Earnings Release • May 12, 2022
Earnings Release
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Brussels, 12 May 2022, 08:00 CEST – Titan Cement International SA (Euronext Brussels, ATHEX and Euronext Paris, TITC) announces the first quarter 2022 summary financial results.
Q1 2022 marked a positive start to the year, with resilient demand in all regions we operate and significant price increases across all products. It is reminded that Q1 is a seasonally low sales quarter and not representative for the year. TITAN Group consolidated revenue reached €454.6m, up 22.6% versus Q1 2021. At the same time EBITDA decreased by 17.3% to €46.4m as the phasing in of higher prices in early months only gradually absorbed the increase in energy and input costs. Further price increases have already been announced in most markets and will be effective within the first half of 2022. In Q1 2022 net profit after taxes and minority interests dropped to €1.3m (versus €15.3m in Q1 2021), due to lower EBITDA levels and negative FX variances, mainly due to the devaluation of the Egyptian pound.
Operating Free Cash flow showed a seasonal quarterly outflow of €34.5m which is due to lower EBITDA levels, higher Capex of €38.9m and working capital needs of €50.6m. Group net debt at the end of March 2022 closed at €756.8m same as debt levels of end March 2021.
On March 17, 2022, the Board of Directors decided the return of capital of €0.50 per share to all shareholders of the Company on Thursday, 28 April 2022 (record date). The date of payment will be July 5 th , 2022.
Share buy-back: In the context of the share buy-back programme launched in October 2021, in Q1 2022 the Group acquired 508,436 shares for a total amount of €6,763,076. On March 17, 2022, the Board decided to implement a new share buy-back programme of up to a maximum amount of €10,000,000 in Euronext Brussels and the Athens Exchange. The expected term of the programme is 6 months and its implementation started on April 1, 2022.
| In million Euros, unless otherwise stated | Q1 2022 | Q1 2021 | %yoy |
|---|---|---|---|
| Revenue | 454.6 | 370.7 | 22.6% |
| EBITDA | 46.4 | 56.1 | -17.3% |
| Net Result after Taxes & Minorities | 1.3 | 15.3 | -91.4% |
The US continues to demonstrate growth as cement volumes grew significantly in what is practically a sold-out market. Demand for residential construction remainssolid, while commercial projects enjoy a resurgence. Healthy DoT budgets are reflected in robust road infrastructure work activity across states. Amidst the heightened demand significant price increases were implemented in January and were progressively applied, therefore their effect was not fully reflected in Q1 results. Profitability margins were impacted by high freight costs and the increased cost of imported cement, as well as by the rise in input costs such as energy, logistics, and raw materials. A second round of price increases has been announced for June to cover cost inflation and restore margins. Sales of lower carbon footprint cements progressed across the operations, building on Titan America's head start in this domain. Revenue in the USA recorded a 17.8% increase to €267.6m (9.6% increase in US \$ terms) but EBITDA was down to €24m from €38.5m last year.
Activity in the Greek market continues robustly with domestic demand growing and price increases were absorbed by the market. Construction activity continues both in urban centers with residential and real-estate development, as well as the periphery with many municipal and public works in progress. On the other hand, the increased costs of building materials in general have slowed down the start of new projects. On the export front, the US continued being Greece's biggest export destination. Like in most markets, energy and electricity costs, as well as other input costs, constitute headwinds which the Group has been addressing through price increases, (a new price increase was implemented at the end of Q1) and cost management such as an increase in alternative fuel utilization. Further operational efficiencies are achieved as a result of ongoing digitalization projects across our plants. Total revenue for Greece and Western Europe in the first quarter of 2022 increased by 23% to €69.9m and EBITDA increased by 4.7% to €6.3m.
Growth in the region continued with healthy construction activity levels. Price increases, covering a large part of the cost increases, were successfully implemented across all countries. As the region is heavily dependent on imported energy, we have seen energy and electricity costs spiraling across the board and further price increases were recently introduced in order to recover margins. The Group is vigilantly managing the challenge targeting continuous operational improvements, with increased use of alternative fuels, investments in solar projects, and other initiatives.
