Vassiliko Cement Works (VCW) reported a 36.8% year-on-year increase in net profits to CYP 6.88 mln for 2005 compared to CYP 5.03 mln in 2004, but maintained its final and dividend at the same levels of 2005 in view of its massive investment plans.
Following the spectacular increase in profitability, which was achieved on the back of a buoyant local construction sector, the Board of Vassiliko decided to declare a 2 cent per share final dividend, the same as in 2004, which together with the 1.5 cent interim already paid, takes the total dividend to 3.5 cent per share for a total payout of CYP 1.88 mln, the same as the previous year.
The main drivers of profitability were the satisfactory growth in Company total sales of cement and clinker coupled with the Company’s material improvement in production efficiency and its enhanced cost containment efforts.
Total Company sales exhibited a strong growth of 15.6% to CYP 45.86 mln for an improvement of 4.1% y/y as local cement and clinker sales surged higher. Total sales of cement and clinker increased to 1.4 mln tons vs. 1.3 mln tons in 2004, up by 7.8%. Specifically, local sales of cement and clinker remained strong at 1.16 mln tons compared to 1.1 mln tons in 2004, while export sales increased from 205.000 tons to 264.000 tons.
During the year, the Company successfully launched a new cement type product thus increasing its cement products to six.
Despite soaring energy prices, Vassiliko successfully achieved
material production efficiencies through investment in new technology, the use of alternative energy sources and the operation and usage of VCW’s electricity plant (absorbed 25% of the Company’s total electricity consumption needs).
Net Profit advanced to CYP 6.88 mln, up by 15.6% from CYP 5.03 mln in 2004, with earnings per share improving to 12.8 cent against 9.4 cent in 2004. Based on the results and the latest closing price, VCW trades at an 2005 P/E ratio of 10.4 times.
The company noted that it intends to invest CYP 1.5 mln to double the capacity of its electricity plant to 10MW, which will eventually lead to cost efficiencies amounting to CYP 0.5 mln per annum.
Additionally, the Company is currently proceeding with the construction of a new silo for clinker of a total capacity of 90.000 tons at an approximate cost of CYP 6 mln. This is expected to be completed by 2007 and will attain in the improvement of product quality and more importantly in further cost containment.
