View
37
Download
0
Category
Preview:
Citation preview
Italcementi Group Exane BNPP – 1 April 2014
“New Decouplings”
Giovanni Ferrario, C.O.O.
Giovanni Maggiora, C.F.O.
9th Exane BNPP Basic Material Seminar London, 1 April 2014
Italcementi Group Exane BNPP – 1 April 2014
The Group at the end of 2013
2
51%
10%
21%
13%
5%
Rec. Ebitda by Geography: 631M€ Revenues by Geography
After eliminations
Revenues by Business: 4.2B€
64%30%
6%
Ready-Mix &
Aggregates
Others
Cement
&
Clinker
Central
Western
Europe
Emerging
Europe,
North Africa,
Middle East
Asia
North America
38%
9%
41%
12%
Central
Western
Europe
Emerging
Europe,
North Africa,
Middle East
Asia
North
America
Central
Western
Europe
Emerging
Europe,
North Africa,
Middle East
Asia
North
America
14.5
13.2 4.3
10.5
Cement & Clinker Sales Volumes: 43mt/y
(*) Excludes ~5mt/y capacity through companies consolidated at equity method
Trading & Others
Central
Western
Europe
Emerging
Europe,
North Africa,
Middle East
Asia
North
America
22
18
7
13
Cement Capacity: 60 mt/y (*)
Trading &
Elim.
0.6
Italcementi Group Exane BNPP – 1 April 2014 3
131
9274
142
167182
2007 2010 2013
Developed Markets Emerging Markets
CAGR-1.7% CAGR
-0.4%
“Decouplings” in Italcementi Group “core” markets: two
distinct phases since 2007
273 259 256
5.7%
-11.1% -6.9%
2.9%
Italcementi Group Markets (*), mt
* Estimated domestic cement consumption
From
a “perfect” Developed
vs. Emerging markets
decoupling in the
2007-10 period
to
a more mixed trend
inside the two clusters
in 2010-13
Italcementi Group Exane BNPP – 1 April 2014
Increase in volatility requires more granular view inside each
cluster
2007 2009/10 2009/10 → 2013 2014 onwards
Developed markets
entering downturn
Higher speed in
construction -bubble
countries (US/Spain)
4
Developed markets
differentiating:
• GDP recovery
dynamics (US vs.
Europe)
• Euro-driven N/S
divide in Europe
• Market-specific
competition factors
• Industry restructuring
initiated (Italy, Spain)
Emerging markets not a
“one size fits all” game
• Volatility – D/S
balance and
margin pressure
• Increasing socio-
political turmoil
• China: a game of its
own
Emerging markets still
riding uniform growth
wave
Ongoing wave of
capacity increases
undermining future
profitability
Italcementi Group Exane BNPP – 1 April 2014
2013 vs. 2007 Group volumes and Rec. Ebitda
in Developed Markets
5
Rec. EBITDA in key countries – M€
Domestic market refers to Italcementi market area
(*) Industrial operations, excluding trading and other activities
310
866
(704) (159)
(58) 105
258
2
RecurringEBITDA
2007
Volume Price VariableCosts
Fixed Costs OtherOperating
Costs
Scope & FX RecurringEBITDA
2013
Rec. Ebitda var. by driver – M€ (*)
CAGR 07-10 -5.9% -9.9% -22.7% -11.3%
CAGR 10-13 -0.3% -13.8% -22.7% +3.7%
North America already past cyclical trough
France resilient with lower volume volatility
Italy at Rec. Ebitda breakeven after strong
network restructuring
Volume effect key driver of mature markets
contribution to Group EBITDA
Pricing power resilient to volume drop but
insufficient to offset variable cost inflation
Strong reaction over the years targeting fixed
and variable cost base
-18%
-60%
-39%-31%
-53%
-79%
-22%
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
France /Belg. Italy S./N. Spain North America
Δ ITC Sales
Δ Domestic Mkt
2013 vs.‘07 cement volumes %Δ: key markets
398
192
89128
266
-15 -355
-50
50
150
250
350
450
France /Belgium
Italy Spain North America
2007 2013
Trough in 2009
13M€
Italcementi Group Exane BNPP – 1 April 2014
231
104
6443
110
143
28
52
0
100
200
300
