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Cementos Portland Valderrivas expects a return to profits in 2013 through its Newval Plan

18/05/2012

Cementos Portland Valderrivas expects a return to profits in 2013 through its Newval Plan

  • Production capacity will be trimmed and revenues expanded to obtain 200 million euro in EBITDA
  • The Shareholders' Meeting, held in Pamplona, approved 2011 earnings
Cementos Portland Valderrivas expects a return to profits in 2013 through its Newval Plan

Cementos Portland Valderrivas Group expects EBITDA of 200 million euro and a return to profits in 2013 through execution of its NewVal Plan, which is being implemented this year, as Juan Béjar, the new chairman and managing director of CPV, told shareholders in Pamplona.

The 2012-2013 NewVal Plan, which focuses on cost reduction and the search for new revenues, aims to adapt the company's industrial structure in Spain to the new market situation. According to the chairman, the action plan will generate around 80 million euro in EBITDA: 50 million euro from adapting production capacity in Spain and 30 million euro from optimising production costs in the US. The plan will enable the company to achieve the objectives in the 2012-2017 Business Plan, which envisages a return to profits and 200 million euro in EBITDA in 2013.

According to Mr Béjar, cement consumption in Spain amounted to 20.4 million tonnes in 2011, i.e. 64% lower than the 2007 peak, and demand is expected to be less than 16 million tonnes in 2012. He added that consumption will stabilise at around 25-30 million tonnes per year in the medium and long term.

"There is a significant gap between installed capacity in Spain and both current and future demand," said Mr Béjar. In contrast, he noted that cement consumption in the US has started to recover.

He also underlined that the company would not need to take on additional debt to finance its business plan. According to Mr Béjar, attainment of the objectives and steps to reduce debt will enable the group to enhance the conditions of its debt, in view of current requirements in the financial market.

Commitment to alternative fuels and research

The Group continued to advance its policy of seeking alternative sources of energy and raw materials in the last year. The chairman commented that another two plants in Spain started burning biomass in 2011, bringing the total to eight.
Mr Béjar also highlighted that the Group has continued to research innovative products that add value and/or enable the group to tap new markets. In the last two years, the company has developed eleven new competitive cement products offering faster setting times, strength under extreme weather conditions, and lower environmental impact.

The company has begun to leverage its technology and is positioning itself to market a portfolio of innovative products.

Performance in 2011

Mr Béjar discussed the Group's results for 2011, when it reported a loss of -327.4 million euro, contrasting with +1.2 million euro in profit in 2010. He noted that the earnings performance is attributable to 337 million euro in writedowns booked by Cementos Portland Valderrivas.

The 2011 figures reflect the effect of the reclassification of Giant Cement Holding Inc. as a non-current asset available for sale (July).

Resolutions

The Shareholders' Meeting in Pamplona approved last year's financial statements and the distribution of income. In view of the loss in the year, the Meeting resolved not to pay any dividends or to remunerate the members of the Board of Directors.

The shareholders also approved amendments to the Articles of Association, the Rules of the General Meeting of Shareholders and the Rules of the Board of Directors to adapt them to recent legislative changes and updated the powers of the Board of Directors to increase capital by up to 50% over a five-year period and to issue fixed-income securities. They also ratified the appointment of Juan Béjar as chairman, which was adopted by the Board of Directors on 12 January.