ELVALHALCOR HELLENIC COPPER AND ALUMINIUM INDUSTRY S.A.
Press Release regarding H1 2008 Group Financial Results.
Halcor Group of companies announced its H1 2008 consolidated financial results according to the International Financial Reporting Standards (IFRS).
Consolidated turnover reached in H1 2008 euro 644.2 mln. versus euro 714.2 mln. in H1 2007, decreased by 9.8%. Despite the adverse conditions in both domestic and European market, and more specifically the economic development slowdown and the decrease in the construction activity, volume of sales remained practically unchanged in the same level with H1 2007 marking a slight decrease of 0.6%. The decrease of volume of sales was more intense in copper products used in installations, due as well to the persistent high level of copper prices. Decrease in consolidated turnover was mainly the result of the increase of the proportion of brass products to total sales in conjunction with the significant decrease of zinc prices.
Average copper price in H1 2008 in euro terms increased by 4.2% standing at euro 5,293 per ton versus euro 5,082 per ton in H1 2007. In contrary, average zinc price decreased significantly by 44.6% and stood at euro 1,485 per tone versus euro 2,679 per tone in H1 2007. With respect to volume, in H1 2008 cable products accounted for 35% of total sales, tubes for 28%, rolled products for 17%, brass rods for 13% and copper bus bars for 7%.
Group profits posted a decrease as well, with consolidated gross profit at euro 33.1 mln. versus euro 55.4 mln. in H1 2007 showing a decrease of 40.3%. Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) reached in H1 2008 euro 25.7 mln. versus euro 47.2 mln. in the respective period last year, decreased by 45.6%, while earnings before interest and tax (ΕΒΙΤ) decreased by 61.9% and stood at euro 13.4 mln.
The decrease in financial results is attributed to the increase of production costs due to high oil prices, in conjunction with dysfunctions in the country's main ports which affected both quantities and the cost of exports and raw material imports, as well as total inventories of raw materials and final products. Moreover, the combination of metal price fluctuations, a high backwardation emerging early in the year and the delays in receiving large scrap quantities from the international markets resulted to the lack of positive metal results for the first half for the Group.
It is worth mentioning that the production cost has been negatively affected in the short run from the operational pilot testing of large investments in the areas of tubes, rolling products and cables. These investments are expected to produce benefits in the near future.
Consolidated earnings before tax (EBT) marked a significant decrease standing in H1 2008 to losses of euro 1.7 mln. as opposed to profits euro 24.0 mln. in H1 2007, affected by the increased financial expenses as inter-bank interest rates continued standing at high levels. Finally, net earnings after taxes and minorities for H1 2008 amounted to losses euro 4.6 mln. or euro 0.045 per share as opposed to profits of euro 16.0 mln. in the respective period last year.
Conditions that affected the results of the first half of 2008 are expected to persist into the rest of the fiscal year 2008, during which it is estimated that the substitution of certain product categories will continue for as long as copper prices remain at high levels. Furthermore, global construction activity level is continuously decreasing, a fact mainly due to the slower development rate of the international economy along with the slump recession in the United States and the slowdown of European economy. In addition high levels of inflation in conjunction with the continued bank crisis maintain interst rates in high levels.
The Group continues to implement its strategic plan which is based on developing its activities abroad, into new markets where it has not expanded until now, developing high value added products least susceptible to substitution effects, along with the improvement of production cost. Additionally to the aforementioned goals the completion and optimization of new investments along with the continuous increase of scrap use for the production of final products, is estimated that will contribute in the enhancement of HALCOR figures.
Consolidated turnover reached in H1 2008 euro 644.2 mln. versus euro 714.2 mln. in H1 2007, decreased by 9.8%. Despite the adverse conditions in both domestic and European market, and more specifically the economic development slowdown and the decrease in the construction activity, volume of sales remained practically unchanged in the same level with H1 2007 marking a slight decrease of 0.6%. The decrease of volume of sales was more intense in copper products used in installations, due as well to the persistent high level of copper prices. Decrease in consolidated turnover was mainly the result of the increase of the proportion of brass products to total sales in conjunction with the significant decrease of zinc prices.
Average copper price in H1 2008 in euro terms increased by 4.2% standing at euro 5,293 per ton versus euro 5,082 per ton in H1 2007. In contrary, average zinc price decreased significantly by 44.6% and stood at euro 1,485 per tone versus euro 2,679 per tone in H1 2007. With respect to volume, in H1 2008 cable products accounted for 35% of total sales, tubes for 28%, rolled products for 17%, brass rods for 13% and copper bus bars for 7%.
Group profits posted a decrease as well, with consolidated gross profit at euro 33.1 mln. versus euro 55.4 mln. in H1 2007 showing a decrease of 40.3%. Consolidated earnings before interest, tax, depreciation and amortization (EBITDA) reached in H1 2008 euro 25.7 mln. versus euro 47.2 mln. in the respective period last year, decreased by 45.6%, while earnings before interest and tax (ΕΒΙΤ) decreased by 61.9% and stood at euro 13.4 mln.
The decrease in financial results is attributed to the increase of production costs due to high oil prices, in conjunction with dysfunctions in the country's main ports which affected both quantities and the cost of exports and raw material imports, as well as total inventories of raw materials and final products. Moreover, the combination of metal price fluctuations, a high backwardation emerging early in the year and the delays in receiving large scrap quantities from the international markets resulted to the lack of positive metal results for the first half for the Group.
It is worth mentioning that the production cost has been negatively affected in the short run from the operational pilot testing of large investments in the areas of tubes, rolling products and cables. These investments are expected to produce benefits in the near future.
Consolidated earnings before tax (EBT) marked a significant decrease standing in H1 2008 to losses of euro 1.7 mln. as opposed to profits euro 24.0 mln. in H1 2007, affected by the increased financial expenses as inter-bank interest rates continued standing at high levels. Finally, net earnings after taxes and minorities for H1 2008 amounted to losses euro 4.6 mln. or euro 0.045 per share as opposed to profits of euro 16.0 mln. in the respective period last year.
Conditions that affected the results of the first half of 2008 are expected to persist into the rest of the fiscal year 2008, during which it is estimated that the substitution of certain product categories will continue for as long as copper prices remain at high levels. Furthermore, global construction activity level is continuously decreasing, a fact mainly due to the slower development rate of the international economy along with the slump recession in the United States and the slowdown of European economy. In addition high levels of inflation in conjunction with the continued bank crisis maintain interst rates in high levels.
The Group continues to implement its strategic plan which is based on developing its activities abroad, into new markets where it has not expanded until now, developing high value added products least susceptible to substitution effects, along with the improvement of production cost. Additionally to the aforementioned goals the completion and optimization of new investments along with the continuous increase of scrap use for the production of final products, is estimated that will contribute in the enhancement of HALCOR figures.