2012 Annual Report - Italcementi Group

short-term was negatively influenced by bad weather and, for the year, unfavorable
macroeconomic fundamentals, which could become structural in nature, had an even
greater effect.
In 2012, cement consumption fell by more than 22%, a percentage fall never seen in the
postwar period, to some 25.5 million metric tons. As pointed out more than once, the
increasing gap between demand for cement and investments in construction is primarily a
result of the shift in investments toward restructuring projects, while the proportion of civil
engineering projects, which require more cement, has declined.
The reduction in cement production was only slightly smaller and affected all geographical
areas, but was most acute in the central region.
This sharp fall in demand led to a reduction, albeit less substantial, in imports of cement
and clinker, while exports rose slightly, resulting in a notable increase in the surplus of
exports by volume.
Domestic production*
2012 2012/2011
(millions of metric tons)
(% change)
Northern Italy 12.8 (18.3)
Central Italy 4.6 (28.9)
Southern Italy 6.1 (22.2)
Italian islands 2.8 (12.7)
Total 26.2 (20.8)
* source: AITEC
In this scenario, Italcementi S.p.A. recorded revenue of 554.7 million euro, a reduction of
9.6% compared to 2011 (613.8 million euro), as a result of the sharp decline in sales
volumes, which was partially offset by considerably better prices.
Recurring EBITDA worsened from -0.5 million euro in 2011 to -5.1 million euro in 2012.
Better prices offset the considerable effect on recurring EBITDA of the contraction in sales
and the increase, albeit of a lesser degree, in variable costs. Among the latter, the
substantial increase in electricity prices was partly offset by savings achieved in other cost
items, in part by means of energy efficiency measures arising from the restructuring of the
production network, as well as from specific measures such as the increased use of
alternative fuels and substitute raw materials.
Under the production network restructuring plan, which started in 2012 and aims to
rationalize production, bringing it into line with the new market conditions, a series of initial
decisions were taken, such as the disposal of the Pontassieve cement plant in June and
the interruption of clinker production in two other plants (Porto Empedocle and Vibo
Valentia) in the third quarter. This plan, combined with measures affecting other production
units, led to significant savings in overheads, which partially offset the lower income from
CO 2 emission rights, compared to 2011, which benefited from higher rights trading and
income from reimbursement of “new entry” CO 2 quotas, awarded to three production plants
for the period 2008-2012.
For the plan launched in 2012 and “Project 2015”, announced in December 2012, an
amount of approximately 47 million euro was recognized under non-recurring expense.
The impact of this expense, in part offset by the gain from the sale of Pontassieve (about
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