Vassiliko Cement profits surge as construction boom continues

Vassiliko Cement Works Pcl (CVW), Cyprus’ leading cement producer and exporter reported a 22.6% jump in net profits during the first quarter to EUR 3.98 mln from EUR 3.24 mln in the same period in 2006 on the back of higher sales to the booming construction sector as well as its success in restricting cost increases.

Total turnover was up 10% to EUR 22.24 mln (CYP 12.9m) from EUR 20.19 mln a year ago as local cement and clinker sales reached 331.000 tonnes, up 19.5% compared to 277.000 tonnes a year ago.

Local sales during the first quarter of 2007 were 12.4% higher at 437.000 tonnes, compared to 389.000 tonnes a year earlier with cement sales in April galloping at a 15.4% YoY rate.

Exports of cement and clinker declined to 23.000 tonnes from 81.000 tonnes a year ago as Vassiliko shifted production to satisfy the local market needs.

This helped improve the gross profit margin to 26.6% in 1Q07 from 26.3% in 1Q06 with gross profit at EUR 5.9 mln from EUR 5.3 mln. The ability of Vassiliko to restrict cost increases, despite intense pressure on pet-coke prices (one of the key ingredients needed to burn the cement furnaces) was instrumental in boosting profits. Nevertheless, Management said it is looking into alternatives to contain its costs.

Operating profits were up 19.6% YoY to EUR 4.29 mln from EUR 3.58 mln and with finance income climbing to EUR 208k from EUR 46k, net profit attributable to shareholders amounted to EUR 3.982.000 in 1Q07 from EUR 3.247.000 in 1Q06.

EPS were 7.4 euro cents from 6 euro cents a year ago.

Vassiliko booked net profit of EUR 18.67 mln in 2006 and trades at a p/e of 8 times based on its most recent price of EUR 2.75 per share on the CSE. The company’s book value according to Financial Mirror calculations is EUR 2.70 for a price to book value of 1.02 times.