Company Presentation December 2010
Company Presentation December 2010
Antea Cement plant, Albania
Table of Contents I.
TITAN Group
II.
Summary Results 9M 2010
III. Market Overview IV. Historical Performance – Group Financials V.
Outlook
Unsaved Document / 05//09/2009 / 20:36
TITAN Group
A values-driven company with over 100 years of experience in the building materials industry
1902 TITAN Cement founded, Eleusis plant
1948 First cement exports
1902
1912
1998 2010 1998-2010 Int’l expansion to the US, SEE East Med
1948
1912 Listing on the Athens Stock Exchange
1992
1998-2010
1992 Acquisition of first plant outside Greece
TITAN’s Core Values
Integrity
Value to customer
Continuous Self Improvement
Know-how
Delivering g results
Corporate Social p y Responsibility
2010 marks the 108th year for TITAN
4
A clearly stated governing objective and a supporting set of strategic priorities
Geographic Diversification
1
2
Vertical Integration
“We We aim to grow as a multi-regional, multi regional vertically integrated cement producer, combining an entrepreneurial spirit and operational excellence with respect for people, society and the environment. environment.”
Focus on Human Capital and CSR
4
3
Continuous Competitiveness Improvement
TITAN is committed to its strategic priorities and corporate values 5
1
Geographic Diversification: Multinational Scale with Local Presence Over €3 billion invested over the last decade EBITDA 2009 Eastern Mediterranean 31%
Greece and Western Europe 39%
Acquisition of Lafarge’s 50% stake t k iin E Egyptt Acquisition of 50% Adocim Turkey
700
South Eastern Europe 22%
USA 8%
600 500
EBITDA 2003
South Eastern Europe 12%
Tarmac acquisition Zlatna, BG Acquisition
400
Eastern Mediterranean 4%
300
7
0
123
378
76
95
50 2000
97 2001
9
224
17
100
Greece and Western Europe 62%
243
Construction of new plant in Albania & new line in Egypt
449
200
USA 22%
USA Ready Mix acquisitions
134
2002
2003
246
155
146
160
2004
2005
2006
Thessaloniki &Pennsuco modernisation
14
2007 Capex
209
181
2008
2009
Investments & Acquisitions
Over the last few years the Group has been transformed into a multi-regional producer 6
2
Vertical Integration TITAN Group enhances Vertical Integration since 1992 (Sales in € millions)
Annual sales of cement and cementitious materials over 15.9m MT, 3.9m m3 of ready mix concrete, aggregates 15.3m MT Strong market presence in vertically integrated operations in Eastern US and Greece. Growing presence in South Eastern Europe and Eastern Mediterranean Vertical integration provides better control over distribution channels and reduces earnings and cashflow volatility
Noncement 21%
Noncement 30%
Cement 79%
Cement 70%
1.800 1 600 1.600
1,361
1.400 1.200
410
1 000 1.000 800 600 400
267
200
56 211
951
0 1992
2009 Cement
Non cement Non-cement
((1))
(1) Non cement include ready-mix, aggregates, mortars and porcelain
Vertical Integration with emphasis on value creation 7
Continuous competitiveness improvement
3
Energy Efficiency 105
Index (kcal per kg clinker)
102
100
100 100
100
101
100
101
97
98 95
95
Organic SG&A costs were reduced 15% by € 21.5m in 2009
95
95
94
90
Electricity savings of about 5%, between 2003-2009
92
92
92 91
85 2003
2004
2005
Pensucco, USA
Worldwide leader in carbon fly-ash beneficiation technology which is noncyclical and improves operating margins
2006
2007
Beni Suef , Egy pt
2008
2009
Usje, FY ROM
Group CO2 Emissions 12
850
805
11 Total CO2 Emissions (mt )
97
705 10 9
716 9,5
8,8
698 9,9
690 10,3
690 10,3
686
11,0
8,5
780 677
710
8,7
640
8
Specific CO2 Emissions S kgCO2/t product
98 96
570
7
500 1990
2003
2004
2005
2006
2007
2008
2009
Increased use of alternative fuels (although from a small base) make a positive contribution to energy outlays 8
4
Focus on Human Capital and CSR Corporate Governance and Human Capital
CSR
Pursuing best practice in corporate governance… Majority j y of independent p Board Members Independent Deputy Chairman
Independent Audit, Remuneration, Nomination and Corporate Governance Committees Code of conduct
…and developing human capital Performance culture Systematic career and succession planning Learning organization Stock Incentive Plan vesting based on outperforming peers
2003: Joined in as a core member and now participate to C.S.I (CEMENT SUSTAINABILITY INITIATIVE)
2004: Joined as a core member “Ranked 278th worldwide -Amongst the Top 1000 Sustainable Performance Leaders Globally” (October 2010)
2009: IR MAGAZINE, 1st Investor Relations Country Award
2002: Signed the U.N. G.C. pledge
2007 & 2008: A+ application level according to GRI
“2009: Ranked first in the Accountability Rating Greece for 2009.”
Corporate Governance and Social Responsibility are high on TITAN’s agenda 9
Unsaved Document / 05//09/2009 / 20:36
Summary Results 9M 2010
Turnover & EBITDA by Region 9M 2010 USA
2009
South Eastern Europe
2010
+7%
-15%
291,1
-76%
247,9
28,1 Turnover (€m)
6,8 ,
EBITDA (€m)
+18%
72,6
61,4
Turnover (€m)
Greece
EBITDA (€m)
Eastern Mediterranean
-13%
380,3
181,3
168,7
+30%
268,9 330,4
-21%
, 96,1
Turnover (€m)
+46%
206,2 72,5
75 4 75,4
EBITDA (€m)
Turnover (€m)
105,5
EBITDA (€m)
EBITDA contributed from Eastern Med. and SE Europe outweighs heritage markets of Greece and US 11
Performance Highlights – 9M 2010 DELIVERING SOLID FINANCIAL PERFORMANCE •Turnover at €1.03B,, reduced by y 1.7% •EBITDA at €260.3m, an increase of 0.9% :Net Profit after taxes and minority interests at €98.3m, down by 5.2% :Steep slowdown in Greece in Q3 OPTIMIZING BUSINESS PORTFOLIO •Expansion in Western Balkans (Albania, Kosovo) •Commenced Commenced RMC business in Egypt and Turkey •IFC became a 15.21% minority shareholder in Egypt for €80m in cash •Divested a non-core quarry in Kentucky/USA, for $41.5m in cash STRENGTHENING THE BALANCE SHEET •Operating Free Cash flow (1) positive by + €147m •Liquidity ratio (2) at 5.15x and Net Debt / EBITDA per covenants at 2.54x •Full repayment of the balance of USPP notes in July 10.7% •BB+ rating with Positive Outlook reaffirmed by S&P in October 2010 (1) Free Cash Flow = EBITDA – CAPEX +- Δ in Operating Working Capital (2) Liquidity Ratio = { Cash + Long Term Unutilized Committed Lines} / {Debt Maturities within the next 12 months 12
Solid Performance in 9M 2010 Despite Continued Trough-like Conditions in Key Markets Key Financials 3rd Quarter 2010
Key Financials 9 Months 2010 (€ in millions - unless stated otherwise)
(€ in millions - unless stated otherwise)
2010
2009
Var 10 vs 09
Turnover
347,7
362,6
-4,1%
EBITDA EBITDA Margin
98,9 98 9 28,4%
96,8 96 8 26,7%
Profit before taxes
29,8
Net Profit after Taxes & Minorities Earnings per Share ((€/share))
2010
2009
Var 10 vs 09
Turnover
1.028,5
1.046,2
-1,7%
2,1% 2 1% + 1.7pts
EBITDA EBITDA Margin
260,3 260 3 25,3%
257,9 257 9 24,7%
0,9% 0 9% +0.7pts
51,4
-42,0%
Profit before taxes
118,5
128,2
-7,5%
30,0
44,3
-32,1%
Net Profit after Taxes & Minorities
98,3
103,7
-5,2%
0,3689
0,5440
-32,2%
Earnings per Share ((€/share))
1,2075
1,2744
-5,2%
30th Sep 2010
31st Dec 2009
Var 10 vs 09
Share Price
14.91
20.32
-26.6%
ASE Index
1,471.04
2,196.16
-33.0% 33.0%
13
Strong Results in Egypt and Western Balkans Compensate for Continued Weakness in Greece and USA Turnover
EBITDA
(€ in millions)
9 Months
1,100
-1.7%
1,046.2
16.1
(83.2)
49.4
1,028.5
1.5%
1,000
-8.0%
900 800
4.7%
-3.3%
700 600 Turnover 2009
Translation Impact
Organic Growth
Scope Impact
Turnover 2010
Turnover
(€ in millions)
280 260 240 220 200 180 160 140 120 100
0.9% 257.9
2.4
(16.5)
16.5
0.9%
-6.4%
6.4% 0.0%
24.7% EBITDA 2009
25.3%
EBITDA margin Translation Impact
Organic Growth
Scope Impact
EBITDA 2.1%
-4.1%
Q3
EBITDA 2010
(€ in millions)
(€ in millions)
400 350 300 250 200 150 100 50 0
260.3
362.6
12.7
3 5% 3.5%
(48.1)
-13.3%
20.5
347.7
5.7%
-7.6%
120 100 80 60 40 20
96.8
16 1.6
(6 6) (6.6)
70 7.0
1.7%
-6.8%
7.2%
98 9 98.9
0.4% 26.7%
28.4%
EBITDA margin
0 Turnover 2009
Translation Impact
Organic Growth
Scope Impact
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
14
9M 2010 Net Profit After Taxes and Minorities at € 98.3 Million Group Net Profit After Taxes and Minorities (€ in millions)
150 120
12.3 103.7
(0.1)
(4.5)
3.2
0.2
NPAT 2009
EBITDA Growth
Depn.