Revenue for the region overall in the first quarter of 2022 increased by 30% to €63.7m on the back of higher volumes and prices but EBITDA dropped from €11.3m to €10.7m penalized by the steep increase in energy costs.
The market in Egypt continued its growth path and recorded a 4.7% increase in Q1 2022. The rationalization of production implemented by the government last summer has led to a healthier balance between supply and demand and to improved operational profitability with stronger pricing. Macroeconomic challenges notwithstanding, the market continued to be driven by extensive public housing projects and various national infrastructure projects.
In Turkey, macroeconomic challenges and the ripples from the war in Ukraine are manifesting themselves in the real economy. With inflation soaring to over 60%, reduced public investments, and spiraling costs, on top of what was a very harsh winter this year, volumes declined. Cement prices have increased as producers swiftly reacted to cover inflationary pressures.
Total revenue in the Eastern Mediterranean reached €53.4m, posting an increase of 41.9% year on year, while EBITDA jumped to €5.4m versus €0.2m in the first quarter of 2021.
In Brazil, the market reflects the forces of mounting inflationary pressures and rising interest rates, but, on the other hand, there is a drive -especially ahead of this year's general elections in October- in public housing and infrastructure investments. The total cement market in Brazil in the first quarter declined by 2.4% while prices posted a significant increase covering most but not all of the impact of cost inflation.
The Group accelerated its carbon footprint reduction efforts, and, in the first quarter of 2022, net specific CO2 emissions were 6.6% lower than in the same period last year.
The installation of a pre-calciner at the Kamari plant in Greece, which will enable the utilization of greater quantities of waste-derived fuels, is progressing according to schedule and will be completed in 2023. In addition, TITAN America continued to expand its sales of its lower carbon Type IL cement, which is now also available in New Jersey and the New York metropolitan area.
In Greece, TITAN launched ENVIRA, an innovative ready-mix concrete that reduces the possibility of flooding phenomena, conserves valuable water resources and controls the increase in the average temperature in urban built environments. Meanwhile, a pilot carbon capture unit was installed at the Kamari plant near Athens, in the context of the EU Funded Carbon Capture and Utilization (CCU) project RECODE. The project involves the production of value-added chemicals and materials by utilizing CO2 captured from the plant.
Global macroeconomic challenges have not abated since our last communication in March 2022. The world remains hostage to the tragic events in Ukraine which are translating not only into human suffering and loss but are also having adverse consequences across the global economy in the guise of inflationary pressures, supply chain disruptions, and mounting geopolitical uncertainties.
As far as the building materials sector is concerned, in the US, despite macroeconomic risks, the underlying construction market dynamics remain strong. Residential activity continues driving demand. The infrastructure segment is poised to provide a steady backbone to demand from 2023 onwards, as the full effect of America's large infrastructure investment drive starts to materialize on the ground.
In Europe, for the time being the outlook of demand in our markets remains positive. In Greece in particular, EU funded projects are expected to support demand growth going forward.
Across geographies cost pressures are expected to persist, and the Group will continue to address global cost headwinds by adjusting pricing, in a successive manner in order to safeguard and enhance its performance.
