Regulatory News:
Vicat (Paris:VCT):
- Consolidated sales up +2.6% in the first three months of the
year, stable at constant scope and exchange rates (+0.2%)
- Positive price trends overall
- Limited impact from Covid-19 over the quarter as a whole,
but significant effects in France, Italy and India at the end of
the period
Consolidated sales
(€ million)
31 March 2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)*
Cement
319
302
+5.5%
+3.7%
Concrete & Aggregates
228
225
+1.4%
-2.1%
Other Products & Service
69
73
-5.6%
-7.2%
Total
615
600
+2.6%
+0.2%
Commenting on these figures, Guy Sidos, the Group’s
Chairman and CEO, said:
“The Group’s performance over the first quarter of 2020 was
solid despite a sharp slowdown at the end of the period in France,
India and Italy.
Faced with the sanitary crisis, the Group demonstrated its
flexibility and responsiveness by putting in place from the outset
protective measures for our colleagues, our clients and our
suppliers and introducing strong measures to cut costs, increase
control of our working capital requirements and reduce our
investments in line with the situation.
Industrial and commercial activity was maintained on almost all
sites, in line with market evolutions, and this has attenuated the
impact of the crisis.
Nevertheless, visibility remains particularly low for the rest
of the year, and a significative impact on first-half results and
ratios is to be expected from this exceptional situation.”
*Alternative performance measures (APMs), such as “at constant
scope and exchange rates”, “operational sales”, “EBITDA”, “net
debt”, “gearing” and “leverage” are defined in an appendix to this
press release.
Important information:
- In this press release, and unless indicated otherwise, all
changes are stated on a year-on-year basis (2020/2019), and at
constant scope and exchange rates.
- This press release may contain forward-looking statements. Such
forward-looking statements do not constitute forecasts regarding
results or any other performance indicator, but rather trends or
targets. These statements are by their nature subject to risks and
uncertainties as described in the Company’s annual report available
on its website (www.vicat.fr). These statements do not reflect the
future performance of the Company, which may differ significantly.
The Company does not undertake to provide updates of these
statements.
Further information about Vicat is available from its website
www.vicat.fr.
---------------------------------------------------------------------------------------------------------------------------------
In the first three months of 2020, the Vicat Group’s
consolidated sales came to €615.5 million, up +2.6% on a reported
basis and almost unchanged (+0.2%) at constant scope and exchange
rates compared with the same period of 2019.
The evolution in consolidated sales comprises a positive
exchange rates effect of +0.5%, a scope effect of +1.9%, relating
to the acquisition of Ciplan in Brazil, and an organic change of
+0.2%.
Operational sales advanced +3.0% on a reported basis and 0.8% at
constant scope and exchange rates. Developments in operational
sales by business were as follows over the first quarter:
- The Cement business posted a +6.0% increase on a reported basis
and a +4.4% increase at constant scope and exchange rates;
- The Concrete & Aggregates business posted a +1.8% increase
on a reported basis and a -1.7% decrease at constant scope and
exchange rates;
- In Other Products and Services, operational sales moved -5.4%
lower on a reported basis and -6.5% lower at constant scope and
exchange rates.
1. Consolidated sales in the three months ended 31 March 2020
by geographical region
1.1. France
(€ million)
31 March 2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Sales
211
225
-6.5%
-8.0%
After a start to the year that saw strong trends under
favourable macroeconomic and sector conditions, business activity
slowed abruptly following the introduction of lockdown measures on
17 March 2020. Industrial activity was never halted. However,
commercial activity has moved in line with the slow return of
markets that were stopped by the lockdown measures.
- In the Cement business, operational sales were down -2.7% over
the period. Volumes were more than 6% lower over the period, due to
the sharp slowing of business levels in the second half of March,
which is a historically dynamic month. Selling prices were higher
in the domestic market but fell in export markets.
- In the Concrete & Aggregates business, operational sales
were down -12.0% at constant scope and exchange rates. This
performance was the result of falls in volumes of -9% in Concrete
and -13% in Aggregates. The growth recorded in the first two months
of the year was not sufficient to offset the sharp downturn seen in
the second half of March. Selling prices were higher in both
Concrete and Aggregates.
- In the Other Products & Services business, operational
sales fell by -6.8%.