Interest
FX Dif f .
(8.5)
(8.0) 98.3
90 60 30 0 Taxes
Other
Minority Interest
NPAT 2010
15
€147 Million of Operating Free Cash Flow Generated in 9M 2010 Sources and Uses of Cash (€ in millions)
Free Cash Flow from Operations 300
260
(59)
250 (54)
200
35
(70)
150
10
100
(24)
98
50 0 EBITDA 9M 2010
CapEx
Operating Working Capital
Acquisitions/ Interest, Tax, Disposals Dividends & Provisions
Minorities
Net FX Impact Decrease in Net Debt 30/09/10
Net Debt decreased by €98m, including a €24m adverse forex impact. €147m Free Cash Flow generation benefited from a significant reduction in Capex but was negatively affected by a deterioration in Working Capital. Capital 16
EBITDA contributed from EMED and SEE outweighs heritage markets of Greece and US 9M 2010 Turnover (€m)
9M 2010 EBITDA (€m)
330.4
32%
GREECE
USA
3% 6.8 -15% 15%
USA
-76% 76%
291.1
28%
11%
181.3
18%
SEE
+18%
61.4
24% 268 9 268.9
26%
E. MED.
+30%
50 100 150 200 250 300 350 400 2009 ACT
105 5 105.5
40%
E.MED.
+46%
206.2
2010 ACT
72.6
SEE
168.7
20%
28.1
28% +7%
16%
96.1
37%
247.9
24%
0
-21%
GREECE
380.3
36%
75.4
29% -13% 13%
72.5
28%
0
20
40 2010 ACT
60
80
100
120
2009 ACT
17
Accelerating Decline in Greece Cushioned by Increased Export p Activity y and Targeted g Cash-Generating g Initiatives Significant contraction of domestic demand for building products Decline in sales volume exacerbated in Q3 by truck drivers’ strike in September EBITDA positively impacted by disposal off assets ((net impact €3.6m) €3 6 ) Substantial increase in electricity costs due to levies applied As of Q2 2010 reversal of positive fuel cost trends witnessed in Q1 €7.9m extraordinary social responsibility tax pertaining to 2009 profits Well provisioned for risk of doubtful receivables Turnover
EBITDA
(€ in millions)
-13.1%
(€ in millions)
-21.5%
9 Months
120
400
380.3
300
(52,9) -13.9%
200
100
3.0
330.4
96.0
0.5
80
-22.1%
60
0.8%
(21.1) 75.4
0.6%
40
100
20
0
0
Turnover 2009
Organic Growth
Scope Impact
Turnover 2010
25.2% EBITDA 2009
EBITDA Margin Organic Growth
Scope Impact
22.8% EBITDA 2010
18
Continued Weakness with No Solid Signs of a Sustained Recovery in the USA Mid-Atlantic cement demand seems to have stabilized at trough levels Florida market conditions remain challenging; erosion of prices in $ terms €32.7m disposal of Kentucky quarry in April, transaction was EBITDA neutral Early repayment of USPP resulted in pre-tax cost of €8,0mil ($10.3 mil) in Q3 Deferred Tax benefit of $32.1m generated in 9M. Cash tax return of $17.5m related to 2009 FY received in Q3 Separation Technologies performs strongly, continues expansion In Lake Belt, ACE granted new 20-year mining permits Turnover
EBITDA
(€ in millions)
9 Months
350 300
-14.8%
291.1
10.6
3.6%
250 200
(12,5) (41.3)
-14.1%
247.9
(€ in millions)
30
-75.9%
28.1
0.3
(21.5)
0.9% -4.3%
-76.4%
20
150 (0.1)
10
100 50
9.7%
EBITDA Margin -0.4%
6.8
2.7%
0
0 Turnover 2009
Translation Impact
Organic Growth
Scope Impact
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
19
Growth initiatives in Western Balkans offset weakness in South Eastern European markets Cement volume growth driven by the new plant in Albania and expanded activities in Kosovo New plant in Albania commenced production at end of Q1. Growth in both domestic and export cement sales as plant ramps up Severe slow-down in Bulgaria continued albeit at slower pace Prices in most of South Eastern European markets under pressure Working capital needs increased due to new plant operations in Albania
Turnover
EBITDA
9 Months
(€ in millions)
200
7.5%
(€ in millions)
18.4%
80
168.7
150
(5,2)
(38.7)
56.5
181.3 60
-3.1% -22.9%
100
33.5% %
15.9 61.4
(1.8)
(2.8)
-2.9%
-4.6%
72.6
25.9%
40 20
50
36.4% 0
EBITDA Margin
40.0%
0 Turnover 2009
Translation Impact
Organic g Growth
Scope p Impact
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
20
Eastern Mediterranean Region Shows Solid Growth Potential In Egypt Titan volumes grow on the back of increased capacity, temporary slow-down during Ramadan period was reversed in October Strong St volume l growth th in i Turkey T k fueled f l d by b fast f t recovery off the th economy and d supported t d by b exportt markets New-to-the-Group Ready Mix Cement business kick-started in Egypt and Turkey Sale of 15.2% 15 2% minority stake in Egypt to IFC for €80m in cash completed on Nov Nov. 19th EBITDA affected by increased fuel and electricity costs in both Turkey and Egypt
Turnover
EBITDA
(€ in millions)
30.4%
(€ in millions)
45.6%
9 Months
120 300 250 200
49.7 206.2
1.1%
10.7
5.2%
2.3
268.9
100 80
24.1%
28.9 72.5
150 100
40
50
20
0
35.2%
105.5
0.3%
3.9
39.9%
5.5%
60
0.2
39.2%
EBITDA Margin
0 Turnover Translation 2009 I Impact t
Organic G Growth th
Scope I Impact t
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
21
Unsaved Document / 05//09/2009 / 20:36
Market Overviews
Greece Business Overview Greece Significant capacity surplus 16.5m MT capacit capacity
Location of Production Facilities (€ in millions) Grey Cement - Titan
White Cement - Titan
TITAN Cement: 4 plants l approx. 7m MT Ready-mix: 1.8m m3 (largest concrete operator) Aggregates: nearly 10m MT (largest aggregates producer)
Italcementi
800 600
Lafarge
631
607
526
504
166
191
191
169
128
0 2005
2006
2007
Turnov er
Market Shares
2008
2009
EBITDA
Trends & Drivers
Halyps (Italcementi) 5%
Titan 40-45% Lafarge 50-55%
633
400 200
Market share 40-45%
Greek operations (2009) 37% of Group Turnover (€504m) 39% of Group EBITDA (€128m)
Turnover & EBITDA
Worsening economic climate negatively affects construction
Weak housing market
Greece’s budgetary difficulties delay infrastructure projects
Exportt volumes E l increased i d in i 2010 compared to 2009
TITAN’s home market: modern assets and strong cash-flow generation 23
Greece Market Overview Domestic Cement Consumption (Mt) 1990-2009
14 12 10 8 6 4 2 0
11,66 11,0 11 10,5 11,0 10,4 10,1 10,2 9,4 8,9 8,6 7,7 8,2 7,7 7,7 7,7 7,2 7,7 6,6 6,8 7,3
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20082009E Sources: National Statistic Service of Greece, Greek Cement Association, TITAN Estimates
Domestic Cement Consumption per Capita
Greece GDP Growth 6%
(kg)
4,5% 4,5%
4 6% 4,6%
4%
2,1%
2,0%
2%
2,1%
1,1%
2,2%
0%
1200 1000
2,7%
960
1 046 1.046 913
1 017 1.017
925
800
690
600
(2%) (4%)
(2,0%)
(6%) 04 20 Source: IMF
05 20
06 20
07 20
08 20
09 20
(2,6%) (4,0%)
E E E E E E 1 2 01 3 14 11 15 10 2 20 20 20 20 20
400 200 0 2004
2005
2006
2007
2008
2009E
Sources: Greek Cement Association, Association TITAN Estimates
In 2010 TITAN increased export volumes to partly offset decline of the Greek market 24
Greece Market Overview Production Index in Construction 35% 25% 15% 5% -5% -15% -25% 25%
Q 2
Q 1
20 06 20 Q 06 3 20 Q 06 4 20 Q 06 1 20 Q 07 2 20 Q 07 3 20 Q 07 4 20 Q 07 1 20 Q 08 2 20 Q 08 3 20 Q 08 4 20 Q 08 1 20 Q 09 2 20 Q 09 3 20 Q 09 4 20 Q 09 1 20 Q 10 2 20 10
-35%
Greece
Euro Area (EA 16)
Sources: National Statistic Service of Greece, Foundation for Economic and Industrial Research Note: Production Index in Construction shows the quarterly activity in the production of building construction and the production of civil engineering sectors. The Index compares the volume of each quarter’s output with the corresponding figure of the same quarter the previous year.
