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Italcementi<br />
Italy/Construction & Materials Analyser<br />
Italcementi (Hold)<br />
Hold<br />
Recommendation unchanged<br />
Share price: EUR<br />
closing price as of 07/05/2012<br />
Target price: EUR<br />
Target Price unchanged<br />
Reuters/Bloomberg<br />
4.87<br />
5.90<br />
ITAI.MI/IT IM<br />
Market capitalisation (EURm) 1,104<br />
Current N° of shares (m) 283<br />
Free float 38%<br />
Daily avg. no. trad. sh. 12 mth 473,976<br />
Daily avg. trad. vol. 12 mth (m) 2<br />
Price high 12 mth (EUR) 7.32<br />
Price low 12 mth (EUR) 4.09<br />
Abs. perf. 1 mth 4.55%<br />
Abs. perf. 3 mth -14.52%<br />
Abs. perf. 12 mth -32.86%<br />
Key financials (EUR) 12/11 12/12e 12/13e<br />
Sales (m) 4,721 4,857 5,152<br />
EBITDA (m) 738 749 858<br />
EBITDA margin 15.6% 15.4% 16.7%<br />
EBIT (m) 129 269 368<br />
EBIT margin 2.7% 5.5% 7.1%<br />
Net Profit (adj.)(m) (92) 21 60<br />
Net debt/(cash) (m) 2,093 2,104 2,119<br />
Net Debt/Equity 0.4 0.4 0.4<br />
Debt/EBITDA 2.8 2.8 2.5<br />
Int. cover(EBITDA/Fin. int) 7.2 6.8 8.6<br />
EV/Sales 0.9 0.9 0.9<br />
EV/EBITDA 5.8 5.9 5.2<br />
EV/EBITDA (adj.) 5.8 5.9 5.2<br />
EV/EBIT 33.0 16.3 12.0<br />
P/E (adj.) nm nm 22.8<br />
P/BV 0.4 0.4 0.4<br />
OpFCF yield 72.0% 64.3% 55.7%<br />
Dividend yield 3.0% 3.3% 3.9%<br />
EPS (adj.) (0.33) 0.07 0.21<br />
BVPS 12.37 12.30 12.35<br />
DPS 0.14 0.16 0.19<br />
7.5 vvdsvdvsdy<br />
7.0<br />
6.5<br />
6.0<br />
5.5<br />
5.0<br />
4.5<br />
4.0<br />
Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12<br />
Source: Factset<br />
ITALCEMENTI Stoxx Construction & Materials (Rebased)<br />
Shareholders: Italmobiliare 60%; First eagle 2%;<br />
Analyst(s):<br />
Francesco Sala, Banca Akros<br />
francesco.sala@bancaakros.it<br />
+39 02 4344 4240<br />
Cost inflation expected to weigh on 2012 results<br />
The facts: Italcementi held a conference call on first quarter results yesterday.<br />
Our analysis:<br />
2012 outlook - the company stated it expected operating results in line with 2011<br />
and to contain net financial debt at a slightly higher level (compared to 2011). We<br />
highlight that at the beginning of March the company stated it expected 2012<br />
operating results higher than 2011. The management stated that the main reasons<br />
for the foregoing revision are: weaker than expected volumes in Italy; higher than<br />
expected increase in the cost of fuel and energy.<br />
Italian market – in Italy Italcementi recorded an improvement in EBITDA in Q1<br />
(EUR -6m recurring EBITDA VS. EUR -19m in Q1 11) notwithstanding a 23% Y/Y<br />
decrease in volumes. The main reason of this improvement was a sizeable<br />
increase in cement prices in Q1 12 (+27% Y/Y); the management stated the<br />
present cement prices are expected to stick in the market and that Italcementi<br />
should record a positive EBITDA in Italy in 2012.<br />
Egyptian market - the management stated its outlook on the Egyptian market has<br />
improved with volumes now expected up 1.5/5% Y/Y in 2012 vs. the previous<br />
estimate of –1.5/-5% Y/Y. The sharp increase in gas prices (+35%) negatively<br />
affected the EBITDA margin though the management stated that the present<br />
cement prices are higher than 2011 average.<br />
French market .- the management lowered its estimate on 2012 cement prices in<br />
France from the previous +1.5/+5% Y/Y to the present flat scenario. In this respect<br />
the management stated that this guidance could be considered cautious and that<br />
there‟s some room for a slight increase in prices in 2012. The company keeps on<br />
assuming flat volumes in 2012.<br />
Cost increase – overall Italcementi is experiencing a sizeable increase both in fuel<br />
and energy costs with the cost of fuel up 10% Y/Y and power up 8% Y/Y in Q1 12.<br />
New investments – the company is going to invest in both efficiency and<br />
expansion projects. Particularly the company is going to invest EUR 160m to<br />
replace the existing wet lines in Bulgaria and USD 400m for a 3mt/y greenfield<br />
project in India (74% stake in JUV with Zuari) in Gulbarga. Italcementi is also<br />
going to expand its capacity in Morocco.<br />
Conclusion & Action: the main issues for Italcementi in 2012 are the Egyptian<br />
market because of the political turmoil which plainly limits the visibility on volumes<br />
and prices and the French market after a weak start in Q1 also because of bad<br />
weather conditions. Rating and target confirmed.<br />
Page 62 of 80 European Securities Network<br />
Please refer to important disclaimer on the last page
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