heracles group analysts’ day – 24th may 2007
DESCRIPTION
Heracles Group Analysts’ Day – 24th May 2007. Agenda. Highlights 2006 Financial & Market Overview Financial Performance. Highlights 2006. Safety cascading program launched and in progress Domestic market boomed due to private residential activity Better market conditions for exports - PowerPoint PPT PresentationTRANSCRIPT
Heracles GroupHeracles GroupAnalysts’ Day – 24th May 2007Analysts’ Day – 24th May 2007
2
Highlights 2006
Financial & Market Overview
Financial Performance
AgendaAgenda
3
Highlights 2006Highlights 2006 Safety cascading program launched and in progress
Domestic market boomed due to private residential activity
Better market conditions for exports
Customer orientation program fully deployed
Increased fuel, power and raw material prices affected cost,
partly set off by performance improvement of fuel mix and
power consumption.
Headcount reduction compensated wages’ general increase
Organizational restructuring program initiated
4
Financial OverviewFinancial Overviewin mio € 2006 2005 variance
Turnover 693,7 609,1 13,9%
Profit from Operations, as analysed: 101,4 134,4 -24,6%
Cost of voluntary retirement scheme 14,9 - -
Partial recovery of fees by Greek State - (44,1) -
Profit from Operations - like to like 116,3 90,3 28,8%
Net Profit after Tax, as analysed: 58,0 158,7 -63,5%
Prior years income tax 10,1 - -
Net deferred tax income from real property revaluation
- (50,3) -
Net Profit after Tax - like to like 83,0 64,3 29,1%
Proposed dividend 1,00 € 0,95 € 5,3%
5
Market OverviewMarket Overview
Prior historical high in 2003 due to the Olympic Games construction projects Market boomed in 2006 to all times high due to private residential activity (VAT in
construction resulted in sharp increase of permits in 2nd half of 2005) Slow down of private housing smoothen by an increase in infrastructure construction One of the highest per capita consumptions worldwide, driven by
– Significant use of concrete in the buildings
– Housing & real estate viewed as a solid investment
– Potential for summer / secondary housing for Northern Europeans / development of resort constructions
– Infrastructure still lagging behind European standards
M tons
7,4 7,7 8,2 8,6 8,9 9,410,5 11,0
10,4 10,3
11,911,3
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 F2007
6
Market Shares – Customer StructureMarket Shares – Customer Structure
Heracles is the market leader (*)
(*) 2005 Cement Industry Association Statistics
Ready Mix concrete producers consume two thirds of the total cement supplies
Customer structure remains stable
Market Share
Competition
48%
Heracles52%
0%
Customer Structure 2006
Other5%
Ready Mix68%
Distri-butors21%
Constru-ction Co
6%
7
Heracles Sales BreakdownHeracles Sales Breakdown: Domestic / : Domestic / ExportsExports
Domestic market is a priority and absorbs the majority of production Exports (cement & clinker) cover the rest of our production capacity
4,7 4,9 5,4 5,9 5,4 5,36,2 5,8
4,3 3,5 2,3 2,7 2,92,3 2,4
1
2,2
0,50,40,50,50,4
0,5
2000 2001 2002 2003 2004 2005 2006 F2007
Mto
ns
Domestic Cement Export Cement Export Clinker
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Profit & Loss EvolutionProfit & Loss Evolutionin € thousands GROUP
2004 2005 2006
Turnover 588.001 609.081 693.660Cost of sales (444.726) (470.030) (518.136)Gross margin 143.275 139.051 175.524Administrative & Selling expenses (46.236) (44.781) (53.624)Other operating revenues/(expenses) (201) (3.977) (5.652)Partial recovery of fees by Greek State 0 44.138 0Cost of voluntary retirement scheme 0 0 (14.875)Share of profits/(losses) of associates 26 (34) 3Profit from operations 96.864 134.397 101.376Financial revenues/(expenses) (2.519) (310) 1.433Net income before tax 94.345 134.087 102.809Income tax 1.955 24.606 (44.798)Net income after tax 96.300 158.693 58.011
