October 18, 2021

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Edited Transcript of TITK.AT earnings conference call or presentation 19-Mar-20 5:00pm GMT

Athens Apr 2, 2020 (Thomson StreetEvents) — Edited Transcript of Titan Cement Company SA earnings conference call or presentation Thursday, March 19, 2020 at 5:00:00pm GMT

* Dimitrios Th. Papalexopoulos

Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council

* Michael H. Colakides

Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director

Ladies and gentlemen, thank you for standing by. I am Constantinos, your Chorus Call operator. Welcome, and thank you for joining the Titan Cement Group conference call to present and discuss the full year 2019 financial results. (Operator Instructions) And the conference is being recorded. (Operator Instructions) At this time, I would like to hand the conference over to Mr. Michael Colakides, Group CFO; and Mr. Dimitri Papalexopoulos, Chairman of the Group Executive Committee. Mr. Colakides, you may now proceed.

Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [2]

Thank you. Good evening, ladies and gentlemen. Welcome to our conference call for the presentation of TITAN’s 2019 annual results. The world focus today is not on what happened last year, but at the current events, the coronavirus and its unprecedented impact on the global economy. So we will quickly cover the main points of our 2019 performance. We’ll touch upon our approach to climate change. We’ll brief on where we stand today, and we will then be open for your questions and discussions.

Turning to the first slide. TITAN Group demonstrated strength through 2019, sustaining growth performance with 8% growth in revenue and a smaller increase of 2.8% in EBITDA. NPAT at $51 million was 5.5% down. Results were led for another year by the U.S. operations. Titan America delivered robust performance with revenue exceeding $1 billion, as cement consumption in the United States continued to increase against a background of healthy macroeconomic environment.

Greece has started showing signs of growth, particularly in the private sector while the region of Southeast Europe recorded strong increase in revenues and profitability, driven by continuing economic growth. Performance in the Eastern Med deteriorated as conditions in both Egypt and Turkey remain challenging.

Group operating cash flow at EUR 175 million, posted an increase of EUR 23 million compared to 2018. Group net debt at the end of 2019 was EUR 836 million, higher by EUR 64 million from the end of 2018. This increase was due to EUR 111 million one-off items, specifically the EUR 59 million impact from the adoption of IFRS 16 and EUR 52 million related to the squeeze-out in listing on Euronext Brussels.

On the next slide, we see the graph of the evolution of revenue, EBITDA and NPAT. While the bottom chart shows that in each quarter in 2019, we recorded revenue growth compared to the same quarter of 2018.

Looking at our P&L on Slide 4, which is in euros, I should point out that there is a 3% to 4% growth impact on revenue as well as on most cost items due to the appreciation of the U.S. dollar versus the euro in 2019. EBITDA at EUR 267 million is EUR 7 million ahead of 2018. However, higher depreciation and impairment charge was the main factor that drove NPAT EUR 2.9 million below 2018 to EUR 51 million. The higher depreciation comes from — EUR 13 million come from IFRS 16 and another EUR 4 million come from impairment of fixed assets in a number of countries.

Turning to our balance sheet. It is substantially unchanged other than a reclassification in the equity accounts. TCI, the new parent, raised equity in the form of the exchange shares. In the new consolidated accounts, while total equity remains practically the same after we deduct the acquired IFC minorities, the underlying accounts were reclassified and the share capital account has grown while results have declined, which was an accounting adjustment.

Moving to the sales volumes on Slide 6. Trends in sales volumes were mixed across markets and product lines. Domestic cement sales increased in all regions, except the East Med, where there was a modest decline. Furthermore, several — severe competition in export markets had an adverse effect on the group’s clinker exports, while supply shortages caused a reduction in sales of fly ash in the U.S.A. Overall, group cement sales declined by 7%. Ready-mix sales increased mainly in the U.S., but was offset by a sharp drop in the East Med, resulting in a marginal decline of 1% for the group.