Egypt Morocco India Thailand
2007 2013
2013 vs. 2007 Group volumes and Rec. Ebitda
in Emerging Markets
6
Rec. EBITDA in key countries – M€
Domestic market refers to Italcementi market area
(*) Industrial operations, excluding trading and other activities
Rec. Ebitda var. by driver – M€ (*)
564
348
(134) (337)
(73) (75)
392
11
RecurringEBITDA
2007
Volume Price VariableCosts
Fixed Costs OtherOperating
Costs
Scope & FX RecurringEBITDA
2013
Of which:
Turkey (47)
Peak in 2010
271M€
CAGR 07-10 +12.8% +4.4% +7.1% +1.6%
CAGR 10-13 +0.7% +0.7% +1.4% +8.5%
Volume contraction mainly in Egypt (new
entrants) and Bulgaria
Price actions compensate strong cost base
pressure driven by political climate (Egypt)
and by energy cost inflation (Asia)
New plant drives strong improvement in
results in Morocco, despite new entrant
Significant impact from scope (divestiture of
Turkey activities) and FX
-33%
5%
30%
-3%
47% 16%
28%
34%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
Egypt Morocco S. India Thailand
Δ ITC Sales Δ Domestic Mkt
2013 vs.‘07 cement volumes %Δ: key markets
Italcementi Group Exane BNPP – 1 April 2014
“Decouplings” to continue as markets seek new equilibria
2007 2009/10 2009/10 → 2013 2014 onwards
Developed markets
entering downturn
Higher speed in
construction -bubble
countries (US/Spain)
Emerging markets still
riding uniform growth
wave
Ongoing wave of
capacity increases
undermining future
profitability
7
Developed markets
differentiating:
• GDP recovery
dynamics (US vs.
Europe)
• Euro-driven N/S
divide in Europe
• Market-specific
competition factors
• Industry restructuring
initiated (Italy, Spain)
Emerging markets not a
“one size fits all” game
• Volatility – D/S
balance and
margin pressure
• Increasing socio-
political turmoil
• China: a game of its
own
“New normal” for each
Developed market:
Infrastructural needs
vs. financing (Public /
Private)
Renovation vs. new
build
Industry restructuring
to continue?
Emerging markets growth
moderating and more
volatile
Country specific
dynamics to dominate
Italcementi Group Exane BNPP – 1 April 2014
Developed markets: domestic cement consumption North America vs. other “core” ITC
Index number 2007 = 100
Steady, yet moderate,
recovery pace in
North East North
America (ITC area)
Resilient demand in
France/Belgium, with
positive medium term
growth prospects
Italy recovery to be
driven by
infrastructure and
public works
8
10
20
30
40
50
60
70
80
90
100
110
2007 2008 2009 2010 2011 2012 2013 2014 F 2015-17F 2018 F
N. America (ITC Area)
France & Belgium
Italy
Spain (South and North)
Italcementi Group Exane BNPP – 1 April 2014
North America
Mkt chg vs. 2012
>+10%
+5 to+10%
-5 to +5%
-5 to -10%
<-10%
9
15
17
19
21
23
25
27
29
2007 2008 2009 2010 2011 2012 2013 2014F 2015-17F 2018F
Cement consumption – mt, Italcementi area
Strong annual gains in overall home
sales to translate in new home
construction, given very lean inventories
Infrastructure / road refurbishment
spending, enabled by improving State
finances and TIFIA funding
Continuous focus on improving
operating leverage and KPIs
Consolidate “close to plants”
market shares to ensure logistic
efficiency
Leverage product innovation and
service excellence
Consumption per
capita 185 KG
Italcementi
Area
Key actions
Italcementi Group Exane BNPP – 1 April 2014
France/Belgium – Resilient overall, with growth potential from
projects
10
15
17
19
21
23
25
27
29
31
33
2007 2008 2009 2010 2011 2012 2013 2014F 2015-17F 2018F
Cement consumption - mt
Public rail transport network (205
km of new lines, 72 new stations,
tunnels...)
