%.

The Group generated robust operating free cash flow of €127.7m, an increase of €41.3m compared to the nine months of 2019. Cash flow generation benefited from higher EBITDA levels, tighter capital expenditures (€60.4m vs €75.5m in 2019) and contained working capital requirements. Group net debt at the end of September 2020 decreased significantly reaching €766m, lower by €74m from the end of 2019 and by €125m vs end September 2019. In July 2020 Titan Global Finance issued €250m notes due in 2027, with a 2.75 per cent coupon. The proceeds of the notes were used for the repayment of other debt.

In Q3 2020, Group Revenue decreased by 1.7% compared to last year reaching €416m. Group Revenue was up by 2.6% at constant exchange rates. Group EBITDA grew by 7.4% to €92.6m. Third quarter 2020 net result after taxes and minority interests was a profit of €35.5m compared to a profit of €31.9m in the same period of 2019, higher by 11.4%.

In million Euros, unless otherwise stated	Q3 2020	Q3 2019	%yoy
Revenue	416.1	423.1	-1.7
EBITDA	92.6	86.2	7.4
Net Profit after Taxes & Minorities	35.5	31.9	11.4

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Regional review of the nine months 2020

The US continued to exhibit dynamic underlying fundamentals. Construction activity was not severely affected by the pandemic. The residential segment, particularly single-family new homes, as well as infrastructure continued to drive the market while commercial/industrial has slowed down due to the macroeconomic conditions. Record low mortgage rates and a low stock of unsold houses drove strong demand for the residential segment.

In Florida and the Mid-Atlantic, while variances exist along different localities, the market situation remained healthy, underpinned by both the strong market conditions in residential as well as by infrastructure. At the same time, a strong performance was recorded in the aggregates business where the Group is capitalizing on its strategy of vertical integration.

Profitability in the third quarter was aided by careful cost management, amplified by Titan America's ability to flexibly adapt to market conditions. Titan America delivered solid performance in US\$-terms. In the first nine months of 2020, revenue in the US was €714.6m, posting a marginal decline of 1% in Euro terms. EBITDA reached €141.4m, growing by 3.2%. EBITDA margin increased and reached 19.8% vs 19% in the same period last year.

Greece & W. Europe

The market in Greece staged a strong rebound following the easing of lockdown restrictions in May. A pick-up in activity continued in the third quarter underpinned by a healthy pipeline of smaller projects spanning both specific infrastructure segments as well as commercial/industrial buildings across the mainland and outside urban centers. Major infrastructure projects commenced but are still at their initial stages, while the long-awaited contract for the construction of Athens Metro line 4 has now also been awarded. Private building activity also exhibited positive momentum. Exports for the period were reduced reflecting a decision to decrease less profitable exports, taking a long-term view of CO² requirements.

Coupled with the healthy performance of the Greek market, profitability was aided by prevailing lower thermal energy prices. Continuing progress in the utilization of alternative fuels in our Greek plants have contributed in reducing both costs and the Group's carbon footprint. In the first nine months of 2020, revenue in Greece and Western Europe was €177.9m, posting a 3.9% decrease. EBITDA reached €16.4m, growing by 5.9%.

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Almost all domestic markets where the Group is present in the region rebounded strongly in the third quarter. Revenue in the first nine months of 2020 was €196.6m, posting a 0.9% increase, supported by pricing gains and overall resilient volumes. Activity in the region continued to be driven by a mix of residential and commercial works, as well as select infrastructure projects mostly regarding road works, depending on the specific market. The favorable energy cost side of the profitability equation contributed to the region's EBITDA, which reached €72.7m up by 23.4% in the nine months, compared to the same period last year.

In Turkey, despite severe macroeconomic challenges, the market recorded a sharp increase, fueled by private construction supported by the government's incentives and housing programme. June housing sales were the highest on record and housing stock has been sharply reduced, with new building development therefore expected to continue. Despite the Group's healthy performance, foreign exchange weakness penalizes translation into Euro. Adocim, the Group's subsidiary in Turkey benefited from buoyant local demand, which, supplemented by exports, led to strong revenue gains and a profitable operating performance.

In Egypt, market conditions remain challenging. The country suffers from overcapacity and 2020 has marked the fourth consecutive year of decline in demand. Domestic consumption in the nine months recorded a shrinkage of about 7%. The main reason for the decline has been the six-month suspension of licenses for private construction, partially lifted in October and recovering since. Pricing also remained anemic owing to the low capacity utilization rates affecting all producers in the market.

In the first nine months of 2020, revenue in the Eastern Mediterranean region was €113.2m, posting a 5.8% increase year on year. EBITDA, reflecting the disappointing conditions in Egypt, was negative by €1.1m.

Brazil (Joint venture)

The Brazilian market enjoyed growth for the second year in the row. Our business in Brazil has been growing with a rise in profitability, reflecting improvements both in volumes and prices. The market experienced a surge in demand witnessed even during the first wave of the pandemic. This was largely due to the spur in DIY and private activity instigated during the lockdown period. Market fundamentals remain solid; however, the standing uncertainty persists owing to the continuing surge of new cases of the pandemic in a vast and populous country.