Civil Engineer works (YoY change)
Expectations Index regarding construction activity (YoY change) 60%
40% 18,1%
20%
21,8%
-20%
15%
4,8%
0%
-16,8%
-17,3%
-49,9% 2005
2006
-15% -30% -45%
-60% 2004
1,5%
0%
-15,5%
-40%
44,6%
45% 30%
2007
2008
2009
Sources: National Statistic Service of Greece Greece, National Bank of Greece
2010 (Q2)
3,0%
-22,7% -29,1% 2004
2005
-31,4% 2006
2007
2008
2009
-26,4%
2010 (Jan-Sep)
Source: Foundation for Economic and Industrial Research
Economic crisis affects business confidence and building activity 25
Greece Housing Market House Price Index in urban areas (YoY change)
Foreign capital inflow for real estate investments (YoY change)
20% 14,4% , 10%
13,9%
80% 60% 40% 20% 0% -20%
12,4%
10,6%
10,9%
5,4%
5,1%
2,3%
0%
1,7% -4,3% -4,5%
-10%
66,5%
33% -24,4%
2004
2005
2006
2007
2008
2009
2010 (Jan-Aug)
Source: National Bank of Greece
Interest rates on new housing loans
40%
6%
33%
4,8%
26,3%
27,6%
-35 35,0% 0%
-58,2%
Mortgage market (Average YoY change)
30%
55,4%
-40% -60% -80%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (Q2) Sources: National Statistic Service of Greece, National Bank of Greece
73,0%
4%
4,7%
4 3% 4,3%
4,9%
5,3% 4,1%
4,0%
21,9%
20%
2%
11,5%
10%
3,7% 1 0% 1,0%
0% 2004
2005
Source: National Bank of Greece
2006
2007
2008
2009
2010 (Sep)
0% 2004
2005
2006
2007
2008
2009
2010 (Aug)
Source: National Bank of Greece
Aff t d consumer sentiment, Affected ti t resilience ili off house h prices i and d stagnation t ti off mortgage t market k t lead to deepening of crisis in residential sector 26
USA Business Overview Location of Production Facilities
USA
Current cement capacity exceeds demand (historically about 10% of demand supplied by imports)
Ohio
Indiana
MD
West Virginia Kentucky
Virginia
Cement plant
800
Market presence through vertically integrated activities
Georgia
FL
Ready-mix: over 2.6m
Aggregates: over 6.5m MT* Market share 10-30% depending p g on the region g
US operations (2009)
27% of Group Turnover (€366m) 8% of Group EBITDA (€26m)
366 140
184
106
43
26
2005
2006
2007
2008
2009
Turnover
EBITDA
m3
484
0
2 plants total 3.5m MT and 3 import terminals
593
400 200
Cement:
712 605
600
South Carolina AL
Turnover & EBITDA (€ in millions)
DE
North Carolina
Tennessee
MS
TITAN
inois
NJ
Florida Market Shares
Oldcastle ~5%
Swannee (SAC) ~20% Vulcan ~20%
Eastern Cement ~1%
Trends & Drivers
Holcim ~1% Cemex ~30%
Titan ~23%
Housing market crisis and deepening of non residential sector decline
Economic stimulus program impact anticipated in 2010-2011
PCA national forecasts for 2010: +0.3%
Strong S o g long-term o g e de demographic og ap c trends e ds
TITAN operates highly efficient plants in USA and through an integrated logistic network 27
USA Market Overview Construction and Economic Activity
Cement consumption
(Index 1990 = 1.0)
140.450 120 450 120.450 100.450 80.450 60.450 40.450 20.450 450
1,8 1,6
GDP
1,4 1,2
Construction Spending
1,0 ,
-54 mt
1989
1993
1997
2001
2005
19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15
0,8 2009
Source: PCA Annual Yearbook 2010
Capacity Utilization Rate
Clinker Capacity (Thousands of Metric Tons) 110.000
(Percent)
120 100.000
100 80
90.000
60
80.000
40
70.000
20
60.000
0 1989
1994
Source: PCA Annual Yearbook 2010
1999
2004
2009
1989
1994
1999
2004
2009
Source: PCA Annual Yearbook 2010
Sustained improvement in consumer and business confidence are key for construction recovery 28
South Eastern Europe Business Overview TITAN Cement: 4 plants approx. 5m MT, including new plant in Albania (Q1 2010)
Location of Production Facilities (€ in millions)
200 BULGARIA ALBANIA
TITAN
100
Holcim ~30%
Serbia
Seament Holding
Holcim
Lafarge
FYROM
Albania Imports ~35%
Seament ~35%
TITAN ~30%
TITAN ~20%
73
2005
2006
97
105
74
2007
2008
Turnov er
2009
EBITDA
Trends & Drivers
Others Lafarge ~20% ~45%
Italcementi Holcim ~40% ~35%
56
0
FYROM
Italcementi
216
210
187
158
SERBIA
Market Shares
Bulgaria
287
300
Ready-mix: 7 production units
South Eastern Europe (2009) 16% of Group Turnover (€216m) 22% of Group EBITDA ((€74m))
Turnover & EBITDA
TITAN ~80%
Decline of demand in SEE markets in 2010
Challenging market conditions in Bulgaria accentuated by imports
New cement plant in Albania (1.5m MT), started in March 2010
TITAN ~30%
Source: Broker reports, Global Cement Report
Attractive regional cluster set to benefit from long-term infrastructure needs and EU admission 29
Albania – Antea: Commissioning of New Cement Plant Overview
Albania is a potential candidate country for EU accession − Pre-accession EU financial aid of c.€500m from 20072012 GDP growth of 3.8% in 2009 (+2.6% 2010E) Strong g consumption p relative to its wealth reflects country's y continuing needs for basic infrastructure and housing Antea strengthens the network of TITAN cement plants in the Balkans TITAN has been exporting to Albania since 1992 2006 TITAN commissions 2006, i i ab bulk lk cementt tterminal i l iin Vl Vlore 2008, TITAN acquires a distribution terminal in Tirana 2010 March, commissioning of the new cement plant in Boka e Kuqe (close to Tirana) Annual cement capacity 1 1.5m 5m tones cement
Construction completed on time, within budget and without accident EBRD & IFC are co-investors in Antea with 20% each 30
Eastern Mediterranean Business Overview Egypt
Location of Production Facilities
Currently, demand is higher than production
Turnover & EBITDA (€ in millions)
TURKEY
Turkey
300
Capacity surplus increased after 2008 new additions
200
EGYPT
TITAN
Egypt: 2 cement plants approx. 5m MT, including new line in BSCC Turkey: 50% JV in Adocim Cimento
Eastern Mediterranean (2009)
20% of Group Turnover (€275m)
31% of Group EBITDA (€103m)
Cement plants
100
Grinding plant
0
52
28
2005
Distribution Terminals
Cement total: 7.5m MT
275
174 62
64 33
2006
Competitors and Market Shares – Egypt
31
2007
Turnov er
64
2008
103
2009
EBITDA
Trends & Drivers
Misr Cement (Qena) Misr Beni Suef Sinai 4% 4% 6% Suez and Helw an National ((Italcementi)) 8% 28%
Market conditions favorable in Egypt and are improving in Turkey
New production line of 1.5m MT cement at Beni Suef started in November 2009
Cimpor 8%
In Egypt, sale of a minority stake of 15.2% to IFC (Nov 2010) for €80 m in cash
TITAN 9% Cemex 13%
Lafarge L f 20%
Source: Ministry of Trade and Industry
Two large markets (c. 100m MT of combined cement consumption in 2009) with long-term long term positive drivers 31
Egypt Business Overview Location of Production Facilities
Cement Supply and Demand (Tonnes in millions)
Favourable demographic profile
40 38 41
57
10 Distribution Terminals
0 2006A
2008A
2010E
Domestic Demand
Largest Population in MENA Region
100
77
80
60 35
32
24
20
Source: IMF
