Titan Group Financial Results Full Year 2008 · •Management focus emphasizes cash management; ......
Transcript of Titan Group Financial Results Full Year 2008 · •Management focus emphasizes cash management; ......
Analyst Conference Call
Athens – 24th February 2009
Titan Group
Financial Results – Full Year 2008
•This document contains forward-looking statements relating to the Group’s future business,
development and economic performance. It also includes statements from sources that have
not been independently verified by the Company.
•Such statements may be subject to a number of risks, uncertainties and other important
factors, 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 and
results 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 new
information, future events or otherwise.
• Performance Highlights
• Market Overviews
• Group Financial Results
• Outlook
Agenda
4
Performance Highlights Full 2008
• Q4 turnover +11.8%; +8% excl. FX; -2% excl. FX and acquisitions
• Q4 EBITDA grew by +8.0%; +6% excl. FX; -10% excl. FX and acquisitions
• Full year turnover + 5.4% to €1.578m; +8% excl. FX
• Full year like-for like turnover (excl. FX & acquisitions) flat; organic growth in SE Europe & East Med.,
offset the decline in the US and Greece
• Full year EBITDA down by -11.2% to €380m ; -10% excl. FX; -17% excl. FX and acquisitions
• Reported income tax close to zero due to extraordinary positive items
• Net Profit after tax and minority interests down by -13% to €208m
• Annual 2008 EPS at €2.53 (-11%)
• Recommended dividend at €0.42 per share (-44% vs. last year), reflecting cash preservation
• Management focus emphasizes cash management; working capital needs reduced by €57m in Q4
• Performance Highlights
• Market Overviews
• Group Financial Results
• Outlook
Agenda
6
Turnover & EBITDA by Region
Q4 2008
TURNOVER (€m)
18,0
47,1
186,5
125,6
162,3
64,0
68,6
153,4
117,4
144,9
0 50 100 150 200
E.MED.
SEE
USA $
USA €
GREECE
2007 2008
EBITDA (€m)
8,1
20,9
24,2
15,7
39,4
25,7
22,7
9,5
7,7
34,7
0 10 20 30 40 50
E.MED.
SEE
USA $
USA €
GREECE
2007 2008
37%46%
30%36%
38%47%
9%19%
• Egypt presented on a proportionate basis
-11%
-7%
-18%
+46%
+256%
-12%
-51%
-61%
+8%
+218%
Operating profitability in Q4 more than doubled in East Med., grew in SE Europe and
declined in the US and Greece
17%
13%
16%
5%
25%25%
28%
9%
7
Market Overview, Greece & W. Europe
Financial Results Full Year 2008
(1) Percentage change: 08 vs 07
633,06,3(4,2)
630,9
400
500
600
700
Turnover
2007 Organic
Growth
Turnover
2008 EBITDA
2007
Organic
Growth
EBITDA
2008
Scope
Impact
168,5
(0,7)
(24,3)193,5
100
120
140
160
180
200
220
Turnover (€m) EBITDA (€m)
1.0%(0.7)%
(12.6)%
Scope
Impact
(0,4)%
● Moderate decline of domestic cement volumes continues
● Aggregates & ready mix volumes supported by minor acquisitions
● Excess housing inventory weighs on demand
● Record increases in energy costs partially offset by better prices
● Final allocation of CO2 emission rights for 2008-12 will not affect production in current conditions
PCA Cement & Construction Market,
USA 2008
Cement consumption continues to deteriorate in the US and particularly in Florida
Cement Market Volumes(1)
Cement Consumption (PCA) YTD December '08 vs '07
Cement Consumption (PCA) YTD December '07 vs 06
(1) Source: PCA Consumption Trends report, data to end December '08
N.B.: PCA data are not necessarily representative of trends prevailing for Titan's operations
-21% -15%
FLORIDA VIRGINIA N. CAROLINA USA
-29% -10% -4% -10%
-26% -15%
9
483,919,7
(97,3)(31)
592,5
300
400
500
600
700
800
42,83,1
(64,0)(2,7)106,4
0
20
40
60
80
100
120
140
160
Market Overview, USA
Financial Results Full Year 2008
Turnover
2007
Organic
Growth
(16.4)%
Turnover
2008
Translation
Impact
3,3%
EBITDA
2007
Organic
Growth
(60,2)%
EBITDA
2008
Translation
Impact
2,9%
(5.2)%
Scope
Impact
(2,6)%
Scope
Impact
(1) Percentage change: 08 vs 07
● Cement volumes decline continued
● Deepening of the crisis of housing market affects volumes across all products
● Uncertain time of recovery – no signs of stabilization in key markets
● Moderate price erosion in $ terms
● Positive contribution from Ready Mix and aggregates acquisitions
Turnover (€m) EBITDA (€m)
1010
Lake Belt - Update
● In 2007, the US District Court for the Southern District of Florida invalidated permits for
mining Lake Belt
● In May 2008, the Court of Appeals in Atlanta reversed that order and remanded the case
back to the District Court for reconsideration
● In January 2009, the same District Court still found basis to cancel all 2002 permits
● Decision affects all competitors in the area; Titan plans to appeal again
● Impact on Titan’s 2009 results mitigated by inventory position and sluggish demand
● Cost effective contingency plans to maintain Pennsuco production
● The US Army Corps of Engineers is continuing to develop its Environmental Impact Study
(EIS) – expected to be issued in 2009, as a basis for a longer term permit in Lake Belt
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105,30,2
8,5
(0,4)97,0
80
90
100
110287,33,675,2
(1,2)
209,7
100
120
140
160
180
200
220
240
260
280
300
Market Overview, SE Europe
Financial Results Full Year 2008
(0.6)%
1.7%
(0,5)%
0,2%
Turnover
2007
Organic
Growth
Turnover
2008 Translation
Impact
EBITDA
2007
Organic
GrowthEBITDA
2008
Scope
Impact
8,8%
Translation
Impact
35.8%
Scope
Impact(1) Percentage change: 08 vs 07
• Demand grew in major markets
• Continued expansion in Albania in preparation for completing new cement plant in early 2010
• Prices increases followed energy costs surge
• Draft CO2 emission rights allocation in Bulgaria likely to have no impact in production
EBITDA (€m)Turnover (€m)
12
Market Overview, Eastern Med.