1.2 Europe (excluding France)
(€ million)
31 March 2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Sales
86
75
+14.7%
+7.4%
Sales in Europe (excluding France) in the three months to 31
March 2020 amounted to €86 million, up from €75 million in the same
period of 2019. This improvement in sales at constant scope and
exchange rates across the region resulted from strong growth in
Switzerland. This performance has largely offset the decline
recorded in Italy following the introduction of strict lockdown
measures in March.
In Switzerland, the Group’s consolidated sales rose by
+9.1% at constant scope and exchange rates, helped by a much milder
winter than in the previous year. Business in this country
continued as normal with no significant impact on sector conditions
from the epidemic.
- In the Cement business, operational sales grew by +11.9% at
constant scope and exchange rates in the quarter, with an increase
in selling prices and the positive impact of the mild winter on
volumes.
- In the Concrete & Aggregates business, operational sales
rose +22.0% at constant scope and exchange rates. This strong
growth resulted from a significant volumes increase in Concrete and
in Aggregates. Selling prices rose substantially in
Aggregates.
- In the Precast business, operational sales fell -2.6% at
constant scope and exchange rates. The decline was the result of
stiff competition in standardised products and a resumption in
orders from the national rail operator, which was limited by an
unfavourable product mix.
In Italy, consolidated sales fell -15.0% over the first
quarter. The impact of the health crisis was felt in a substantial
drop in volumes, of over -16.0%, whilst selling prices saw a slight
increase.
1.3 Americas
(€ million)
31 March 2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Sales
134
115
+16.6%
+11.4%
Reported figures for the region benefited from the favourable
effect of the consolidation of Brazil over the whole of the first
quarter of 2020. In 2019, Brazil was only consolidated from 24
January.
In the United States, the macroeconomic and sector
environment remained favourable. The strong performance enjoyed in
California more than offset the unfavourable weather conditions in
the South-East. The Covid-19 epidemic had had no significant impact
on sector conditions by the end of March. As a result, the Group’s
consolidated sales grew +11.2% at constant scope and exchange rates
(+14.6% on a reported basis).
- In the Cement business, operational sales grew by +14.8% at
constant scope and exchange rates over the first quarter of the
year. Volumes rose by more than 12% with strong growth in
California, thanks in particular to a favourable basis of
comparison, which offset the fall in the South-East caused by
unfavourable weather conditions. Selling prices saw the full
benefits of the increases recorded in 2019, rising in both
California and the South-East.
- In the Concrete business, operational sales moved up +12.9% at
constant scope and exchange rates. Volumes were nearly 10% higher
over the period, with growth in California offsetting the fall in
the South-East for the same reasons as in the Cement business.
Selling prices increased in both California and the
South-East.
In Brazil, consolidated sales were €30 million, an
increase of +24.4% on a reported basis and +11.9% at constant scope
and exchange rates (in 2019, the business was only consolidated
from 24 January). Conditions in the industry improved gradually, in
an environment that was not visibly affected by the health crisis
during the period.
- In the Cement business, operational sales were €24 million, an
increase of +11.1% at constant scope and exchange rates driven by a
significative increase in prices.
- In the Concrete & Aggregates business, operational sales
were €8 million, an increase of +16.1% at constant scope and
exchange rates. The marked increase in volumes at constant scope
was accompanied by a substantial increase in selling prices,
particularly in Aggregates.
1.4 Asia (India and Kazakhstan)
(€ million)
31 March 2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Sales
81
90
-10.3%
-10.5%
The Asia region benefited from a relatively positive overall
macroeconomic and sector conditions in the early months of the
year, although the impact of the health crisis had contrasting
effects from one region to another. Thus, Kazakhstan benefited from
favourable competitive conditions at the beginning of the quarter
as cement producers operated by Chinese workforces were forced to
shut down production due to Chinese lockdown measures. Conversely,
the industry in India was completely halted from 24 March as a
result of the government’s measures to tackle the pandemic.
In India, the Group posted consolidated sales of €69
million in the first quarter of the year, down -15.1% at constant
exchange rates. After a small increase in volumes at the beginning
of the quarter, the introduction of lockdown measures at end March
resulted in the total closure of the business and the shut-down of
all of the region’s production sites. As a result, over the
quarter, volumes dropped by nearly 10% and selling prices were down
year-on-year.
