Titan Cement Shows Slight Improvement in Second-Quarter 2010, Despite Gloom in U.S., Greece

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Researched by Industrial Info Resources (Sugar Land, Texas)--Cement industry leader Titan Cement Group (OTC:TITCF) (Athens, Greece) reported steady gains in the second quarter of 2010, as strong sales in the southeastern European and eastern Mediterranean regions more than offset sales declines in the United States and Greece. Net income for the quarter was reported to be 43.5 million euros (US$55.34 million), a 14.17% increase from the same period last year.

Total sales for the quarter stood at 394.8 million euros (US$502.24 million), a 5.08% increase from second-quarter 2009. The cement and ready-mix segments cited gains in sales volumes. An interest expense reduction of 5.3 million euros (US$6.74 million) was among the factors positively impacting the bottom line. Net debt stood at 917 million euros (US$1.17 billion), a 7.19% decrease from the first quarter of this year.

Declining construction in the U.S. housing industry led to a significant drop in cement consumption; nonetheless, Titan's U.S. subsidiary, Separation Technologies LLC, reported a small increase in sales and profits. However, Turkey and Egypt saw increases in cement demand of 15% and 7%, respectively, based largely on Turkey's economic recovery and Egypt's extension in housing development programs.

"Financial performance in the first half of 2010 was solid, despite weak fundamentals prevailing in some of our key markets," said Bill Zarkalis, the chief financial officer for Titan, in a conference call.

"Titan is now reaping the benefits of several years of geographical diversification efforts," he later added.

Sales volumes saw an overall improvement, helped largely by strong cement sales:

• Cement sales volumes totaled 5 million tons, a 16.28% increase from the same period last year.
• Aggregate sales volumes totaled 3.4 million tons, a 5.56% decrease from second-quarter 2009.
• Ready-mix sales volumes totaled 1.1 million cubic meters, a 10% increase from the same period last year.

For the remainder of 2010, Titan officials expect activity to remain steady in southeastern Europe and to continue to increase in the eastern Mediterranean. The company does not expect to see any significant increase in U.S. construction in the second half of the year, but expects a 2.4% increase in cement consumption, considering the expected impact of the federal government's stimulus package on the housing market and public infrastructure. Activity and consumption are expected to continue to fall in Greece.

"The hesitant and uneven economic recovery is adversely affecting demand for building materials, especially in developed markets," said Dimitri Papalexopoulos, the managing director for Titan, in the conference call. "It is the emerging markets, for example in the eastern Mediterranean, that are expected to continue driving cement growth."

Industrial Info is tracking four active Titan projects worth more than $500 million in the U.S., including construction of the $469 million, 2.3 million-ton-per-year Ideal Cement Plant in Castle Hayne, North Carolina. The project is expected to kick off in May 2011 and to be completed in October 2012. For more information, visit Industrial Info's North American Metals & Minerals Project Database.

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