Tunisiia
10 Syria a
20 0
77
78
80
81
83
85
86
60 26
40 6 Libya a
39
40
Cement Supply
(Population in millions)
100 80
2012E
Population Growth
(Population in millions)
Yemen n
Healthy banking system with very low mortgage penetration (currently below 1% of GDP)
31
34
55
49
48
20
Cement p plants
Increase in cement consumption as urbanisation and industrialisation increase Annual demand for housing estimated at c.750,000 units (emphasis on social housing)
39
48 46
30
KSA A
40
Morocc co
50
EGYPT
Algeria
60
Sudan
One of the largest g cement markets in the MENA region
Egyp pt
20 0 2009A 2010E 2011E 2012E 2013E 2014E 2015E Source: IMF
One of the fastest growing cement markets globally with positive underlying economic fundamentals and an attractive demographic profile 32
Egypt – Commissioning of New Production Line Overview
The new production line started operations in November 2009 adding 1.5m MT to the existing total capacity (total of c. 5m MT)
Located within the existing plant in Beni Suef, it benefits from access to existing g infrastructure and operating personnel
Operational synergies are expected to improve profitability margins
Vast raw materials reserves in proximity of the plant
Turn-key supplier, France’s Fives FCB
New plant During Construction
6.5 million hours without LTI (Lost Time Incident)
Construction completed on time and within budget 33
Turkey Business Overview Location of Production Facilities
Population Growth (Population in millions)
Favourable demographics coupled with urbanisation trend Ongoing infrastructure and energy projects together with growing residential investments drive cement demand Mortgages g g at historical lows
Recovery of volumes and prices (from very low levels)
Major capacity expansions in 2005-2009 lead to market overcapacity
Fragmented competition
100 80 TURKEY
71
71
72
73
74
75
76
60 40 20 Cement plants
0 2009A 2010E 2011E 2012E 2013E 2014E 2015E
Grinding plant Source: IMF
Domestic Demand – 12-M.O. Trailing (MT)
Source: Turkish Cement Manufacturers Association, Cheuvreux
Domestic Demand (MT)
Source: Turkish Cement Manufacturers Association, Cheuvreux
Increase of building activity based on dynamic economic recovery and favourable demographics 34
Unsaved Document / 05//09/2009 / 20:36
Historical Performance – Group Financials
Historical Performance Highlights Earnings per Share
EBITDA Margin
34% 32% 30% 28% 26% 24% 22% 20% 2000
2002
2004
2006
2008
3,70 3,20 , 2,70 2,20 1,70 1,20 0 70 0,70 0,20 2000
2010
2002
2004
2006
2008
2010
Long g term Returns (TITK) ( )
Year
Period
TITK Cumulative Return
EPS Growth
ASE Cumulative Return
1995-2010
15 years
574%
463% (1)
69%
2005-2010
5 years
-50%
-28% (2)
-58%
Notes: (1) EPS Growth is calculated for the period 1994-2009 (2) EPS Growth is calculated for the period 2004-2009
Solid track record of profitable growth 36
Historical Performance Highlights ROCE vs WACC for cement companies (1998-2009) 12%
A prudent investor
growing by successful acquisitions and capacity expansions made g internal cash through flow generation
9,8%
10% 8% 6%
2,4%
4% 2% 0% -2%
-1,8%
-4%
-0,9%
-0,5%
-0,7%
Company 1 Company 2 Company 3 Company 4 Company 5
Last share capital
i increase was iin 1990
-1,4%
-0,6%
Company6
Company 7
TITAN
Average (1998 (1998-2009) 2009) ROCE vs WACC
Source: Jefferies
TITAN share vs Peers 1995- 2009
the last 12 years TITAN had superior returns compared to average in the sector (Return on p Employed p y Capital compared to WACC)
Indexed Price
Analysis shows that over
1800% 1600% 1400% 1200% 1000% 800% 600% 400% 200% 0%
TITAN
Company 1
Company 2
Company 3
Company 4
TITAN combines industry experience with a long term strategy delivering strong shareholder value 37
Net Debt Continues to Improve Significantly Group Debt (30.9.2008 – 30.9.2010) (€ in millions)
1,500
Net Debt/EBITDA (1) = 2.54
1 300 1,300 1133
1114
(1) According to covenants definition in the syndicated loan of €800m
1154 1028
1,100 900
1029
971
988 917
873
Net debt
700 Q3
Q4
Q1
Q2
2008
Q3
Q4
Q1
2009
Q2
Q3
2010
Leverage Ratios of Major Industry Players 2009 (Net debt/EBITDA) 6,8
7,0
Leverage close to average industry levels
60 6,0 5,0
3,9
3,9
4,0
2,9
2,7
3,0
2,5
22 2,2
2,54 2,0
2,0 1,0 0,0
Source: Jefferies
Company p y 1
Company p y 2
Company p y 3
Company p y 4
Company p y 5
Company p y 6
Company p y 7
TITAN
TITAN 30/9/2010
Commitment to cash flow generation is leading to significant de-leveraging 38
TITAN Group: Solid Capital Structure FFO/Net Debt Strong operating cash
90%
flow generation profile reasonable profile, leverage.
49%
58%
85%
63% 49%
47%
37% 24%
27%
Net debt starting to
decrease in 2010, as a result of the completion of the 2 major capex projects and the efforts over the last two years.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 FFO: Funds From Operations
Operating EBITDA Interest Coverage
14 1x 14,1x
Over O the th last l t five fi
11,4x
years Net Debt to Operating EBITDA has averaged 1.3x and FFO to Net Debt has averaged 61.6%, consistent with a strong investment grade profile.
2003
11,3x
2004
11,3x
2005
9,7x
2006
2007
5,9x
5,2x
2008
2009
Strengthening of the B/S in line with TITAN’s traditionally conservative approach to financing Source: Titan Financials Source: Titan Financials
39
Unsaved Document / 05//09/2009 / 20:36
Outlook
2010 Outlook 1
Greek market decline continues
2
No upturn seen in the US
3
Markets remain weak in South Eastern Europe
4
Demand grows in Eastern Med
5
Energy costs trending up
6
Pricing pressures increasing
Titan benefiting from : o Focus on free cash flow generation o Productivity initiatives o New capacities in Egypt and South Eastern Europe
7
41
Important disclosures
This document contains forward-looking statements relating to the Group’s future business, development and economic performance. It also includes statements from sources that have not been independently verified by the Company.
Such statements may be subject to a number of risks, uncertainties and other important factors, such as but not limited to: − Competitive pressures − Legislative and regulatory developments − Global, macroeconomic and political trends − Fluctuations in currency exchange rates and general financial market conditions − Delay or inability in obtaining approvals from authorities − Technical development − Litigation − Adverse publicity and news coverage, which would cause actual development and results to differ materially from the statements made in this document
TITAN assumes no obligation to update or alter such statements whether as a result of new information, future events or otherwise.
http://www.titan-cement.com/
Antea Cement plant, Albania
Table of Contents I.