In Kazakhstan, the Group posted sales of €12 million, an
increase of +32.1% at constant exchange rates. That growth resulted
from an increase in volumes over the period as a whole, which
largely offset lower prices resulting primarily from price cuts
announced at the end of 2019. Over this period, the inability of
some operators to continue production operations, due to their
Chinese workforces being under lockdown, allowed the Group to
increase significantly its sales in the local market.
1.5 Mediterranean (Egypt and Turkey)
(€ million)
31 March 2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Sales
33
34
-1.1%
+0.6%
The Mediterranean region is affected by the deterioration in the
macroeconomic and sector situation in Turkey, although this is now
stabilising gradually. In Egypt, the security situation and the
competitive environment remained difficult throughout the
period.
In Turkey, sales came to €21 million, down -1.4% at
constant scope and exchange rates and -10.7% on a reported basis.
This slight contraction in business levels reflected the gradual
stabilisation of macroeconomic and sector conditions, although this
process was then affected by the government’s sanitary
measures.
- In the Cement business, operational sales moved -2.6% lower at
constant scope and exchange rates over the period as a whole. That
was due to a fall in volumes of over -6%.
- Operational sales in the Concrete & Aggregates business
rose +12.4% at constant scope and exchange rates over the period as
a whole. Volumes were up around +2% in both Concrete and
Aggregates.
In Egypt, consolidated sales totalled €12.2 million, up
+5.3% at constant scope and exchange rates and up +21.2% on a
reported basis as a result of the rise in the Egyptian pound. This
trend reflected the marked increase in volumes of over +18% in the
period as a whole, whereas selling prices were still lower than in
the year earlier period.
1.6 Africa
(€ million)
31 March 2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Sales
71
61
+16.1%
+16.1%
In the Africa region, the construction market is growing
in a market that has been bolstered by the price increases seen at
the end of 2019. Against this background, and helped by improved
operating conditions at the Rufisque plant, the Group was able to
take full advantage of favourable sector conditions at the start of
the year and the opening of its new grinding station in Mali.
- In Cement, operational sales rose +33.5% in Africa. This trend
was the result of an increase in Cement volumes of nearly +18%,
with strong growth in Senegal, and even more so in Mali following
the start-up of the new mill, largely offsetting the drop in
volumes in Mauritania. Selling prices in Senegal also rose
significantly given the price increases introduced in 2019.
- In Senegal, consolidated sales in the Aggregates business were
€7 million, a fall of -46.3% over the period. Volumes fell -43%
following the temporary freeze on government contracts that began
in the second half of 2019 and a transport strike in January and
February.
2. Profitability and financial position at 31 March
2020
2.1 Group profitability performance in the first quarter of
2020
Given the current circumstances, the Group has elected to
provide, on an exceptional basis, figures for its
profitability over the first quarter of 2020. It is important to
note that historically, and given the highly seasonal nature of the
Group’s business, EBITDA in the first quarter is not representative
of the full-year trend.
Group EBITDA in the first quarter was €57 million, from €58
million in the same period of 2019, a decline of -1.6% on reported
figures and -2.9% at constant scope and exchange rates. This
performance reflects improvements in operating profitability in
most regions, limited by the significant impact of the health
crisis in France and India during March.
2.2 Changes in Group financial position to 31 March
2020
At 31 March 2020, the Group’s shareholders’ equity was €2,486
million and net debt stood at €1,394 million, from €1,410 million
at 31 March 2019. On this basis, and taking account of IFRS 16,
gearing was 56.07%, from 57.44% at 31 March 2019. Leverage was
2.65x, from 2.85x at 31 March 2019.
Excluding IFRS 16, the reference still used for the calculation
of covenants, gearing at 31 March 2020 was 46.62% compared to
47.45% at 31 March 2019, and leverage was 2.53x, compared to 2.67x
at 31 March 2019.
It should be noted that the Group had confirmed financing lines,
not used and not allocated to the liquidity risk on treasury bills
at 31 March 2020 of €399 million, from €440 million at 31 December
2019, sufficient to cope with forthcoming repayments due.
