Analyst Presentation 9M 2011
Transcript of Analyst Presentation 9M 2011
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Athens, November 10, 2011
Financial Results –
9 Months 2011
Analysts’
conference call
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Disclaimer
2
•This document contains forward-looking statements relating to the Group’s future business,development and economic performance. It also includes statements from sources that havenot been independently verified by the Company.
•Such statements may be subject to a number of risks, uncertainties and other importantfactors, such as but not limited to:
– Competitive pressures
– Legislative and regulatory developments
– Global, macroeconomic and political trends
– Fluctuations in currency exchange rates and general financial market conditions
– Delay or inability in obtaining approvals from authorities
– Technical development
– Litigation
– Adverse publicity and news coverage, which would cause actual development andresults to differ materially from the statements made in this document
•TITAN assumes no obligation to update or alter such statements whether as a result of newinformation, future events or otherwise.
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Agenda
Group Financial Results
Market Overviews
Outlook
3
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Severe Greek Recession and Euro Affect 9M 2011 Results
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13.1
10.1
2.94
11.6
8.2
2.72
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Cement(tn m)
Aggregates(tn m)
Ready-mix(m3 m)
2010A
2011A
5
9 Months
-12% (3)
(1) (2)
(1) Cement sales include clinker and cementitious materials(2) Includes Turkey at 100%(3) % represents performance versus last year
-19% (3)
-7% (3)
4.4
3.1
0.97
4.0
2.8
0.90
0.0
1.0
2.0
3.0
4.0
5.0
Cement
(tn m)
Aggregates
(tn m)
Ready-mix
(m3 m)
2010A
2011A
3 rd
Quarter
-9% (3)
-7% (3)
-7% (3)
(1) (2)
Declining Sales Volumes Driven by Weak Demand inGreece and Shutdown of N. Africa Export Markets
Loss of sales due to steep decline of demand in the Greek marketLoss of sales due to steep decline of demand in the Greek market
and closureand closure
of some targeted export markets was not offset by growth experieof some targeted export markets was not offset by growth experie nced acrossnced acrossall product lines in the US, most of the Balkans and Turkey.all product lines in the US, most of the Balkans and Turkey.
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1,028.5
838.9
(45.3)(144.3)
200300
400500600
700
800900
1,000
1,100
Turnover2010
TranslationImpact
OrganicGrowth
Turnover2011
‐4.4%
‐14.0%
‐18.4%(€ in millions)
Turnover Reconciliation
21.4% 18.9%
6
260.3
219.8
(13.0)(27.4)
60
110
160
210
260
310
EBITDA2010
TranslationImpact
OrganicGrowth
EBITDA2011
‐5.0% ‐10.5%
26.2%25.3%
‐15.5%
EBITDA Margin
(€ in millions)
9 m o n
t h s
3 r d
Q u a r t e r
EBITDA Reconciliation
Turnover Reconciliation
347.7
282.0
(17.4) (48.3)
0
100
200
300
400
Turnover2010
TranslationImpact
OrganicGrowth
Turnover2011
‐5.0%‐13.9%
‐18.9%(€in millions)
EBITDA Reconciliation
98.978.5
(3.6) (16.8)
0
20
40
60
80
100
120
EBITDA2010
TranslationImpact
OrganicGrowth
EBITDA2011
‐3.6%‐17.0%
27.8%28.4%
‐20.6%
EBITDA Margin
(€in millions)
ExcludingExcluding € € 13 m negative impact from FX, organic EBITDA declined by13 m negative impact from FX, organic EBITDA declined by € € 27.4 mil, adversely impacted by27.4 mil, adversely impacted by € € 32.7m drop in Greece and32.7m drop in Greece and € € 11m in US.11m in US.
9M 2011 Results Affected by Sharp Decline in Greece Salesand Exacerbated by Strong Euro
Note: Organic growth includes changes net of translation and scope impacts.