Aggregate sales. Aggregate sales increased by 5% as a result of increased volumes across all markets.

Regarding the group cash flow, which in 2019, was up to EUR 175 million, posting an increase of EUR 23 million compared to 2018. The cash flow generation benefited from the higher EBITDA and lower capital expenditure. Group capital expenditure in the year reached EUR 109 million compared to EUR 119 million in 2018, with more than half of new investments directed to the group’s U.S.A. operations.

Coming to net debt on Slide 8. Group net debt was EUR 836 million at the end of the year, higher by EUR 64 million compared to 2018. As mentioned, the increase was the — mainly the effect of the 2 one-off items, EUR 59 million from IFRS 16 and EUR 52 million from the squeeze-out and expenses for listing of TCI in Brussels.

Furthermore, net debt increased by EUR 20 million, representing the initial payment for the acquisition of the minority shares from IFC in Southeast Europe and Egypt. Excluding the aforementioned elements, net debt would have recorded a decrease of EUR 67 million.

In July 2019, Titan Global Finance repaid EUR 160 million of maturing notes using available group cash. The next significant maturity comes in June 2021 with a maturity of EUR 300 million bond issue, the one that was issued in 2016.

Moving onto the regional performance. U.S. revenue increased — sorry, Titan America delivered another strong performance, as cement consumption in the United States continued to increase, supported by healthy macroeconomic conditions. Improved market demand, combined with strong demographics in the areas Titan America operates, resulted in increased sales across all product lines with the exception of fly ash due to supply shortages. Profitability was supported by higher selling prices and better weather patterns with the exception of Q4, but was burdened by higher cement import costs, higher distribution costs and lost earnings from the fly ash business. In dollar terms, revenue crossed the $1 billion threshold again in 2019, reaching $1.60 billion. In euro terms, revenue in the U.S. recorded a 10.7% increase, reaching EUR 952 million and EBITDA at EUR 179 million was marginally higher in euro terms compared to last year.

Performance in Greece improved, driven by a modest growth in demand, tourism sector construction posted growth and private sector investments, residential as well as nonresidential recorded an increase. Delays in public sector — in public infrastructure projects, partially offset the sales gains from the private sector. Production costs benefited from lower fuel costs due to lower pet coal prices, while electricity cost rose, burdened by increased pass-through CO2 costs. Cement exports remained strong, with the U.S.A. representing Greece’s biggest export market, while lower-margin clinker exports declined. Total revenue for Greece and Western Europe increased by 3.3% to EUR 245 million, while EBITDA increased by 9.2% to EUR 11.9 million.

Next, Southeast Europe, which improved significantly, supported by continuing economic growth in the region. Overall, construction activity has been rising with growth recorded, particularly in the residential segment, and in most countries in infrastructure projects as well. Revenues increased substantially, driven by greater demand for construction materials, leading to volume growth combined with a favorable pricing environment. Regional performance was further enhanced by higher plant utilization rates, higher use of alternative fuels and lower fuel costs, though the latter were partially counterbalanced by higher electricity prices. The region’s progress has been supported by the EU and international organizations, while the unblocking of the EU accession process for the West Balkan countries will act as an additional lever for development. Overall, revenue in Southeast Europe posted a 10% increase, reaching EUR 262.6 million, while EBITDA was up by 29%, reaching EUR 77 million. A reminder that at the end of 2019, in line with our long-term business strategy and commitment to the region, TITAN Group acquired the minority stakes of IFC in our subsidiaries in Albania, Serbia, North Macedonia and Kosovo.

Turning next to East Med. Conditions in the East Mediterranean continue to be challenging. In Egypt, despite strong GDP growth of 6% for the third consecutive year, cement consumption in 2019 dropped by 3.6%. The sector has been driven to lower capacity utilization rates, which combined with higher electricity costs and clay taxes have resulted in a higher cost base. Moreover, prices were not adjusted accordingly, causing further decline in profitability.