3. Adjustment measures for the current circumstances
3.1 Cost-cutting programme and optimisation of working
capital
As announced at the Group’s AGM on 4 April, the Group rapidly
deployed a package of cost-cutting measures in countries where
business levels were significantly affected by the Covid-19
epidemic and by governmental measures to tackle the crisis.
Thus, in France, India and Senegal, the initial measures in the
reduction of fixed costs (control of the wage bill, reduction in
the use of outside contractors and a reduction in maintenance
costs) have netted approximately €24 million over the short
term.
Depending on the course of the epidemic, and its effects on
economic activity, similar or additional measures are likely to be
implemented at pace in affected regions.
Also, the full year impact of the decrease in fuel prices
(excluding volume effect) is expected to be around €23 million.
Lastly, with regard to working capital, optimisation measures
implemented will significantly reduce working capital at 30 June
2020 when compared to 30 June 2019.
3.2 Deferral of non-strategic investment
At present, the Group has put a freeze on its new investment
projects, it is nevertheless continuing its existing strategic
investments, notably in terms of energy substitution rates and
renewals of industrial facilities. Thus, the new kiln project at
Ragland in Alabama is continuing, although the timing of works
could be delayed as a result of sanitary measures and their effect
on the availability of suppliers.
Other investments, considered non-strategic, have been suspended
for the time being, pending better visibility on future conditions
in each of the regions concerned.
Considering all of these factors, the cash outflow for
industrial investment, is expected to be at a comparable level to
that of 2019.
4. Outlook for 2020
In 2020, macroeconomic conditions in all of the countries where
the Group is active are likely to be significantly affected by the
Covid-19 crisis, to varying degrees depending on health conditions
and the governmental responses.
At present, business is conducted within the strict framework of
the procedures adapted to the public health conditions in each
country where the Group is present. Within this framework, it is
important to note that:
- The twelve countries where the Group operates have been
affected by the Covid-19 epidemic, sometimes with timing
differences in the intensity of its impact;
- Business levels are highly volatile;
- The sharing of experience between countries allows good
practice and operating modes to be introduced to help meet the
demands of the situation in each country and ensure business
continuity where this is allowed.
The Group’s business has therefore continued at differing
levels:
- In France, after a sharp slowing in business levels at the
beginning of the lockdown, the activity is on a gradually improving
trend with the reopening of trading and, more slowly, of building
sites;
- In Switzerland, business levels are close to normal, thanks to
the strict respect of preventative measures on all construction
sites;
- In western Africa and the USA, business levels are also close
to normal, but the situation could change rapidly;
- Business levels in Brazil remain strong but with contrasting
situations across the country’s regions;
- In Turkey and Egypt, where macroeconomic conditions had already
deteriorated, the epidemic has not so far had a significant
impact;
- In Kazakhstan, activity levels have been particularly strong in
the early part of this year. The effects of recent lockdown
decisions could make themselves felt on business in the second
quarter;
- Lastly, business levels in Italy and India came to a virtual
standstill following the very strict lockdown measures introduced
by their respective governments between the end of March and end of
April. The Group received authorisation in the third week of April
for the gradual reopening of its production facilities in
India.
The gradual upturn in activity, particularly in France and
India, falling energy costs, the introduction of an ambitious
cost-cutting programme, the close attention paid to working capital
and, lastly, the scaling back of the initial capital expenditure
plan, are all factors that will help limit the impact that this
crisis will have on the Group’s results and its financial
situation.
Given all of these factors, the lack of visibility and the
high-level of volatility created by current conditions, the Group
expects a decrease in EBITDA over the full year.
Conference call
To accompany the publication of its sales at 31 March 2020, the
Vicat Group is organising a conference call in English that will
take place on 6 May 2020 at 3pm Paris time (2pm London time
and 9am New York time).
To take part in the conference call live, dial one of the
following numbers:
France: +33 (0)1 70 72 25 50 United Kingdom:
+44 (0)330 336 9125 United States: +1 323-994-2131
To listen to a playback of the conference call, which will be
available until 12 May 2020, dial one of the following
numbers:
France: 33 (0)1 70 48 00 94 UK: +44 (0) 207
660 0134 USA: +1 719 457 0820 Access code: 8426419#
Next report:
First-half 2020 results on 30 July 2020 after
the close.