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98.3
52.9
(39.7)
(13.0)4.1 (2.7) 0.7
7.0 (2.1) (12.1)12.3
0
20
40
60
80
100
120
NPAT2010
EBITDAOrganicGrowth
EBITDATranslation
Impact
EBITDAOne-off
Depn. Interest Taxes Other MinorityInterest
FX Gains/ Losses
NPAT2011
NPAT after Minorities Adversely Impacted by WeakMarkets and Strong Euro
7
(€ in millions)
9M 2011 Group Net Profit After Taxes and Minorities9M 2011 Group Net Profit After Taxes and Minorities(Reconciliation vs. 9M 2010)(Reconciliation vs. 9M 2010)
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FX Impact in Million €
(Variance)Q1 Q2 Q3 9M
EBITDATranslation Impact -2 -7 -4 -13
FX Gains/Losses -14 -6 +8 -12
30 th
Jun2011
Δ
Q3 30 th
Sep2011
Net Equity -88 +53 -35
Net Debt -20 +15 -5
Working Capital -5 +2 -3
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P & L
B S
Variance Variance
30/9/2011 31/12/2010 30/9/11 vs 31/12/10 Avg 9M 11 Avg 9M 10 Avg 9M 11 vs 9M 10
€1 = USD 1.35 1.34 -1% 1.41 1.32 -7%€1 = EGP 8.05 7.76 -4% 8.34 7.36 -13%1USD=EGP 5.97 5.80 -3% 5.93 5.59 -6%€1 = RSD 101.17 105.50 4% 101.95 101.66 0%€1 = ALL 140.95 138.77 -2% 140.43 137.48 -2%€1 = TRY 2.51 2.07 -21% 2.29 2.00 -15%
Bulgarian Leva fixed at €1 = BGN 1,956
No change in €/MKD exchange rates , at €1 = 61,51A negative variance represents a devaluation of the bas e currency vs. the Euro
Balance Sheet P&L
Strengthening of the Euro in 9M 2011
Leads to a SubstantialDrop in Profitability and Net Equity
FX Gains/Losses (Variance)
Country LocalCurrency
LoanCurrency
9M 2011
Egypt EGP EUR +4.2
Turkey TRY EUR, USD -8.8
Albania ALL EUR -4.3
Other -3.3
Total -12.2
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220
9
4
5
(30)
(42)
(41)
(107)
0
50
100
150
200
250
EBITDA 9M2011
Non-CashItems
CapEx OperatingWorkingCapital
Acquisitions/ Disposals
Interest, Tax,Dividends,Accruals
Net FX Impact Change inNet Debt30/09/11
Sources and Uses of Cash(€ in millions)
9
Operating Free Cash Flow
€107m
Group Generates €107m in Operating Free Cash Flow in 9M 2011
€ € 107m Operating Free Cash Flow covers107m Operating Free Cash Flow covers € € 92.3m of finance/tax/dividends related92.3m of finance/tax/dividends relatedpayments and reduces Net Debt bypayments and reduces Net Debt by € € 9m9mNote: NonNote: Non --cash items includes Egypt clay fee returncash items includes Egypt clay fee return
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11141154
1028 1029
971 988
917873
777 777745
768
700
900
1,100
1,300
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Net debt
(€ in millions)
Deleveraging Remains a Top Priority for the GroupDeleveraging Remains a Top Priority for the Group
Group Net Debt
10
2008 2009 2010 2011
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Agenda
Group Financial Results
Market Overviews
Outlook
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€219.8m Group EBITDA Driven Mainly by SEE and EMED
9M 2011 Turnover (€m) 9M 2011 EBITDA (€m)
29%
38%
27%
25%
14%
9%
30%
28%
15%
42%
-11
-11
30%
20%
73%
55%
268.9
181.3
247.9
330.4
215.8
183.4
229.4
210.3
0 100 200 300 400
E. MED.
SEE
USA
GREECE
2011 ACT 2010 ACT
‐20%
1%
‐7%
‐36%25%
26%
26%
18%
22%
24%
27%
32%
105.5
72.6
6.8
75.4
108.1
73.4
-4.3
42.7
-10 0 10 20 30 40 50 60 70 80 90 100110120
E.MED.
SEE
USA
GREECE
2011 ACT 2010 ACT
2%
1%
‐43%
41%
49%
28%
33%
3%
‐2%
28%
20%
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Greece Turnover Reconciliation Greece EBITDA Reconciliation
330.4
210.3
(120.0)
0
50
100
150
200
250
300
350
Turnover
2010
Organic
Growth
Turnover
2011
‐36.3%(€ in millions)
‐36.3%
75.4
42.7
(32.7)
0
10
20
30
40
50
60
70
80
EBITDA2010
OrganicGrowth
EBITDA2011
‐43.3%
22.8% 20.3%EBITDA Margin
(€ in millions)
‐43.3% 9 M o n t h
s
Profitability in Greece Plummets amidst Severe Recession
Greek recession leads building activity to a tailspin.