| (all amounts in Euro thousands) | For the three months ended 31/3 | ||
|---|---|---|---|
| 2022 | 2021 | ||
| Revenue | 454,638 | 370,735 | |
| Cost of sales | -395,338 | -306,521 | |
| Gross profit | 59,300 | 64,214 | |
| Other net operating income/(expenses) | 1,459 | -198 | |
| Administrative and selling expenses | -48,790 | -40,544 | |
| Operating profit | 11,969 | 23,472 | |
| Finance income and expenses | -8,380 | -9,565 | |
| Fair value changes in interest rate swaps | 1,443 | 441 | |
| (Losses)/gains from foreign exchange differences | -2,902 | 5,473 | |
| Share of (loss)/profit of associates and joint ventures | -627 | 780 | |
| Profit before taxes | 1,503 | 20,601 | |
| Income tax | -781 | -5,583 | |
| Profit after taxes | 722 | 15,018 | |
| Attributable to: | |||
| Equity holders of the parent | 1,311 | 15,312 | |
| Non-controlling interests | -589 | -294 | |
| 722 | 15,018 | ||
| Basic earnings per share (in €) | 0.0181 | 0.1990 | |
| Diluted earnings per share (in €) | 0.0181 | 0.1982 |
| (all amounts in Euro thousands) | For the three months ended 31/3 | |
|---|---|---|
| 2022 | 2021 | |
| Operating profit | 11,969 | 23,472 |
| Depreciation and amortization | 34,445 | 32,624 |
| Earnings before interest, taxes, depreciation, | ||
| amortization and impairment (EBITDA) | 46,414 | 56,096 |
| (all amounts in Euro thousands) | 31/03/2022 | 31/12/2021 |
|---|---|---|
| Assets | ||
| Property, plant & equipment and investment property | 1,538,642 | 1,556,362 |
| Intangible assets and goodwill | 363,608 | 363,430 |
| Investments in associates and joint ventures | 103,943 | 88,753 |
| Other non-current assets | 44,695 | 27,229 |
| Deferred tax assets | 9,013 | 8,867 |
| Total non-current assets | 2,059,901 | 2,044,641 |
| Inventories | 319,316 | 305,131 |
| Receivables, prepayments and other current assets | 290,737 | 248,987 |
| Cash and cash equivalents | 70,359 | 79,882 |
| Total current assets | 680,412 | 634,000 |
| Total Assets | 2,740,313 | 2,678,641 |
| Equity and Liabilities | ||
| Equity and reserves attributable to owners of the parent | 1,316,653 | 1,321,626 |
| Non-controlling interests | 14,574 | 15,260 |
| Total equity (a) | 1,331,227 | 1,336,886 |
| Long-term borrowings and lease liabilities | 707,878 | 687,465 |
| Deferred tax liability | 117,579 | 113,604 |
| Other non-current liabilities | 115,778 | 99,860 |
| Total non-current liabilities | 941,235 | 900,929 |
| Short-term borrowings and lease liabilities | 119,327 | 105,620 |
| Trade payables, income tax and other current liabilities | 348,524 | 335,206 |
| Total current liabilities | 467,851 | 440,826 |
| Total liabilities (b) | 1,409,086 | 1,341,755 |
| Total Equity and Liabilities (a+b) | 2,740,313 | 2,678,641 |
Cash and cash equivalents at end of the period 70,359 128,271
| Measure | Definition | Purpose |
|---|---|---|
| CAPEX | Acquisitions/additions of property, plant and equipment, right of use assets, investment property and intangible assets |
Allows management to monitor the capital expenditure |
| EBITDA | Operating profit before impairment losses on goodwill plus depreciation, amortization and impairment of tangible and intangible assets and amortization of government grants |
Provides a measure of operating profitability that is comparable among reportable segments consistently |
| Net debt | Sum of long-term borrowings and lease liabilities, plus short-term borrowings and lease liabilities (collectively gross debt), minus cash and cash equivalents |
Allows management to monitor the indebtedness |
| NPAT | Profit after tax attributable to equity holders of the parent |
Provides a measure of total profitability that is comparable over time |
| Operating free cash flow |
Cash generated from operations minus payments for CAPEX |
Measures the capability of the Group in turning profit into cash through the management of operating cash flow and capital expenditure |
| Operating profit | 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 |
Provides a measure of operating profitability that is comparable over time |
| 05 July 2022 | Date of payment of capital return |
|---|---|
| 28 Jul 2022 | Publication of the second quarter and half year 2022 results |
| 10 Nov 2022 | Publication of the third quarter and nine months 2022 results |
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.
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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