At the end of 2019, TITAN acquired the minority stakes of IFC operations — of IFC in our operations in Egypt. Following this transaction, our subsidiary Alexandria Portland Cement Company has initiated the process for its delisting from the Cairo Stock Exchange.

In Turkey, the unfavorable domestic economic environment affected the construction sector with cement consumption decreasing on an annual basis by an estimated 30%. Our operations were impacted by the general slowdown of the market. However, in the second half of 2019, the market showed encouraging signs of stabilization. In 2019, Adocim was fully consolidated for the full year, following the acquisition of a 25% stake from our minority partner back in October 2018.

Overall, operating results in the East Med declined. Total revenue reached EUR 150 million recording a 2.6% decline or 12% like for like, if we take the full year for Adocim. While at EBITDA level, the group recorded a EUR 1.2 million loss versus a positive EUR 11.3 million in 2018. We should note that the gradual improvement in the second half of 2019 was reflected in a positive fourth quarter with an EBITDA of EUR 1.8 million.

Turning next to Brazil. In Brazil, the market posted growth for the first time in 5 years as the country has entered a phase of gradual economic recovery and growth. In 2019, cement demand in Brazil grew by 3.5% year-on-year, reaching 54.7 million tons, driven by private construction. This is the first year of growth since the peak of 2014, where consumption was 72 million tons. Our own subsidiary, Apodi, our joint venture in Brazil, recorded a 3.7% revenue growth.

We are now moving to — the next few slides are about climate change, where we would like to state what our approach is and what our measures are. Climate change is one of the most pressing issues facing the world and a key element in the long-term sustainability of our business, given the high carbon intensity of the cement-making process. TITAN is fully committed to contribute to the Paris Agreement objective to keep the global temperature increase below 2 degrees centigrade. We are also aligned with the UN Sustainable Development Goals. Our main priority is the reduction of the carbon footprint of our own operations and our participation in the decarbonization of the construction value chain, contributing towards the global effort of climate change mitigation.

In 2019, specific net CO2 emissions were further reduced by 1.5%, reaching 676 kilos per tonne of cementitious product, corresponding to a drop of 13% below our 1990 levels. We expect to meet our 2020 target of 20% reduction of specific emissions compared to the base year of 1990, with a short delay in the period up to 2023 due to regulatory and market conditions that influence product and fuel mix. For the midterm, TITAN has launched an internal CO2 initiative, which includes actions per plant as well as in research and development. In order for the group to achieve an approximately 30% reduction below 1990 levels by 2030, broadly in the same range as our peers and in line with the Paris Agreement target of the 2% temperature growth. And for the longer term, TITAN is fully supportive of the European Commission’s Green Deal vision of carbon neutrality in Europe by 2050.

On the next slide, looking at our initiatives. Our mitigation activities and plant level focus on the increased use of alternative fuels, the reduction of the clinker cement ratio and gains in energy efficiency. The main driver of the reduction in our specific emissions in 2019 was substantially increasing the use of alternative fuels, reaching a total substitution rate of 13.6% on a thermal basis. Biomass use also improved to reach 4.3% thermal substitution rate. The percentage of clinker in cement dropped by 0.8% to 82.9%. In general, this ratio takes longer to reduce, as it depends also on the types of cement that customers and markets require.

With regards to energy efficiency, we already have 5 plants running under ISO 50001 energy management system and are ready to certify 2 more plants in 2020. We maintained our good progress on energy consumption levels through targeted investments such as more efficient burners. TITAN is also collaborating in European and international consortium on R&D projects, piloting carbon capture technologies in its plants, developing low carbon cementitious products and participating in the decarbonization of the construction value chain. We have 3 ongoing projects on carbon capture and one in solar-powered calcination. We are working on nanotechnology-inspired products and optimizing further the low carbon cement that we produced in — by — in 2018.