TITAN Group
II.
Summary Results 9M 2010
III. Market Overview IV. Historical Performance – Group Financials V.
Outlook
Unsaved Document / 05//09/2009 / 20:36
TITAN Group
A values-driven company with over 100 years of experience in the building materials industry
1902 TITAN Cement founded, Eleusis plant
1948 First cement exports
1902
1912
1998 2010 1998-2010 Int’l expansion to the US, SEE East Med
1948
1912 Listing on the Athens Stock Exchange
1992
1998-2010
1992 Acquisition of first plant outside Greece
TITAN’s Core Values
Integrity
Value to customer
Continuous Self Improvement
Know-how
Delivering g results
Corporate Social p y Responsibility
2010 marks the 108th year for TITAN
4
A clearly stated governing objective and a supporting set of strategic priorities
Geographic Diversification
1
2
Vertical Integration
“We We aim to grow as a multi-regional, multi regional vertically integrated cement producer, combining an entrepreneurial spirit and operational excellence with respect for people, society and the environment. environment.”
Focus on Human Capital and CSR
4
3
Continuous Competitiveness Improvement
TITAN is committed to its strategic priorities and corporate values 5
1
Geographic Diversification: Multinational Scale with Local Presence Over €3 billion invested over the last decade EBITDA 2009 Eastern Mediterranean 31%
Greece and Western Europe 39%
Acquisition of Lafarge’s 50% stake t k iin E Egyptt Acquisition of 50% Adocim Turkey
700
South Eastern Europe 22%
USA 8%
600 500
EBITDA 2003
South Eastern Europe 12%
Tarmac acquisition Zlatna, BG Acquisition
400
Eastern Mediterranean 4%
300
7
0
123
378
76
95
50 2000
97 2001
9
224
17
100
Greece and Western Europe 62%
243
Construction of new plant in Albania & new line in Egypt
449
200
USA 22%
USA Ready Mix acquisitions
134
2002
2003
246
155
146
160
2004
2005
2006
Thessaloniki &Pennsuco modernisation
14
2007 Capex
209
181
2008
2009
Investments & Acquisitions
Over the last few years the Group has been transformed into a multi-regional producer 6
2
Vertical Integration TITAN Group enhances Vertical Integration since 1992 (Sales in € millions)
Annual sales of cement and cementitious materials over 15.9m MT, 3.9m m3 of ready mix concrete, aggregates 15.3m MT Strong market presence in vertically integrated operations in Eastern US and Greece. Growing presence in South Eastern Europe and Eastern Mediterranean Vertical integration provides better control over distribution channels and reduces earnings and cashflow volatility
Noncement 21%
Noncement 30%
Cement 79%
Cement 70%
1.800 1 600 1.600
1,361
1.400 1.200
410
1 000 1.000 800 600 400
267
200
56 211
951
0 1992
2009 Cement
Non cement Non-cement
((1))
(1) Non cement include ready-mix, aggregates, mortars and porcelain
Vertical Integration with emphasis on value creation 7
Continuous competitiveness improvement
3
Energy Efficiency 105
Index (kcal per kg clinker)
102
100
100 100
100
101
100
101
97
98 95
95
Organic SG&A costs were reduced 15% by € 21.5m in 2009
95
95
94
90
Electricity savings of about 5%, between 2003-2009
92
92
92 91
85 2003
2004
2005
Pensucco, USA
Worldwide leader in carbon fly-ash beneficiation technology which is noncyclical and improves operating margins
2006
2007
Beni Suef , Egy pt
2008
2009
Usje, FY ROM
Group CO2 Emissions 12
850
805
11 Total CO2 Emissions (mt )
97
705 10 9
716 9,5
8,8
698 9,9
690 10,3
690 10,3
686
11,0
8,5
780 677
710
8,7
640
8
Specific CO2 Emissions S kgCO2/t product
98 96
570
7
500 1990
2003
2004
2005
2006
2007
2008
2009
Increased use of alternative fuels (although from a small base) make a positive contribution to energy outlays 8
4
Focus on Human Capital and CSR Corporate Governance and Human Capital
CSR
Pursuing best practice in corporate governance… Majority j y of independent p Board Members Independent Deputy Chairman
Independent Audit, Remuneration, Nomination and Corporate Governance Committees Code of conduct
…and developing human capital Performance culture Systematic career and succession planning Learning organization Stock Incentive Plan vesting based on outperforming peers
2003: Joined in as a core member and now participate to C.S.I (CEMENT SUSTAINABILITY INITIATIVE)
2004: Joined as a core member “Ranked 278th worldwide -Amongst the Top 1000 Sustainable Performance Leaders Globally” (October 2010)
2009: IR MAGAZINE, 1st Investor Relations Country Award
2002: Signed the U.N. G.C. pledge
2007 & 2008: A+ application level according to GRI
“2009: Ranked first in the Accountability Rating Greece for 2009.”
Corporate Governance and Social Responsibility are high on TITAN’s agenda 9
Unsaved Document / 05//09/2009 / 20:36
Summary Results 9M 2010
Turnover & EBITDA by Region 9M 2010 USA
2009
South Eastern Europe
2010
+7%
-15%
291,1
-76%
247,9
28,1 Turnover (€m)
6,8 ,
EBITDA (€m)
+18%
72,6
61,4
Turnover (€m)
Greece
EBITDA (€m)
Eastern Mediterranean
-13%
380,3
181,3
168,7
+30%
268,9 330,4
-21%
, 96,1
Turnover (€m)
+46%
206,2 72,5
75 4 75,4
EBITDA (€m)
Turnover (€m)
105,5
EBITDA (€m)
EBITDA contributed from Eastern Med. and SE Europe outweighs heritage markets of Greece and US 11
Performance Highlights – 9M 2010 DELIVERING SOLID FINANCIAL PERFORMANCE •Turnover at €1.03B,, reduced by y 1.7% •EBITDA at €260.3m, an increase of 0.9% :Net Profit after taxes and minority interests at €98.3m, down by 5.2% :Steep slowdown in Greece in Q3 OPTIMIZING BUSINESS PORTFOLIO •Expansion in Western Balkans (Albania, Kosovo) •Commenced Commenced RMC business in Egypt and Turkey •IFC became a 15.21% minority shareholder in Egypt for €80m in cash •Divested a non-core quarry in Kentucky/USA, for $41.5m in cash STRENGTHENING THE BALANCE SHEET •Operating Free Cash flow (1) positive by + €147m •Liquidity ratio (2) at 5.15x and Net Debt / EBITDA per covenants at 2.54x •Full repayment of the balance of USPP notes in July 10.7% •BB+ rating with Positive Outlook reaffirmed by S&P in October 2010 (1) Free Cash Flow = EBITDA – CAPEX +- Δ in Operating Working Capital (2) Liquidity Ratio = { Cash + Long Term Unutilized Committed Lines} / {Debt Maturities within the next 12 months 12
Solid Performance in 9M 2010 Despite Continued Trough-like Conditions in Key Markets Key Financials 3rd Quarter 2010
Key Financials 9 Months 2010 (€ in millions - unless stated otherwise)
(€ in millions - unless stated otherwise)
2010
2009
Var 10 vs 09
Turnover
347,7
362,6
-4,1%
EBITDA EBITDA Margin
98,9 98 9 28,4%
96,8 96 8 26,7%
Profit before taxes
29,8
Net Profit after Taxes & Minorities Earnings per Share ((€/share))
2010
2009
Var 10 vs 09
Turnover
1.028,5
1.046,2
-1,7%
2,1% 2 1% + 1.7pts
EBITDA EBITDA Margin
260,3 260 3 25,3%
257,9 257 9 24,7%
0,9% 0 9% +0.7pts
51,4
-42,0%
Profit before taxes
118,5
128,2
-7,5%
30,0
44,3
-32,1%
Net Profit after Taxes & Minorities
98,3
103,7
-5,2%
0,3689
0,5440
-32,2%
Earnings per Share ((€/share))
1,2075
1,2744
-5,2%
30th Sep 2010
31st Dec 2009
Var 10 vs 09
Share Price
14.91
20.32
-26.6%
ASE Index
1,471.04
2,196.16
-33.0% 33.0%
13
Strong Results in Egypt and Western Balkans Compensate for Continued Weakness in Greece and USA Turnover
EBITDA
(€ in millions)
9 Months
1,100
-1.7%
1,046.2
16.1
(83.2)
49.4
1,028.5
1.5%
1,000
-8.0%
900 800
4.7%
-3.3%
700 600 Turnover 2009
Translation Impact
Organic Growth
Scope Impact
Turnover 2010
Turnover
(€ in millions)
280 260 240 220 200 180 160 140 120 100
0.9% 257.9
2.4
(16.5)
16.5
0.9%
-6.4%
6.4% 0.0%
24.7% EBITDA 2009
25.3%
EBITDA margin Translation Impact
Organic Growth
Scope Impact
EBITDA 2.1%
-4.1%
Q3
EBITDA 2010
(€ in millions)
(€ in millions)
400 350 300 250 200 150 100 50 0
260.3
362.6
12.7
3 5% 3.5%
(48.1)
-13.3%
20.5
347.7
5.7%
-7.6%
120 100 80 60 40 20
96.8
16 1.6
(6 6) (6.6)
70 7.0
1.7%
-6.8%
7.2%
98 9 98.9
0.4% 26.7%
28.4%
EBITDA margin
0 Turnover 2009
Translation Impact
Organic Growth
Scope Impact
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
14
9M 2010 Net Profit After Taxes and Minorities at € 98.3 Million Group Net Profit After Taxes and Minorities (€ in millions)
150 120
12.3 103.7
(0.1)
(4.5)
3.2
0.2
NPAT 2009
EBITDA Growth
Depn.