Financial Results Full Year 2008
174,288,8
24,4
(2,7)63,7
50
70
90
110
130
150
170
(4,2)%
63,628,4
5,3
(1,2)
31,1
10
20
30
40
50
60
70
(3,8)%
91,4%
Turnover
2007
Organic
Growth
Turnover
2008 Translation
Impact
EBITDA
2007
Organic
Growth
EBITDA
2008
Translation
Impact
139.4%
(1) Percentage change: 08 vs 07
Scope
impact
38,2%
Scope
impact
17%
• Scope expansion boosts turnover and profitability
• Volume growth maintained in Egypt
• In Egypt prices covered increased costs of energy and raw material
• Exports slowdown from Turkey challenges surplus absorption and applies downward pressure on
export prices and potentially on domestic prices
Turnover (€m) EBITDA (€m)
• Performance Highlights
• Market Overviews
• Group Financial Results
• Outlook
Agenda
14
15,6
19,9
5,9
17,218,6
5,4
Cement (tn m) (1) Aggregates (tn m) Ready-mix (m3 m)
3,9
4,8
1,5
4,2 4,5
1,2
Cement (tn m) (1) Aggregates (tn m) Ready-mix (m3 m)
Key Sales Volume
Full Year 2008
+10% (3)
-7%
-8%
Full Year4th Quarter
+8% (2)
-5%
-17%
20072008
(1) Cement sales include clinker and cementitious materials
(2) % in boxes represents performance versus last year
(3) Includes Egypt and Turkey at 100%, even when accounted for on a proportionate basis
Cement volume growth is driven by SE Europe (organic) & East Med (organic +
acquisitions). Volumes decline in other segments reflects downturn in the USA & Greece
15
380,0
31,0
(74,6)(4,4)
428
200
250
300
350
400
450
500
550
Group Turnover and EBITDA –
Full Year & Q4 2008
Full Year
1578,4(1,9)(35)1496,9 118,4
800
900
1000
1100
1200
1300
1400
1500
1600
1700
1800
Turnover
2007
Scope
ImpactTurnover
2008Organic
Growth
Translation
Impact
-0.1% 7,9%
EBITDA
2007 Scope
Impact
Organic
Growth
-17.4%
Translation
Impact
7,3%
28.6% 24.1%EBITDA Margin %
-1,0%
394,936,1
(8,3)14353,1
100
200
300
400
4% -2.4%
Turnover
Q4 07Organic
Growth
Turnover
Q4 08
Translation
Impact
90,813,3
(8,2)1,6
84,1
50
70
90
110
130
EBITDA
Q4 07
Translation
Impact
Organic
Growth
EBITDA
2008
16%1,8%
23.8% 23.0%EBITDA Margin %
Scope
ImpactScope
ImpactEBITDA
Q4 08
Q4
-9,7%Turnover €m
EBITDA €m10,2%
7,8%
7.8%
-10.1%
6.3%
-2.3%
Group Turnover and EBITDA benefited by organic growth in S.E. Europe/Egypt and by acquisitions
in East Med., despite the negative organic growth in the US and Greece
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Financial Highlights
Full Year & Q4 2008
Net profit after tax for full year has been impacted negatively by the increased D&A
and financing costs, offset by the zeroed income tax due to one-off items (reversal of
provision in Greece, tax credits in Bulgaria, lower tax expense from the US and lower
deferred taxes in Greece because of new lower tax rates in 2010-14)
394,9 11,8% Turnover 1.578,5 5,4%
90,8 8,0% EBITDA 380,0 -11,2%
23,0 -0,8pts EBITDA Margin (%) 24,1 -4,5pts
30,6 -41,3% Earnings Before Tax and minorities 210,0 -30,1%
45,0 -3,1% Net Profit after Taxes and Minorities 208,2 -13,2%
Share Price(1)
13,9 -55,4%
ASE Index(2)
1.786,51 -65,5%
Dividend per share 0,42 -44,0%Notes:
(1)+(2) Share Prices and Index Value on 31/12/08
Q4 2008 Full Year 2008
2008
Var 08 vs
07 2008
Var 08
vs 07
17
Group Net Profit after Tax
Full Year 2008
NPAT
2007Depn. Minority
Interests
NPAT
2008
InterestOrganic
EBITDA
Growth
Taxes FX Diff.