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Non-financial review

As per the Group CO² initiative, our long-term goal is to reduce specific net direct CO² emissions to approximately 30% below 1990 levels by 2030. Meanwhile, we are rapidly progressing towards meeting the 20% reduction target by 2021-2023, by increasing the use of alternative fuels, accelerating efforts in energy efficiency and reducing clinker content in cement.

In line with our enduring commitment to open and transparent communication with our stakeholders, we have responded for the first time to the Carbon Disclosure Project (CDP) Climate Change and Water Security questionnaires. We have also successfully measured Scope 3 indirect emissions in two of our plants in Greece and Southeastern Europe, recognizing critical areas of carbon emissions in the supply chain. We will start monitoring Scope 3 emissions for all of our cement plants in 2021.

Furthermore, we continue to invest in Research & Innovation, participating in collaborative efforts and continuously evaluating novel technologies for carbon capture and utilization that could offer a multitude of savings in CO2. For its contribution to the EU-funded research project RECODE, TITAN has been recently recognized as a Key Innovator in the European Commission's Innovation Radar. The project involves the installation of a pilot unit at Kamari plant in Greece for the capture of CO2 and its conversion into value-added chemicals.

The Group continues its efforts to efficiently manage waste, promote circular economy and protect ecosystems across all operations with its Pennsuco cement plant in the USA becoming the first cement plant in the world to earn the highest level of certification (Platinum) under the TRUE (Total Resource Use and Efficiency) rating system for zero waste.

As a second wave of Covid-19 is affecting the countries in which we operate, our first priority across the Group remains to take all necessary measures to protect our people and stand by our neighboring communities, partners and contractors.

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Outlook

While market fundamentals remain solid and the drivers of demand are in place to support operational growth, the second wave of Covid-19, which appears to be taking hold across many countries, limits predictive ability regarding the evolution of performance. The timing and the extent of any upturn cannot be predicted. Despite the uncertain context, we remain confident in the solidity of our business model, based on the nature of construction activity, our track record in facing the pandemic and the resilience and dedication of our people.

In the US, solid backlogs point to continuing robust activity in the short-term, underpinned by low mortgage rates, low housing inventories and a pipeline of funded construction projects. In the medium-term, growth should be further aided by expenditure for addressing the country's urgent infrastructure needs.

In Greece, the positive trends witnessed so far are expected to extend through the end of the year and beyond. Housing-related construction seems on track to increase further from current low levels. A number of big construction projects, both public and private, are set to start in 2021. The country stands to capitalize on the disbursement of recovery funds, both directly in the form of infrastructure work, as well as indirectly through income support flowing into the economy and triggering private investment.

In Southeastern Europe, while like in the rest of Europe, a second wave of Covid-19 has set in, the region is expected to continue performing solidly with construction continuing as an essential activity and any slowdown only effected by the onset of winter.

In Turkey, with the situation remaining fluid, on account of both macroeconomic and political challenges, visibility into 2021 is low.

In Egypt, the gradual lift of the suspension imposed on licenses for private construction is leading to the stabilization of cement consumption, as recently witnessed with a recovery of volumes. Furthermore, there is growing market consensus for government action in order to stimulate demand and support the sector, an issue to which the authorities are now also sensitized. Looking to the longer-term, the country maintains favorable and promising fundamentals for a recovery, as Egypt records positive GDP growth and enjoys one of the highest birth rates in the region generating needs for future housing and infrastructure construction.

Last, in Brazil, the market continues at the same positive trend witnessed thus far with indications for a healthy positive close to the year.

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Summary of Interim Consolidated Income Statement

(all amounts in Euro thousands)		For the nine months ended 30/9
	2020	2019
Revenue	1,202,358	1,208,547
Cost of sales	-957,399	-983,690
Gross profit	244,959	224,857
Other net operating income	2,393	6,009
Administrative and selling expenses	-121,872	-124,805
Operating profit	125,480	106,061
Finance income and expenses	-38,964	-46,083
Fair values change in interest rate swaps	-6,754	-5,379
(Losses)/gains from foreign exchange differences	-6,550	2,725
Share of profit/(loss) of associates and joint ventures	1,413	-711
Profit before taxes	74,625	56,613
Income tax	-16,758	-9,753
Profit after taxes	57,867	46,860
Attributable to:
Equity holders of the parent	57,958	45,250
Non-controlling interests	-91	1,610
	57,867	46,860
Basic earnings per share (in €)	0.7507	0.5704
Diluted earnings per share (in €)	0.7481	0.5640

Earnings before interest, taxes, depreciation, amortization and impairment (EBITDA)

(all amounts in Euro thousands)		For the nine months ended 30/9
	2020	2019
Operating profit	125,480	106,061
Depreciation and amortization	103,859	101,816
Impairment of tangible and intangible assets	68	538
Earnings before interest, taxes, depreciation, amortization and
impairment (EBITDA)	229,407	208,415

