Report 2010 - Italcementi Group

2010 Annual Report
Presentation 6
Consolidated Annual Report Directors’ report 28
Corporate Governance Consolidated financial statements 68
Italcementi S.p.A. financial statements 158
At the end of March, the new 5,500 mt/day kiln line at the Yerraguntla plant began
production; cement production began in the fourth quarter. Group domestic cement sales
grew by 3.8%, while total cement and clinker sales were up 8.4%. Competitive pressures
tightened considerably due to the start-up of new production capacity; after the drop that
began in September 2009, average sales prices remained at a significantly lower average
level than in 2009, despite the gradual rise reported in the last four months of the year.
Operating results were sharply down on 2009 chiefly because of the fall in average sales
prices and, in the last quarter, the rise in the cost of fuel and electricity, counterbalanced
only in part by higher sales volumes and a favorable exchange-rate effect.
Cement consumption is expected to continue growing in 2011 on Group markets, but
competition will be fiercer due to new production capacity and the consequent pressure on
average sales prices.
Others
In China, the economy continued to grow, although the trend slowed in the second half of
2010. In a favorable scenario, our cement sales volumes rose by 11.2% (+9.4% for total
cement and clinker sales), while sales prices were affected by the start-up of new
competitor plants. Operating results decreased compared with 2009 due to the fall in prices
and rise in fuel costs, countered only in part by the increase in sales volumes and a
positive exchange-rate effect. In 2011 the market is expected to show further growth,
thanks to new public investment in infrastructure, but competition will be more aggressive.
In Kazakhstan, the rapid expansion of the construction sector in 2010 contributed to the
strong increase in cement consumption compared with 2009 (+10.5%). Despite competition
from imports, domestic cement sales volumes rose by 12.7% (+16.1% for overall cement
and clinker sales) with a very positive trend in prices. Despite the unfavorable dynamic in
operating expenses, especially for energy, a significant improvement was posted in
operating results.
CEMENT AND CLINKER TRADING
Total Cement
and Clinker Trading
Grinding centers 1
Trading terminals 3
RMC plants 2
Revenues Recurring
EBITDA
EBITDA EBIT
Capex Employees
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
Total 229.3 221.1 14.3 11.0 14.3 11.0 11.4 8.5 2.5 2.4 369 360
In 2010 intragroup and third-party cement and clinker sales volumes fell by 6.9%, largely as
a result of performance in the second half.
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