Interest
FX Dif f .
(8.5)
(8.0) 98.3
90 60 30 0 Taxes
Other
Minority Interest
NPAT 2010
15
€147 Million of Operating Free Cash Flow Generated in 9M 2010 Sources and Uses of Cash (€ in millions)
Free Cash Flow from Operations 300
260
(59)
250 (54)
200
35
(70)
150
10
100
(24)
98
50 0 EBITDA 9M 2010
CapEx
Operating Working Capital
Acquisitions/ Interest, Tax, Disposals Dividends & Provisions
Minorities
Net FX Impact Decrease in Net Debt 30/09/10
Net Debt decreased by €98m, including a €24m adverse forex impact. €147m Free Cash Flow generation benefited from a significant reduction in Capex but was negatively affected by a deterioration in Working Capital. Capital 16
EBITDA contributed from EMED and SEE outweighs heritage markets of Greece and US 9M 2010 Turnover (€m)
9M 2010 EBITDA (€m)
330.4
32%
GREECE
USA
3% 6.8 -15% 15%
USA
-76% 76%
291.1
28%
11%
181.3
18%
SEE
+18%
61.4
24% 268 9 268.9
26%
E. MED.
+30%
50 100 150 200 250 300 350 400 2009 ACT
105 5 105.5
40%
E.MED.
+46%
206.2
2010 ACT
72.6
SEE
168.7
20%
28.1
28% +7%
16%
96.1
37%
247.9
24%
0
-21%
GREECE
380.3
36%
75.4
29% -13% 13%
72.5
28%
0
20
40 2010 ACT
60
80
100
120
2009 ACT
17
Accelerating Decline in Greece Cushioned by Increased Export p Activity y and Targeted g Cash-Generating g Initiatives Significant contraction of domestic demand for building products Decline in sales volume exacerbated in Q3 by truck drivers’ strike in September EBITDA positively impacted by disposal off assets ((net impact €3.6m) €3 6 ) Substantial increase in electricity costs due to levies applied As of Q2 2010 reversal of positive fuel cost trends witnessed in Q1 €7.9m extraordinary social responsibility tax pertaining to 2009 profits Well provisioned for risk of doubtful receivables Turnover
EBITDA
(€ in millions)
-13.1%
(€ in millions)
-21.5%
9 Months
120
400
380.3
300
(52,9) -13.9%
200
100
3.0
330.4
96.0
0.5
80
-22.1%
60
0.8%
(21.1) 75.4
0.6%
40
100
20
0
0
Turnover 2009
Organic Growth
Scope Impact
Turnover 2010
25.2% EBITDA 2009
EBITDA Margin Organic Growth
Scope Impact
22.8% EBITDA 2010
18
Continued Weakness with No Solid Signs of a Sustained Recovery in the USA Mid-Atlantic cement demand seems to have stabilized at trough levels Florida market conditions remain challenging; erosion of prices in $ terms €32.7m disposal of Kentucky quarry in April, transaction was EBITDA neutral Early repayment of USPP resulted in pre-tax cost of €8,0mil ($10.3 mil) in Q3 Deferred Tax benefit of $32.1m generated in 9M. Cash tax return of $17.5m related to 2009 FY received in Q3 Separation Technologies performs strongly, continues expansion In Lake Belt, ACE granted new 20-year mining permits Turnover
EBITDA
(€ in millions)
9 Months
350 300
-14.8%
291.1
10.6
3.6%
250 200
(12,5) (41.3)
-14.1%
247.9
(€ in millions)
30
-75.9%
28.1
0.3
(21.5)
0.9% -4.3%
-76.4%
20
150 (0.1)
10
100 50
9.7%
EBITDA Margin -0.4%
6.8
2.7%
0
0 Turnover 2009
Translation Impact
Organic Growth
Scope Impact
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
19
Growth initiatives in Western Balkans offset weakness in South Eastern European markets Cement volume growth driven by the new plant in Albania and expanded activities in Kosovo New plant in Albania commenced production at end of Q1. Growth in both domestic and export cement sales as plant ramps up Severe slow-down in Bulgaria continued albeit at slower pace Prices in most of South Eastern European markets under pressure Working capital needs increased due to new plant operations in Albania
Turnover
EBITDA
9 Months
(€ in millions)
200
7.5%
(€ in millions)
18.4%
80
168.7
150
(5,2)
(38.7)
56.5
181.3 60
-3.1% -22.9%
100
33.5% %
15.9 61.4
(1.8)
(2.8)
-2.9%
-4.6%
72.6
25.9%
40 20
50
36.4% 0
EBITDA Margin
40.0%
0 Turnover 2009
Translation Impact
Organic g Growth
Scope p Impact
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
20
Eastern Mediterranean Region Shows Solid Growth Potential In Egypt Titan volumes grow on the back of increased capacity, temporary slow-down during Ramadan period was reversed in October Strong St volume l growth th in i Turkey T k fueled f l d by b fast f t recovery off the th economy and d supported t d by b exportt markets New-to-the-Group Ready Mix Cement business kick-started in Egypt and Turkey Sale of 15.2% 15 2% minority stake in Egypt to IFC for €80m in cash completed on Nov Nov. 19th EBITDA affected by increased fuel and electricity costs in both Turkey and Egypt
Turnover
EBITDA
(€ in millions)
30.4%
(€ in millions)
45.6%
9 Months
120 300 250 200
49.7 206.2
1.1%
10.7
5.2%
2.3
268.9
100 80
24.1%
28.9 72.5
150 100
40
50
20
0
35.2%
105.5
0.3%
3.9
39.9%
5.5%
60
0.2
39.2%
EBITDA Margin
0 Turnover Translation 2009 I Impact t
Organic G Growth th
Scope I Impact t
Turnover 2010
EBITDA 2009
Translation Impact
Organic Growth
Scope Impact
EBITDA 2010
21
Unsaved Document / 05//09/2009 / 20:36
Market Overviews
Greece Business Overview Greece Significant capacity surplus 16.5m MT capacit capacity
Location of Production Facilities (€ in millions) Grey Cement - Titan
White Cement - Titan
TITAN Cement: 4 plants l approx. 7m MT Ready-mix: 1.8m m3 (largest concrete operator) Aggregates: nearly 10m MT (largest aggregates producer)
Italcementi
800 600
Lafarge
631
607
526
504
166
191
191
169
128
0 2005
2006
2007
Turnov er
Market Shares
2008
2009
EBITDA
Trends & Drivers
Halyps (Italcementi) 5%
Titan 40-45% Lafarge 50-55%
633
400 200
Market share 40-45%
Greek operations (2009) 37% of Group Turnover (€504m) 39% of Group EBITDA (€128m)
Turnover & EBITDA
Worsening economic climate negatively affects construction
Weak housing market
Greece’s budgetary difficulties delay infrastructure projects
Exportt volumes E l increased i d in i 2010 compared to 2009
TITAN’s home market: modern assets and strong cash-flow generation 23
Greece Market Overview Domestic Cement Consumption (Mt) 1990-2009
14 12 10 8 6 4 2 0
11,66 11,0 11 10,5 11,0 10,4 10,1 10,2 9,4 8,9 8,6 7,7 8,2 7,7 7,7 7,7 7,2 7,7 6,6 6,8 7,3
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20082009E Sources: National Statistic Service of Greece, Greek Cement Association, TITAN Estimates
Domestic Cement Consumption per Capita
Greece GDP Growth 6%
(kg)
4,5% 4,5%
4 6% 4,6%
4%
2,1%
2,0%
2%
2,1%
1,1%
2,2%
0%
1200 1000
2,7%
960
1 046 1.046 913
1 017 1.017
925
800
690
600
(2%) (4%)
(2,0%)
(6%) 04 20 Source: IMF
05 20
06 20
07 20
08 20
09 20
(2,6%) (4,0%)
E E E E E E 1 2 01 3 14 11 15 10 2 20 20 20 20 20
400 200 0 2004
2005
2006
2007
2008
2009E
Sources: Greek Cement Association, Association TITAN Estimates
In 2010 TITAN increased export volumes to partly offset decline of the Greek market 24
Greece Market Overview Production Index in Construction 35% 25% 15% 5% -5% -15% -25% 25%
Q 2
Q 1
20 06 20 Q 06 3 20 Q 06 4 20 Q 06 1 20 Q 07 2 20 Q 07 3 20 Q 07 4 20 Q 07 1 20 Q 08 2 20 Q 08 3 20 Q 08 4 20 Q 08 1 20 Q 09 2 20 Q 09 3 20 Q 09 4 20 Q 09 1 20 Q 10 2 20 10
-35%
Greece
Euro Area (EA 16)
Sources: National Statistic Service of Greece, Foundation for Economic and Industrial Research Note: Production Index in Construction shows the quarterly activity in the production of building construction and the production of civil engineering sectors. The Index compares the volume of each quarter’s output with the corresponding figure of the same quarter the previous year.