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(all amounts in Euro thousands)	30/9/2020	31/12/2019
Assets
Property, plant & equipment and investment property	1,593,248	1,710,706
Intangible assets and goodwill	402,198	425,340
Investments in associates and joint ventures	82,193	113,858
Other non-current assets	21,586	28,373
Deferred tax assets	24,551	13,939
Total non-current assets	2,123,776	2,292,216
Inventories	266,119	283,519
Receivables, prepayments and other current assets	227,512	197,296
Cash and cash equivalents	218,353	90,388
Total current assets	711,984	571,203
Total Assets	2,835,760	2,863,419
Equity and Liabilities
Equity and reserves attributable to owners of the parent	1,328,764	1,375,165
Non-controlling interests	24,536	34,626
Total equity (a)	1,353,300	1,409,791
Long-term borrowings and lease liabilities	750,567	822,820
Deferred tax liability	99,688	96,319
Other non-current liabilities	131,774	133,001
Total non-current liabilities	982,029	1,052,140
Short-term borrowings and lease liabilities	233,821	107,170
Trade payables, income tax and other current liabilities	266,610	294,318
Total current liabilities	500,431	401,488
Total liabilities (b)	1,482,460	1,453,628
Total Equity and Liabilities (a+b)	2,835,760	2,863,419

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Summary of Interim Consolidated Cash Flow Statement

(all amounts in Euro thousands)	For the nine months ended 30/9
	2020	2019
Cash flows from operating activities
Profit after taxes	57,867	46,860
Depreciation, amortization and impairment of assets	103,927	102,354
Interest and related expenses	38,254	45,294
Other non-cash items	35,143	18,070
Income tax paid	-6,391	-6,947
Changes in working capital	-46,980	-50,649
Net cash generated from operating activities (a)	181,820	154,982
Cash flows from investing activities
Net payments for property, plant & equipment and intangible assets	-58,337	-69,478
Net proceeds from changes in investments to affiliates	1,746	3,883
Net cash flows used in investing activities (b)	-56,591	-65,595
Cash flows from financing activities
Dividends paid and share capital returns	-16,730	-13,685
Payments due to TCI acquiring 100% of Titan Cement	-	-52,201
Other (payments of)/proceeds from financing activities	-1,498	87
Payments for shares purchased back	-8,125	-6,187
Interest and other related charges paid	-36,557	-44,464
Net proceeds from drawn downs/(repayments) of credit facilities	70,110	-23,297
Net cash flows from/(used in) financing activities (c )	7,200	-139,747
Net increase/(decrease) in cash and cash equivalents (a)+(b)+(c)	132,429	-50,360
Cash and cash equivalents at beginning of the year	90,388	171,000
Effects of exchange rate changes	-4,464	3,201
Cash and cash equivalents at end of the period	218,353	123,841

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General Definitions

CAPEX

CAPEX is defined as acquisitions of property, plant and equipment, right of use assets, investment property and intangible assets.

EBITDA

EBITDA corresponds to operating profit plus depreciation, amortization and impairment of tangible and intangible assets and amortization of government grands.

Net Debt

Net debt corresponds to the sum of long-term borrowings and lease liabilities, plus short-term borrowings and lease liabilities (collectively gross debt), minus cash and cash equivalents.

NPAT

NPAT is defined as profit after tax attributable to equity holders of the parent.

Operating Free Cash Flow

Operating free cash flow is defined as cash generated from operations minus payments for CAPEX.

Operating profit

Operating profit is defined as profit before income tax, share of gain or loss of associates and joint ventures, gains or losses from foreign exchange differences, net finance costs and other income or loss.

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• This media release is also available on the website of Titan Cement International SA via this link: https://ir.titan-cement.com
• For further information, please contact Investor Relations at +30 210 2591 257
• An analyst call will be held at 15:00 CET on November 12 2020, please see: http://87399.themediaframe.eu/links/titan201112.html

DISCLAIMER: This report may include forward-looking statements. Forward-looking statements are statements regarding or based upon our management's current intentions, beliefs or expectations relating to, among other things, TITAN Group's future results of operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which we operate. By their nature, forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results or future events to differ materially from those expressed or implied thereby. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this report regarding trends or current activities should not be taken as a report that such trends or activities will continue in the future. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on any such forward-looking statements, which speak only as of the date of this report. The information contained in this report is subject to change without notice. No re-report or warranty, express or implied, is made as to the fairness, accuracy, reasonableness or completeness of the information contained herein and no reliance should be placed on it. In most of the tables of this report, amounts are shown in € million for reasons of transparency. This may give rise to rounding differences in the tables presented in the trading update. This trading update has been prepared in English and translated into French and Greek. In the case of discrepancies between the two versions, the English version will prevail.

About Titan Cement International SA

Titan Cement International is a multiregional cement and building materials producer. Business activities cover the production, transportation and distribution of cement, concrete, aggregates, fly ash, mortars and other building materials. The Group employs about 5,500 people and is present in 15 countries, operating cement plants in 10 of them, the USA, Greece, Albania, Bulgaria, North Macedonia, Kosovo, Serbia, Egypt, Turkey and Brazil. Throughout its history, the Group has aspired to serve the needs of society, while contributing to sustainable growth with responsibility and integrity.

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