€m
Scope
Changes &
Other
Other
Group benefits from significantly lower taxes reflecting lower earnings in US and one-off
tax related items with positive impact
208,2(1,5)2,716,8
(6,5)
(16,1)
(74,6)56,2
(8,5)239,7
140
160
180
200
220
240
260
280
300
18
Foreign Currency Rates
Full Year 2008
Balance Sheet and P&L impacted by USD vs Euro variance
Variance
BALANCE SHEET 31/12/2008 31/12/2007
31/12/08 vs
31/12/07
€1 = USD 1,39 1,47 5%
€1 = EGP 7,68 8,12 6%
1USD=EGP 5,51 5,52 0%
€1 = RSD 88,60 79,24 -12%
1USD=JPY 90,64 112,04 19%
€1 = TRY 2,15 1,72 -25%
P&L Ave 12M 08 Ave 12M 07Ave 12M 08 vs
12M 07
€1 = USD 1,47 1,38 -7%
€1 = EGP 8,02 7,77 -3%
1USD=EGP 5,45 5,64 3%
€1 = RSD 81,91 80,09 -2%
1USD=JPY 102,66 117,63 13%
€1 = TRY 1,91 1,78 -7%
P&L Ave Q4 08 Ave Q4 07Ave Q4 08 vs Q4
07
€1 = USD 1,32 1,45 9%
€1 = EGP 7,30 8,01 9%
1USD=EGP 5,54 5,53 0%
€1 = RSD 84,87 78,84 -8%
1USD=JPY 96,15 113,13 15%
€1 = TRY 2,03 1,73 -17%
Bulgarian Leva fixed at €1 = BGN 1,956
No change in €/MKD exchange rates
A negative variance represents a devaluation of the base currency vs. the Euro€/TRY budget rates were provided for RP1 2008
19
Consolidated Balance Sheet
Full Year 2008
CAPEX and Acquisitions were the most significant impacts on the Balance Sheet, funded through
increase in Net Debt
(€ m)
Balance Sheet 2008 2007 08 vs 07
Fixed Assets and Investments 2496 1641 855
Net Current Assets
Inventories 285 226 59
Receivables and Other Prepayments 316 288 28
Securities 3 3 (0)
Other short term liabilities (269) (194) (75)
335 323 11
Net Debt
Cash 95 167 (73)
Long Term due to Banks (945) (590) (355)
Short term bank liabilities (263) (146) (117)
(1.114) (569) (545)
Long Term Liabilities and Provisions
Provisions (64) (60) (4)
Deffered tax provision (204) (124) (80)
Other long term liabilities (14) (16) 2
(283) (200) (83)
Minorities (38) (22) (16)
Shareholders Equity 1396 1173 223
20
562
498
414 411
494
417394
363
455
392
327
524
582
529
569 565
1058
11331114
498
300
400
500
600
700
800
900
1000
1100
1200
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Net Debt as of 31.12.08
20052004
€m
Consolidated Net Debt
2006 2007 2008
Increase of Net Debt by € 545m since the beginning of 2008 mainly due to financing
acquisitions and capex
21
Sources and Uses of Cash
Full Year 2008
€ m
Net FX
Impact
EBITDA
2008Working
Capital &
other
CAPEX
& investments
Interest, Tax,
Dividends &
Share buy backs
Increase in
Net Debt
31.12.08
(545)(57)(226)
31
(587)380,0
-600-550-500-450-400-350-300-250-200-150-100
-500
50100150200250300350400450500
Capex
209m
Debt
acquired
Acquisitions and Capex and represent the main use of cash in 2008
In Q4, working capital needs decreased by €57m
Acquisitions
378m
(86)
• Performance Highlights
• Market Overviews
• Group Financial Results
• Outlook
Agenda
23
2009 Outlook
• The unprecedented global financial crisis spills over into the real economy
• The world has changed and we are adapting to the new realities
• Focus on generating positive free cash flow and repaying debt
• Drive production costs and SG&A expenses down
• Limit new capex; complete investment in value generating sites in Egypt & Albania
• US demand outlook remains negative; PCA forecasts cement consumption -13% vs. 2008
• Greek demand expected to decline faster vs. 2008
• Volumes in Egypt likely to increase moderately; 2nd line in Egypt goes live in Q4 09
• Demand in SEE markets will slow down sharply and could decline
• Short-term market outlook in Turkey is challenging
• Fuel prices decline, if sustained, will have a positive impact