2011 Annual Report - Italcementi Group

the negative trend in sales volumes. The improvement in sales prices brought healthy
progress in recurring EBITDA, which was also supported by management of CO 2 emission
rights, valorization of energy efficiency credits (white certificates), income from power
interruptability and savings on fixed costs as a result of measures already taken and due to
continue in 2012. This was also achieved through a re-organization of HQ operations and
the production and sales networks, providing for absorption of personnel surpluses with
recourse to a series of welfare benefits. In connection with these measures, a net amount
of 8.1 million euro was recognized in 2011 under non-recurring expense. Among negative
effects, apart from the fall in sales volumes, there was an increase in variable costs, largely
due to the rise in energy costs, counterbalanced by continuous efficiency improvements in
production through use of alternative fuels, replacement raw materials and improvements in
specific use.
Overall operating results reflected the impact of the consolidation, as from the beginning of
the year, of the ready mixed concrete and aggregates sector, with negative recurring
EBITDA. The ready mixed concrete market has been experiencing a severe crisis for a
number of years. In addition to the decline in demand, again a notable feature of 2011,
other factors were the difficulties encountered by small and medium construction
companies in obtaining credit. On a like-for-like basis, although Group sales recovered in
the fourth quarter, they were down 2.7%, as a result of the general market decline, offset in
part by the lively sales trend in major works. Trends in aggregates volumes were similar: a
reduction of 4.1% for the year, with growth reported in the fourth quarter. In 2011, after regaining
full control of operations, the Group drew up a plan to recover high levels of
industrial efficiency and organizational effectiveness. To achieve this, a re-organization will
begin in 2012 with the disposal of non-strategic plants, with recourse to welfare benefits to
mitigate the impact on employees (recourse to state-subsidized layoff for a two-year
period). Non-recurring expense was also provided for the ready mixed concrete and
aggregates sector, for 14.6 million euro.
France – Belgium
In France and in Belgium cement consumption made good progress in 2011 thanks to very
favorable meteorological conditions at the start and end of the year, and a healthy trend in
residential building and public works.
In France, Group overall cement and clinker sales volumes (including marginal export
volumes) increased by 6.4%; in Belgium cement sales volumes grew by 10.0% (+8.4%
including cement and clinker exports).
Average sales prices fell slightly, in both France and Belgium, in part due to growing
competitive pressures.
Operating results in the cement sector slackened as operating expenses rose, especially
for energy and maintenance, and as sales prices showed a slight decrease. These trends
were offset only in part by the increase in sales volumes.
In France Group ready mixed concrete sales volumes progressed by 10.5%, while
aggregates were up 5.6%; in Belgium, on a like-for-like basis , ready mixed concrete sales
volumes increased by 15.6%, while the rise in sales of aggregates was 2.7%. This positive
trend fuelled the improvement in operating results.
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