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Domestic cement volume increased by 16% due to the dynamic private building activity Exports volume decrease by 23%, largely compensated by export selling prices increase by
19% thanks to better market conditions Domestic selling prices increased at inflation level
Sales Variance Analysis 2006 vs Sales Variance Analysis 2006 vs 20052005
609.081
693.660
59.375
23.23634.525
13.915
525.000
550.000
575.000
600.000
625.000
650.000
675.000
700.000
Total turnover2004
Domesticcement volume
variance
Export cementvolume
variance
Cement pricevariance
A&C and othersubsidiaries
variance
Total turnover2005
10
NPAT Variance Analysis 2006 vs 2005NPAT Variance Analysis 2006 vs 2005
Cost of sales adversely affected by increased prices in fuels, power and raw materials as well as departure cost One off positive effects in 2005 from Greek State refund and deferred tax on property revaluation for tax purposes One off negative effect in 2006 from cost of voluntary retirement scheme and prior years income tax
44.138
58.011
158.693
84.579
48.106
8.73814.875
50.339
10.1438.922
50.000
60.000
70.000
80.000
90.000100.000
110.000
120.000
130.000
140.000
150.000
160.000
170.000
180.000
190.000
200.000210.000
220.000
230.000
240.000
250.000
NPAT 2005 Salesvariance
COSvariance
SGA & οther Voluntaryretirement
cost
Greek Staterefund in
2005
Net taxincome in
2005
Prior yearsincome tax
Income taxvariance
NPAT 2006
11
Fuel Prices Evolution
Steam coal price increase 2006 vs 2005: +4% Pet coke price increase 2006 vs 2005: +28%
115
179
229237
100
134
170
219
0
50
100
150
200
250
2003 2004 2005 2006
So
lid
Fu
el
Pri
ces (
Pri
ce I
nd
ex)
Steamcoal Petcoke
12
Balance Sheet EvolutionBalance Sheet Evolutionin € thousands GROUP
31.12.2004 31.12.2005 31.12.2006
Non current assets 659.313 648.200 625.885
Working capital 115.575 120.040 119.371
Working capital days 62 62 54
Net cash 39.244 102.462 118.840
Total 814.132 870.764 864.096
Long-term liabilities 156.874 84.098 85.101
Shareholders' equity 657.258 786.604 778.995
Total 814.132 870.702 864.096
Ass
ets
Liab
ilit
ies
&
Shar
ehol
ders
' eq
uit
y
13
Bank Loans EvolutionBank Loans Evolution
60.015
37.634
7.401
33.071
2.497
24.447
13.187
30.233
-9.985
15
10.015
20.015
30.015
40.015
50.015
60.015
LoanBalance
31.12.2003
Settlement SubsidiaryDisposal
LoanBalance
31.12.2004
LeveragedAcquisition
LoanBalance
31.12.2005
Settlement LoanBalance
31.12.2006
2004 2005 2006
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Profitability IndicatorsProfitability Indicators
14,7% 11,9%
20,2%15,4%
7,4%11,7%
ROE ROIC2004 2005 2006
24,4%16,4%
22,8% 26,1%25,3%
8,4%
Gross Margin Net Margin2004 2005 2006
15
Working Capital IndicatorsWorking Capital Indicators
52
76
49
61
81
46 48
73
39
30
40
50
60
70
80
90
D.P.O. D.I. D.S.O.
2004 2005 2006
16
Cash Flow 2006Cash Flow 2006
174.008
-13.911
30.356
656 124.899
32.008
-14.000
6.000
26.000
46.000
66.000
86.000
106.000
126.000
146.000
166.000
186.000
Adjusted EBITDA Capex & Invest(net of disposals)
Working Capital Interest, Tax &Dividends
Loan Settlement Net Decrease inCash
17
Capital Expenditure EvolutionCapital Expenditure EvolutionCement DivisionCement Division
Capex Bookings (M€)
23,8 24,733,0
22,2
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
2003 2004 2005 2006