Residential (35,000 additional new
units per year, 35,000/y
refurbishment)
New university campus
Expected cement additional
average yearly consumption:
up to 1 mt/y
over 2015-2030 period
An example: “Grand Paris” project
Consumption per
capita 330 KG
Key actions
Push product and service innovation
through ready-mix
Strongly positioned in
Ile-de-France to exploit Grand Paris
development
Continue fixed costs efficiency
Italcementi Group Exane BNPP – 1 April 2014
Italy: accumulated infrastructural needs to sustain
medium-term recovery
11
15
20
25
30
35
40
45
50
2007 2008 2009 2010 2011 2012 2013 2014F 2015-17F 2018F
Cement consumption - mt
Railways
Highways
Subways
Major strategic infrastructure projects (2014-20)
TORINO /
LIONE
GENOVA
MILANO
PEDEMONTANA
LOMBARDA
VERONA-
BRENNERO
PEDEMONTANA
VENETA
LIVORNO /
CIVITAVECCHIA
SASSARI /
OLBIA
BOLOGNA /
FIRENZE
ROMA /
LATINA
SS106
CT-RG
AG-CL
SA-RC
Consumption per
capita 365 KG
Key actions
Long term sustainable and cost
competitive “core plants” network (new
Rezzato operating by end of 2014)
Significant overhead reduction
Product / service innovation to serve
changing end user markets mix
Italcementi Group Exane BNPP – 1 April 2014
Emerging markets: domestic cement consumption Volatility in troubled political scenarios, but favorable medium term perspectives
Egypt to resume growth
pattern thanks to
stabilized political
scenario and sustained
Foreign Direct
Investment support
Morocco to recover after
2012-13 slowdown
Medium long term
growth fundamentals in
Thailand/India despite
current political
uncertainties
Index number 2007 = 100
12
80
100
120
140
160
180
200
2007 2008 2009 2010 2011 2012 2013 2014F 2015-17F 2018F
Egypt
South India
Thailand
Morocco
Italcementi Group Exane BNPP – 1 April 2014
North Africa
13
Egypt Cement consumption - mt Morocco Cement consumption - mt
5
7
9
11
13
15
17
19
2007 2008 2009 2010 2011 2012 2013 2014F 2015-17F 2018F15
25
35
45
55
65
75
2007 2008 2009 2010 2011 2012 2013 2014F 2015-17F 2018F
New
Capacity
Political
uncertainty
New
Entrant
“National”
Market
Model
Fuel
Shortages
Massive
new
capacity /
New
Entrants
Leverage strong and sustainable cost
position
Improve central market presence with
Jorf grinding center (operational early
2015)
Expand geographical presence with
entry into the North (TBD)
Renewable energy projects development
New Coal grinding + alternative
fuels to diversify fuel mix from gas
Wind Farm project to secure long
term power availability (Gulf El Zeit)
Consumption per
capita 595 KG
Consumption per
capita 455 KG
Key actions Key actions
Italcementi Group Exane BNPP – 1 April 2014
Asia
14
Thailand Cement consumption - mt South India Cement consumption - mt
15
25
35
45
55
65
75
85
95
105
2007 2008 2009 2010 2011 2012 2013 2014F 2018F15
20
25
30
35
40
45
2007 2008 2009 2010 2011 2012 2013 2014F 2015-17F 2018F
Massive new capacity /
New Entrants
South Market
Slowdown
Political
uncertainty
Market
Recovery
Strengthen cost competitiveness
(WHRS)
Develop premium brand positioning
(i.nova) and product service
innovation
Current capacity: all “fundamentals” to
compete secured (e.g. reserves,
technology, logistics, brand innovation,
low capacity saturation to reach break-
even at Rec. Ebitda level)
Enlarge market footprint (Solapur
grinding, Cochin terminal)
Secured future organic development
(Gulbarga land)
Consumption per
capita 510 KG
Consumption per
capita 265 KG
Key actions Key actions
Italcementi Group Exane BNPP – 1 April 2014
6
150
116
92
107
140
2013
2012
2011
2010
2009
2008
2007-2013 Cost saving results, M€
156
272
364
610
NB: does not include price variation (*) Net of 15M€ maintenance cost increase in Egypt
Self help: actions to reduce break-even Constantly exceeded announced targets through industrial efficiencies, labor,
maintenance and other fixed costs reduction
470
Steady-state
savings vs. 2007
15
65*
2014 Target
Italcementi Group Exane BNPP – 1 April 2014
Capital allocation priorities 2014 focused on efficiency projects (key revampings, coal grinding capacity) and
“asset-light” market coverage initiatives (cement grinding units, terminals).