Dramatic decline in sales volumes across all products and market segments.
Export volume almost at 1/3 of 2010 due to collapse of North African
exports.
Selling prices quarter-on-quarter decline in all products.
Gross margin supported by sale of excess Carbon rights.
Initiatives to curtail fixed cost. SG&A reduced by 13% in 9M 2011.
Note: Organic growth includes changes net of translation and scope impacts.
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US Turnover Reconciliation US EBITDA Reconciliation
Continued Weakness in the USA
247.9229.4
(15.5)(3.1)
100
120
140
160
180
200220
240
260
Turnover2010
TranslationImpact
OrganicGrowth
Turnover2011
‐1.2%‐6.3%
‐7.5%
(€in millions)
9 M o n t h s
6.8
(4.3)
0.3 (11.4)
-4
-2
0
2
4
6
8
EBITDA2010
TranslationImpact
OrganicGrowth
EBITDA2011
(€ in millions)
4.4%
Economic recovery slow and fragile. Housing market remains weak.
Sales volume growth across all products, as a result of targeted activities.
Selling prices stabilize at the low levels of year-end 2010 for all
products.
ST profitable growth continues with sales up by 15%.
Fuel & Energy costs stable due to lower environmental surcharges
andefficiency initiatives
Note: Organic growth includes changes net of translation and scope impacts.
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Continued Growth in SE Europe, whilst ProfitabilityRemains Stable
15
SEE EBITDA ReconciliationSEE Turnover Reconciliation
181.3 183.43.1(1.0)
130
140
150
160
170
180
190
Turnover2010
TranslationImpact
OrganicGrowth
Turnover2011
1.7%‐0.6%
1.2%(€ in millions)
72.6 73.40.9(0.2)
20
30
40
50
60
70
80
EBITDA2010
TranslationImpact
OrganicGrowth
EBITDA2011
40.0%40.1%
1.2%
EBITDA Margin
1.0%(€ in millions)
‐0.3%
9 M o n t h s
Modest macroeconomic improvement in the region leads to growingdemand in construction materials.
5% average cement sales growth in the region.
Cement prices grow or stabilize quarter on quarter but are still below
the 9M 2010 levels.
Increasing fuel & energy costs clip margins. New alternative fuelsinvestment in Bulgaria bears fruit.
Gross margin supported by sale of excess Carbon rights ex Bulgaria.
Note: Organic growth includes changes net of translation and scope impacts.
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46.4%41.4%
EMED EBITDA ReconciliationEMED Turnover Reconciliation
105.5 108.115.7(13.1)
0
20
40
60
80
100
120
EBITDA2010
TranslationImpact
OrganicGrowth
EBITDA2011
2.4%
14.9%‐12.4%
EBITDA Margin 50.1%39.2%
(€in millions)
268.9
215.8
(28.7)
(24.3)
100
120
140
160
180
200
220
240
260
280
Turnover2010 TranslationImpact OrganicGrowth Turnover2011
‐19.7%
‐9.1%
‐10.7%
(€ in millions)
9 M o n t h s
Political volatility in Egypt affects the construction industry.
In Egypt sales shrink by 9%, affected by weak July-August demand andincreasing S/D imbalance.
EBITDA in Egypt affected by €25m positive contribution of clay fee case,
partly offset by increased profit sharing and legal settlements.
More than 5MT new market capacity in Egypt comes gradually onstream, pressuring prices.
In Turkey double-digit sales growth further accelerates in Q3. Domesticprices continue on an upward trend.
EMED Region Delivers Solid Performance AmidstWeakening Market Fundamentals in Egypt
Note: Organic growth includes changes net of translation and scope impacts.
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Agenda
Group Financial Results
Market Overviews
Outlook
17
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• Increasing Global uncertainty• Greece: Downward trend continues
• US: Stability at very low levels
• South Eastern Europe: Upside opportunity more visible
• Eastern Med: Growth in Turkey, short-term slowdown in Egypt
• Energy costs stabilizing• Pricing power differs by region
• Focus remains on:
Free cash flow generation
Productivity initiatives
Reducing carbon footprint
Bolt –on growth initiatives
Outlook 2011
18