6 - Vicat

EXAMINATION OF THE FINANCIAL POSITION AND RESULTS9.1. INTRODUCTION 9The consolidated cash flows from operations increasedto € 409 million compared with € 387 millionin 2009. The cash generated by operations (€ 403million) has widely funded the € 335 million of industrialinvestments made over the year. With a netfinancial indebtedness of € 988 million, the Groupdisplays, as at December 31, 2010, a sound financialstructure, with gearing as at this date of 38.6% comparedwith 31.4 % at the end of 2009.9.1.2. Elements having an impact on earningsAs at the date of registration of this RegistrationDocument, the Group considers that the principalfactors having a significant impact on its financialperformance are as follows.9.1.2.1. Elements having an impact on salesSeasonal factor1,301,000,60calculated from the seasonality of sales recordedduring the last five years. Thus, for a monthly averageequal to 1, the seasonality factor varies from0.73 on average in January to almost 1.23 on averagein June.0,730,83Seasonal factors of Vicat’s sales1,061,081,111,23jan. feb. mar. apr. may june july aug. sept. oct. nov. dec.1,140,901,061,100,980,77(a) Economic conditions in the countries where theGroup operatesThe materials produced by the Group - cement, concreteand aggregates - are major components of constructionand infrastructure in general.Demand for these products depends on the economicconditions specific to each country and market,which are in turn determined by the rate of demographicgrowth, the level of economic growth andthe level of urbanization. These factors condition thelevel of local public and private investments in residentialhousing and infrastructure, and therefore thesales achieved by the Group in each market where itoperates.The price levels applicable to each market are determinedby the production costs of existing operatorsand the competitive intensity of the product markets.(b) Seasonality factorsDemand in the Cement, Ready-mixed concrete andAggregates businesses is seasonal and tends to decreasein winter in temperate countries and during therainy season in tropical countries. The Group thereforegenerally records a fall in sales in the first andfourth quarters, during the winter season in the principalmarkets of Western Europe and North America.In the second and third quarters, on the other hand,sales are higher, as the summer season is favorableto the construction industry.The following graph shows the changes in the monthlyaverage seasonality coefficient during the year,The seasonality varies depending on the country.Thus, the Group’s activities in Senegal, despite reducedwinter activity from August to October, and inthe United States, were less affected by seasonalitythan Western Europe. Turkey similarly did not see afall in its activity in August, unlike France and Italy.9.1.2.2. Elements having an impact on production costsThe principal components of production costs are energy,raw materials, maintenance, provisions for depreciationof production facilities, transport costs andpersonnel costs.The cost of energy is the most important in the Cementbusiness; it represents in total more than one third ofthe cost price of cement. The cost of energy includes,on one hand, electricity, whose price depends in particularon the production capacity available on eachmarket and, on the other, on fuels, whose prices dependon the overall market conditions for each fuel. Theeffect of changes in fuel prices varies in particular accordingto the mix of fuels used, the energy efficiencyof each factory, and the capacity to use alternative fuels.The impact of energy prices fluctuations has a delayedand reduced impact on the income statements,in view of the stocks held and the existing term supplyagreements.As the Group’s products are heavy, the share of costsrelating to transport can prove to be high. The locationsof factories and their proximity to the markets arethus determinant for the competitive position and havea direct effect on the selling prices net of transportobtained by the companies (see also the section 9.1.4“Elements of the income statement” of this RegistrationDocument).2010 registration Registration Document document VICAT 71