Titan Cement Slows with U.S., European Construction Markets in Third-Quarter 2010

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Researched by Industrial Info Resources (Sugar Land, Texas)--Titan Cement Group (OTC:TITCF) (Athens, Greece), a worldwide cement industry leader, reported declines in revenues and profits for the third quarter of 2010, as economic devastation in Greece and a slow construction industry in the U.S. more than offset progress in the eastern Mediterranean and southeast Europe. Net profits for the quarter were reported to be 30 million euros ($40.14 million), a 32.28% decrease from third-quarter 2009.

Titan officials were quick to point out that results were much flatter when using the EBITDA measurement, which is defined as earnings not including deductions made for income taxes, interest expense, depreciation and amortization. Using this method, profits for the quarter stood at 98.9 million euros ($132.33 million), a 2.17% increase from the same period last year.

Total revenue for the quarter was reported to be 347.7 million euros ($465.3 million), a 4.11% decrease from third-quarter 2010. Among the biggest factors for the results are the continued decline in activity in Greece, where the economic crisis has led to a contraction in private construction demand, and the slow economic recovery in the U.S., although demand remains stable in the mid-Atlantic region. Bright spots could be found in Kosovo, where operations are expanding; Turkey, where a quick recovery is boosting sales; and Egypt, where demand is high.

"Financial performance for the nine months of 2010 was solid, despite continued tough conditions in several of our key markets," said Bill Zarkalis, the chief financial officer for Titan, in a conference call.

Sales volumes were steady for cement and ready-mix, but aggregates dragged down the overall numbers:

• Cement sales volumes totaled 4.4 million tons, a 2.33% increase from third-quarter 2010.
• Aggregate sales volumes totaled 3.1 million tons, a 24.39% decrease from the same period last year.
• Ready-mix sales volumes totaled 0.97 million tons, a 3% increase from third-quarter 2010.

The downward activity in Greece and the slow activity in the U.S. are expected to continue apace for the remainder of 2010. However, results in the eastern Mediterranean region are expected to continue upward. The company believes electricity and fuel costs will continue to rise and have a negative impact on results, and it plans to focus on reducing debt and lowering costs.

"Market trends in our regions of operation are not anticipated to change significantly for the balance of 2010 and into 2011," said Dimitri Papalexopoulos, the managing director for Titan, in the conference call.

Industrial Info is tracking more than $500 million in active Titan projects in the U.S., including the $469 million construction of a cement plant in Castle Hayne, North Carolina. The project involves building a 2.3 million-ton-per-year cement plant adjacent to an existing ready-mix plant on a 1,868-acre site. For more information, visit Industrial Info's North American Metals and Minerals Project Database.

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