Vassiliko Cement Works (VCW) reported a highly satisfactory increase in sales and profits during the first half of the year on the back of strong local demand for cement as the construction boom showed no signs of retreating.
First half turnover surged 17.89% year-on-year to CYP 22.21 mln from CYP 18.84 mln a year ago in the same period. Total cement and clinker sales surged to 678.000 tonnes from 619.000 a year ago, with local sales surging 8.9% to 587.000 from 539.000 tonnes a year ago. The company reported that total cement and clinker sales in the local market were up 8% to 823.000 from 761.000, giving Vassiliko a 71.32% market share.
Vassiliko also managed to increase in exports to 91.000 tonnes from 80.000 tonnes a year ago in the first half, with export prices registering a satisfactory increase to reflect rising costs.
Referring to the prospects, Vassiliko said local cement sales from May onwards have shown a small decline compared to a year ago, but the company blames this on the truck drivers strike and bad weather. The company believes that higher exports will more than compensate the decline in local cement demand.
On the negative side, Vassiliko expects costs to continue higher following the increase in crude oil prices, but expects negligible hit to the results due to the inability of the company to adjust its prices accordingly.
MARGINS IMPROVE
During the first half, Vassiliko reported gross profit of CYP 6.31 mln from CYP 5.23 mln with the gross profit margin improving to 28.44% of total sales from 27.76% previously.
Increased fuel costs were partly to blame for the 19.3% year-on-year increase in total costs to CYP 2.65 mln in the first half, but more worrisome was the 56% y/y increase in total expenses during the second quarter to CYP 1.56 mln from CYP 1.03 mln.
Despite the sharp increase in costs, operating profits showed a satisfactory increase of 28.6% in the first half to CYP 4.12 mln. VCW also managed to drop its finance costs to CYP 166k from CYP 231k.
Net profits jumped 36.9% year-on-year to CYP 3.378.000 from CYP 2.467.000 a year ago in 2004 while in the second quarter, net profits were up 6.5% to CYP 1.56 mln from CYP 1.46 mln.
Earnings per share in the first half were up at 6.3 cent from 4.6 cent before, while in the Q2 ‘05, EPS were 2.9 cent from 2.7 cent a year ago in the same period.
LOANS REDUCED
In the balance sheet, VCW reported higher debtors at CYP 6.0 mln from CYP 4.9 mln, but it managed to reduce total bank debt to CYP 2.31 mln from CYP 4.96 mln end of 2004. The reduction in the overall bank debt and the 1.25 percentage point cut in interest rates were instrumental in reducing finance costs to CYP 166k from CYP 231k.
After the payment of CYP 1.08 mln in dividends, shareholders funds improved to CYP 66.28 mln with book value per share improving to 1.2335 per share for a price to book value of 1.02x, according to Financial Mirror estimates.
In another positive development, VCW reported CYP 6.25 mln positive cash flow from operations compared to CYP 4.44 mln a year ago.