About Vicat
The Vicat Group has over 9,000 employees working in three
core divisions, Cement, Concrete & Aggregates and Other
Products & Services, which generated consolidated sales of
€2.740 billion in 2019. The Group operates in twelve
countries: France, Switzerland, Italy, the United States,
Turkey, Egypt, Senegal, Mali, Mauritania, Kazakhstan, India and
Brazil. Some 64% of its sales are generated outside France.
The Vicat Group is the heir to an industrial tradition dating
back to 1817, when Louis Vicat invented artificial cement. Founded
in 1853, the Vicat Group now operates three core lines of
business: Cement, Ready-Mixed Concrete and
Aggregates, as well as related activities.
Vicat group - Financial data - Appendices
Definition of alternative performance measures
(APMs):
- Performance at constant scope and exchange rates is used
to determine the organic growth trend in P&L items between two
periods and to compare them by eliminating the impact of exchange
rate fluctuations and changes in the scope of consolidation. It is
calculated by applying exchange rates and the scope of
consolidation from the prior period to figures for the current
period.
- A geographical (or a business) segment’s operational
sales are the sales posted by the geographical (or business)
segment in question less intra-region (or intra-segment)
sales.
- Value-added: value of production less consumption of
materials used in the production process.
- Gross operating income: value-added, less staff costs,
taxes and duties (other than on income and deferred taxes) plus
operating subsidies.
- EBITDA (earnings before interest, tax, depreciation and
amortisation): sum of gross operating income and other income and
expenses on ongoing business.
- EBIT (earnings before interest and tax): EBITDA less net
depreciation, amortisation, additions to provisions and impairment
losses on ongoing business.
- Cash flow: net income before net non-cash expenses (i.e.
predominantly depreciation, amortisation, additions to provisions
and impairment losses, deferred taxes, gains and losses on
disposals and fair value adjustments).
- Free cash flow: net operating cash flow after deducting
capital expenditure net of disposals.
- Net debt represents gross debt (consisting of the
outstanding amount of borrowings from investors and credit
institutions, residual financial liabilities under finance leases,
any other borrowings and financial liabilities excluding options to
sell and bank overdrafts), net of cash and cash equivalents,
including remeasured hedging derivatives and debt.
- Gearing is a ratio reflecting a company’s financial
structure calculated as net debt/consolidated equity.
- Leverage is a ratio based on a company’s profitability,
calculated as net debt/consolidated EBITDA.
Breakdown of first-quarter 2020 sales by business
Cement
(€ million)
31 March
2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Volume (thousands of tonnes)
5,286
5,000
+5.7%
Operational sales
374
353
+6.0%
+4.4%
Eliminations
(55)
(51)
Consolidated sales
319
302
+5.5%
+3.7%
Concrete &
Aggregates
(€ million)
31 March
2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Concrete volume (thousands of m3)
1,873
1,807
+3.7%
Aggregates volume (thousands of
tonnes)
4,482
5,156
-13.1%
Operational sales
233
229
+1.8%
-1.7%
Eliminations
(5)
(4)
Consolidated sales
228
225
+1.4%
-2.1%
Other Products &
Services
(€ million)
31 March
2020
31 March 2019
Change
(reported)
Change (at constant scope
and exchange rates)
Operational sales
87
92
-5.4%
-6.5%
Eliminations
(18)
(19)
Consolidated sales
69
73
-5.6%
-7.2%
Breakdown of first-quarter 2020 sales by business &
geographical region
Cement
Concrete &
Aggregates
Other Products &
Services
Inter-sector
eliminations
Consolidated
sales
France
87
102
62
(41)
211
Europe (excluding France)
38
39
21
(12)
86
Americas
79
73
-
(18)
134
Asia
79
1
15
(1)
81
Mediterranean
27
11
2
(7)
33
Africa
63
7
-
(0)
71
Operational sales
374
233
87
(79)
615
Inter-sector eliminations
-55
-6
-18
79
-
Consolidated sales
319
228
69
-
615
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005754/en/
Investor relations contact: Stéphane Bisseuil: Tel. + 33
1 58 86 86 05 stephane.bisseuil@vicat.fr
Press contacts: Marie-Raphaelle Robinne Tel. +33 (0)4 74
27 58 04 marie-raphaelle.robinne@vicat.fr
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