Greenfield expansion to restart in 2015-16 according to cash generation
Devnya
1.5mt/y
~ 160M€
Rezzato
1.3mt/y
~ 150M€
Gulbarga
3.0mt/y
Solapur
Grinding
~ 35M€ Full Cycle Plant Revamping
Greenfield Full Cycle Plant
Light Investments
Efficiency Projects
Cochin
Terminal
~ 8M€
2015
2015
2
0
1
5
T
B
D
T
B
D
Jorf Lasfar
Grinding
~15M€
2015
Operational availability Expected 2014 Capex spending: ~460 M€
Morocco
TBD
2014
Kattameya
and Suez
Coal Plants
~40M€
Shymkent
1.2mt/y
~ 45M€
2015
16
Italcementi Group Exane BNPP – 1 April 2014
Capacity management Ready to leverage available efficient capacity after recent investment cycle and
continue to focus on strengthening our industrial network
54%
54%
(*) Excludes ~5mt/y capacity through companies consolidated at equity method
17
22
718
13
14
413
10
CWE NA EENAME Asia
Leverage existing
capacity through cycle
recovery
Reorganize excess
capacity where
necessary
Concentrate on core
plants, revamping
where necessary
Leverage available
capacity
Address legacy wet
capacity
Expand state-of-the-
art clinker capacity to
selectively follow
market growth
Emerging Markets Mature Markets
Available capacity:
~17mt
2013 Cement Capacity: ~60mt *
Outer circle: 2013 Cement and Clinker sales volumes: 43mt
Italcementi Group Exane BNPP – 1 April 2014
In a nutshell – short/medium term results improvement drivers More “granular” view and specific approach
18
Industrial
Leadership Growth
Sustainable Development
Innovation
Self help initiatives to
continue lowering
break-even point
Benefits from “core”
markets consumption
evolution,
including innovation
in products/services
Disciplined expansion
in selected markets
maintaining solid
financial profile
Italcementi Group Exane BNPP – 1 April 2014
Disclaimer This presentation contains forward-looking statements regarding future events and future results of Italcementi and its
affiliate Ciments Français that are based on the current expectations, estimates, forecasts and projections about the
industries in which Italcementi and Ciments Français operate, and on the beliefs and assumptions of the management
of Italcementi and Ciments Français. In particular, among other statements, certain statements with regard to
management objectives, trends in results of operations, margins, costs, return on equity, risk management,
competition, changes in business strategy and the acquisition and disposition of assets are forward-looking in nature.
Words such as ‘expects’, ‘anticipates’, ‘scenario’, ‘outlook’, ‘targets’, ‘goals’, ‘projects’, ‘intends’, ‘plans’, ‘believes’,
‘seeks’, ‘estimates’, as well as any variation of such words and similar expressions, are intended to identify such
forward-looking statements. Those forward-looking statements are only assumptions and are subject to risks,
uncertainties and assumptions that are difficult to predict because they relate to events and depend upon
circumstances that will occur in the future. Therefore, actual results of Italcementi or of its affiliate Ciments Français
may differ materially and adversely from those expressed or implied in any forward-looking statement and neither
Italcementi nor Ciments Français does assume any liability with respect thereto. Factors that might cause or
contribute to such differences include, but are not limited to, global economic conditions, the impact of competition, or
political and economic developments in the countries in which Italcementi and Ciments Français operate. Any
forward-looking statements made by or on behalf of Italcementi or of Ciments Français speak only as of the date they
are made. Neither Italcementi nor Ciments Français does undertake to update forward-looking statements to reflect
any change in their expectations with regard thereto, or any change in events, conditions or circumstances which any
such statement is based on. The reader is advised to consult any further disclosure that may be made in documents
filed by Italcementi with Borsa Italiana S.p.A (Italy) and by Ciments Français with the Autorité des Marchés Financiers
(France).
The Manager in Charge of preparing Italcementi S.p.A financial reports, Carlo Bianchini, hereby certifies pursuant to
paragraph 2 of art. 154-bis of the Consolidated Law on Finance (Testo Unico della Finanza), that the accounting
disclosures of this document are consistent with the accounting documents, ledgers and entries.
This presentation has been prepared solely for the use at the meeting/Analyst Meeting with investors and analysts at
the date shown below. Under no circumstances may this presentation be deemed to be an offer to sell, a solicitation
to buy or a solicitation of an offer to buy securities of any kind in any jurisdiction where such an offer, solicitation or
sale should follow any registration, qualification, notice, disclosure or application under the securities laws and
regulations of any such jurisdiction.
19
Recommended