Civil Engineer works (YoY change)
Expectations Index regarding construction activity (YoY change) 60%
40% 18,1%
20%
21,8%
-20%
15%
4,8%
0%
-16,8%
-17,3%
-49,9% 2005
2006
-15% -30% -45%
-60% 2004
1,5%
0%
-15,5%
-40%
44,6%
45% 30%
2007
2008
2009
Sources: National Statistic Service of Greece Greece, National Bank of Greece
2010 (Q2)
3,0%
-22,7% -29,1% 2004
2005
-31,4% 2006
2007
2008
2009
-26,4%
2010 (Jan-Sep)
Source: Foundation for Economic and Industrial Research
Economic crisis affects business confidence and building activity 25
Greece Housing Market House Price Index in urban areas (YoY change)
Foreign capital inflow for real estate investments (YoY change)
20% 14,4% , 10%
13,9%
80% 60% 40% 20% 0% -20%
12,4%
10,6%
10,9%
5,4%
5,1%
2,3%
0%
1,7% -4,3% -4,5%
-10%
66,5%
33% -24,4%
2004
2005
2006
2007
2008
2009
2010 (Jan-Aug)
Source: National Bank of Greece
Interest rates on new housing loans
40%
6%
33%
4,8%
26,3%
27,6%
-35 35,0% 0%
-58,2%
Mortgage market (Average YoY change)
30%
55,4%
-40% -60% -80%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (Q2) Sources: National Statistic Service of Greece, National Bank of Greece
73,0%
4%
4,7%
4 3% 4,3%
4,9%
5,3% 4,1%
4,0%
21,9%
20%
2%
11,5%
10%
3,7% 1 0% 1,0%
0% 2004
2005
Source: National Bank of Greece
2006
2007
2008
2009
2010 (Sep)
0% 2004
2005
2006
2007
2008
2009
2010 (Aug)
Source: National Bank of Greece
Aff t d consumer sentiment, Affected ti t resilience ili off house h prices i and d stagnation t ti off mortgage t market k t lead to deepening of crisis in residential sector 26
USA Business Overview Location of Production Facilities
USA
Current cement capacity exceeds demand (historically about 10% of demand supplied by imports)
Ohio
Indiana
MD
West Virginia Kentucky
Virginia
Cement plant
800
Market presence through vertically integrated activities
Georgia
FL
Ready-mix: over 2.6m
Aggregates: over 6.5m MT* Market share 10-30% depending p g on the region g
US operations (2009)
27% of Group Turnover (€366m) 8% of Group EBITDA (€26m)
366 140
184
106
43
26
2005
2006
2007
2008
2009
Turnover
EBITDA
m3
484
0
2 plants total 3.5m MT and 3 import terminals
593
400 200
Cement:
712 605
600
South Carolina AL
Turnover & EBITDA (€ in millions)
DE
North Carolina
Tennessee
MS
TITAN
inois
NJ
Florida Market Shares
Oldcastle ~5%
Swannee (SAC) ~20% Vulcan ~20%
Eastern Cement ~1%
Trends & Drivers
Holcim ~1% Cemex ~30%
Titan ~23%
Housing market crisis and deepening of non residential sector decline
Economic stimulus program impact anticipated in 2010-2011
PCA national forecasts for 2010: +0.3%
Strong S o g long-term o g e de demographic og ap c trends e ds
TITAN operates highly efficient plants in USA and through an integrated logistic network 27
USA Market Overview Construction and Economic Activity
Cement consumption
(Index 1990 = 1.0)
140.450 120 450 120.450 100.450 80.450 60.450 40.450 20.450 450
1,8 1,6
GDP
1,4 1,2
Construction Spending
1,0 ,
-54 mt
1989
1993
1997
2001
2005
19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15
0,8 2009
Source: PCA Annual Yearbook 2010
Capacity Utilization Rate
Clinker Capacity (Thousands of Metric Tons) 110.000
(Percent)
120 100.000
100 80
90.000
60
80.000
40
70.000
20
60.000
0 1989
1994
Source: PCA Annual Yearbook 2010
1999
2004
2009
1989
1994
1999
2004
2009
Source: PCA Annual Yearbook 2010
Sustained improvement in consumer and business confidence are key for construction recovery 28
South Eastern Europe Business Overview TITAN Cement: 4 plants approx. 5m MT, including new plant in Albania (Q1 2010)
Location of Production Facilities (€ in millions)
200 BULGARIA ALBANIA
TITAN
100
Holcim ~30%
Serbia
Seament Holding
Holcim
Lafarge
FYROM
Albania Imports ~35%
Seament ~35%
TITAN ~30%
TITAN ~20%
73
2005
2006
97
105
74
2007
2008
Turnov er
2009
EBITDA
Trends & Drivers
Others Lafarge ~20% ~45%
Italcementi Holcim ~40% ~35%
56
0
FYROM
Italcementi
216
210
187
158
SERBIA
Market Shares
Bulgaria
287
300
Ready-mix: 7 production units
South Eastern Europe (2009) 16% of Group Turnover (€216m) 22% of Group EBITDA ((€74m))
Turnover & EBITDA
TITAN ~80%
Decline of demand in SEE markets in 2010
Challenging market conditions in Bulgaria accentuated by imports
New cement plant in Albania (1.5m MT), started in March 2010
TITAN ~30%
Source: Broker reports, Global Cement Report
Attractive regional cluster set to benefit from long-term infrastructure needs and EU admission 29
Albania – Antea: Commissioning of New Cement Plant Overview
Albania is a potential candidate country for EU accession − Pre-accession EU financial aid of c.€500m from 20072012 GDP growth of 3.8% in 2009 (+2.6% 2010E) Strong g consumption p relative to its wealth reflects country's y continuing needs for basic infrastructure and housing Antea strengthens the network of TITAN cement plants in the Balkans TITAN has been exporting to Albania since 1992 2006 TITAN commissions 2006, i i ab bulk lk cementt tterminal i l iin Vl Vlore 2008, TITAN acquires a distribution terminal in Tirana 2010 March, commissioning of the new cement plant in Boka e Kuqe (close to Tirana) Annual cement capacity 1 1.5m 5m tones cement
Construction completed on time, within budget and without accident EBRD & IFC are co-investors in Antea with 20% each 30
Eastern Mediterranean Business Overview Egypt
Location of Production Facilities
Currently, demand is higher than production
Turnover & EBITDA (€ in millions)
TURKEY
Turkey
300
Capacity surplus increased after 2008 new additions
200
EGYPT
TITAN
Egypt: 2 cement plants approx. 5m MT, including new line in BSCC Turkey: 50% JV in Adocim Cimento
Eastern Mediterranean (2009)
20% of Group Turnover (€275m)
31% of Group EBITDA (€103m)
Cement plants
100
Grinding plant
0
52
28
2005
Distribution Terminals
Cement total: 7.5m MT
275
174 62
64 33
2006
Competitors and Market Shares – Egypt
31
2007
Turnov er
64
2008
103
2009
EBITDA
Trends & Drivers
Misr Cement (Qena) Misr Beni Suef Sinai 4% 4% 6% Suez and Helw an National ((Italcementi)) 8% 28%
Market conditions favorable in Egypt and are improving in Turkey
New production line of 1.5m MT cement at Beni Suef started in November 2009
Cimpor 8%
In Egypt, sale of a minority stake of 15.2% to IFC (Nov 2010) for €80 m in cash
TITAN 9% Cemex 13%
Lafarge L f 20%
Source: Ministry of Trade and Industry
Two large markets (c. 100m MT of combined cement consumption in 2009) with long-term long term positive drivers 31
Egypt Business Overview Location of Production Facilities
Cement Supply and Demand (Tonnes in millions)
Favourable demographic profile
40 38 41
57
10 Distribution Terminals
0 2006A
2008A
2010E
Domestic Demand
Largest Population in MENA Region
100
77
80
60 35
32
24
20
Source: IMF
Tunisiia
10 Syria a
20 0
77
78
80
81
83
85
86
60 26
40 6 Libya a
39
40
Cement Supply
(Population in millions)
100 80
2012E
Population Growth
(Population in millions)
Yemen n
Healthy banking system with very low mortgage penetration (currently below 1% of GDP)
31
34
55
49
48
20
Cement p plants
Increase in cement consumption as urbanisation and industrialisation increase Annual demand for housing estimated at c.750,000 units (emphasis on social housing)
39
48 46
30
KSA A
40
Morocc co
50
EGYPT
Algeria
60
Sudan
One of the largest g cement markets in the MENA region
Egyp pt
20 0 2009A 2010E 2011E 2012E 2013E 2014E 2015E Source: IMF
One of the fastest growing cement markets globally with positive underlying economic fundamentals and an attractive demographic profile 32
Egypt – Commissioning of New Production Line Overview
The new production line started operations in November 2009 adding 1.5m MT to the existing total capacity (total of c. 5m MT)
Located within the existing plant in Beni Suef, it benefits from access to existing g infrastructure and operating personnel
Operational synergies are expected to improve profitability margins
Vast raw materials reserves in proximity of the plant
Turn-key supplier, France’s Fives FCB
New plant During Construction
6.5 million hours without LTI (Lost Time Incident)
Construction completed on time and within budget 33
Turkey Business Overview Location of Production Facilities
Population Growth (Population in millions)
Favourable demographics coupled with urbanisation trend Ongoing infrastructure and energy projects together with growing residential investments drive cement demand Mortgages g g at historical lows
Recovery of volumes and prices (from very low levels)
Major capacity expansions in 2005-2009 lead to market overcapacity
Fragmented competition
100 80 TURKEY
71
71
72
73
74
75
76
60 40 20 Cement plants
0 2009A 2010E 2011E 2012E 2013E 2014E 2015E
Grinding plant Source: IMF
Domestic Demand – 12-M.O. Trailing (MT)
Source: Turkish Cement Manufacturers Association, Cheuvreux
Domestic Demand (MT)
Source: Turkish Cement Manufacturers Association, Cheuvreux
Increase of building activity based on dynamic economic recovery and favourable demographics 34
Unsaved Document / 05//09/2009 / 20:36
Historical Performance – Group Financials
Historical Performance Highlights Earnings per Share
EBITDA Margin
34% 32% 30% 28% 26% 24% 22% 20% 2000
2002
2004
2006
2008
3,70 3,20 , 2,70 2,20 1,70 1,20 0 70 0,70 0,20 2000
2010
2002
2004
2006
2008
2010
Long g term Returns (TITK) ( )
Year
Period
TITK Cumulative Return
EPS Growth
ASE Cumulative Return
1995-2010
15 years
574%
463% (1)
69%
2005-2010
5 years
-50%
-28% (2)
-58%
Notes: (1) EPS Growth is calculated for the period 1994-2009 (2) EPS Growth is calculated for the period 2004-2009
Solid track record of profitable growth 36
Historical Performance Highlights ROCE vs WACC for cement companies (1998-2009) 12%
A prudent investor
growing by successful acquisitions and capacity expansions made g internal cash through flow generation
9,8%
10% 8% 6%
2,4%
4% 2% 0% -2%
-1,8%
-4%
-0,9%
-0,5%
-0,7%
Company 1 Company 2 Company 3 Company 4 Company 5
Last share capital
i increase was iin 1990
-1,4%
-0,6%
Company6
Company 7
TITAN
Average (1998 (1998-2009) 2009) ROCE vs WACC
Source: Jefferies
TITAN share vs Peers 1995- 2009
the last 12 years TITAN had superior returns compared to average in the sector (Return on p Employed p y Capital compared to WACC)
Indexed Price
Analysis shows that over
1800% 1600% 1400% 1200% 1000% 800% 600% 400% 200% 0%
TITAN
Company 1
Company 2
Company 3
Company 4
TITAN combines industry experience with a long term strategy delivering strong shareholder value 37
Net Debt Continues to Improve Significantly Group Debt (30.9.2008 – 30.9.2010) (€ in millions)
1,500
Net Debt/EBITDA (1) = 2.54
1 300 1,300 1133
1114
(1) According to covenants definition in the syndicated loan of €800m
1154 1028
1,100 900
1029
971
988 917
873
Net debt
700 Q3
Q4
Q1
Q2
2008
Q3
Q4
Q1
2009
Q2
Q3
2010
Leverage Ratios of Major Industry Players 2009 (Net debt/EBITDA) 6,8
7,0
Leverage close to average industry levels
60 6,0 5,0
3,9
3,9
4,0
2,9
2,7
3,0
2,5
22 2,2
2,54 2,0
2,0 1,0 0,0
Source: Jefferies
Company p y 1
Company p y 2
Company p y 3
Company p y 4
Company p y 5
Company p y 6
Company p y 7
TITAN
TITAN 30/9/2010
Commitment to cash flow generation is leading to significant de-leveraging 38
TITAN Group: Solid Capital Structure FFO/Net Debt Strong operating cash
90%
flow generation profile reasonable profile, leverage.
49%
58%
85%
63% 49%
47%
37% 24%
27%
Net debt starting to
decrease in 2010, as a result of the completion of the 2 major capex projects and the efforts over the last two years.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 FFO: Funds From Operations
Operating EBITDA Interest Coverage
14 1x 14,1x
Over O the th last l t five fi
11,4x
years Net Debt to Operating EBITDA has averaged 1.3x and FFO to Net Debt has averaged 61.6%, consistent with a strong investment grade profile.
2003
11,3x
2004
11,3x
2005
9,7x
2006
2007
5,9x
5,2x
2008
2009
Strengthening of the B/S in line with TITAN’s traditionally conservative approach to financing Source: Titan Financials Source: Titan Financials
39
Unsaved Document / 05//09/2009 / 20:36
Outlook
2010 Outlook 1
Greek market decline continues
2
No upturn seen in the US
3
Markets remain weak in South Eastern Europe
4
Demand grows in Eastern Med
5
Energy costs trending up
6
Pricing pressures increasing
Titan benefiting from : o Focus on free cash flow generation o Productivity initiatives o New capacities in Egypt and South Eastern Europe
7
41
Important disclosures
This document contains forward-looking statements relating to the Group’s future business, development and economic performance. It also includes statements from sources that have not been independently verified by the Company.
Such statements may be subject to a number of risks, uncertainties and other important factors, such as but not limited to: − Competitive pressures − Legislative and regulatory developments − Global, macroeconomic and political trends − Fluctuations in currency exchange rates and general financial market conditions − Delay or inability in obtaining approvals from authorities − Technical development − Litigation − Adverse publicity and news coverage, which would cause actual development and results to differ materially from the statements made in this document
TITAN assumes no obligation to update or alter such statements whether as a result of new information, future events or otherwise.
http://www.titan-cement.com/