Finally, comments on the European Emissions Trading System. Europe has a target to reduce greenhouse gas emissions by 40% by 2030 and is pushing under the Green Deal to go for a reduction of 50% to 55%. To this effect, we are already operating under the EU Emissions Trading System, which may be adapted depending on progress towards this goal. Our plants in Greece and Bulgaria are at similar levels of CO2 efficiency compared to the group as whole. We are seeing a good pace in further CO2 reduction, particularly due to alternative fuels as both countries will start catching up with the European average waste management, circular economy and therefore, alternative fuels availability.

In the medium term, the allowances allocated to TITAN under the current EU Emission Trading System are expected to be sufficient to cover sales through to year 2030, assuming a reduction of clinker exports and no substantial change in the regulatory environment. The pressure, however, on all European cement plants over the coming years will be significant, as production is at risk of shifting to countries without CO2 pricing unless appropriate measures, such as the introductory of complementary carbon adjustment mechanism are taken at European level.

Now before I hand over to Dimitri for a commentary on the outlook, I would like to highlight 2 resolutions taken today our Board of — by our Board of Directors. The first one is regarding return of capital. Following the authorization granted to the Board of Directors by our shareholders assembly last year, the Board of Directors decided the return of capital of EUR 0.20 per share to all the shareholders of the company of record as of May 14, 2020, which is the date of general assembly. There will be a separate announcement regarding the relevant payment details. The second decision was for share buyback. The Board also decided to activate the buyback program for TCI shares, which had also been approved at last year’s general assembly. As of 20th of March, TCI and TITAN will initiate the share buyback program for up to 1 million TCI shares for an amount of up to EUR 10 million that will have a duration of 2 months.

I will now pass on to Dimitri for some comments on present situation and outlook.

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [3]

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Thank you, Michael. Good afternoon, everyone. Obviously, this is a very different situation from traditional outlook statements, or what we would have communicated even a few short weeks ago. The economic outlook, clearly, the economic — sorry, the coronavirus outbreak clearly changes the short-term perspective. Rather than a broadly positive prospects, which we made our plans for 2020, we are now faced with a sharp macroeconomic shock.

Let me start with where we are today. We have had no major disruptions today. All of our plants are running at this time, and we have had a good start to the year. Sales volumes and operating profitability for the first 2.5 months of 2020 are ahead of last year and ahead of our original budget plan. We have no delusions, however, that this is just a low before the storm, and that we will be significantly impacted. It is also clear that each country or region faces a different set of parameters and is developing its playbook real time in those uncharted waters.

There are many sources of uncertainty in the short term. The level and duration of a decline in demand, external disruptions to operations, such as supply chain or logistics, the nature and intensity of local regulatory intervention in anything from closing borders, restricting travel, banning production, specific activities and so on and so forth. And of course, it has also to do with how governments choose to position themselves towards construction. And that is something that country-by-country, we’ve seen so far, very different thoughts and approaches and no unified theme.

Given those levels of uncertainty, we have moved quickly over the past month or so to prepare and put contingencies in place. Our first priority is clearly the health and safety of our people. We have, along with everybody else, I guess, these days, set ourselves up to be able to work remotely as far as possible and every way possible to support containing the spread of the virus.

We have set up local crisis teams, which we coordinate centrally, that need continuously to monitor the rapidly changing environment. We are making sure that people are focused on essential tasks, being able to service customers, ensuring continuity of supply and operations, putting in place backup solutions and so on and so forth.

We are reviewing production and cash flow planning under various stress scenarios. We have — sorry, we have embarked on the standard immediate actions to preserve cash and contain costs, reviewing all CapEx, freezing nonessential hiring, curtailing overtime, closely monitoring working capital needs, reviewing contracts and commitments and so on and so forth. So far, we are taking relatively low regret sort of pull the handbrake-type actions. We have not yet taken more painful break the glass-type actions. We have also strengthened our liquidity position to about EUR 400 million in a combination of cash on hand and committed credit facilities from international and Greek banks.

On the plus side, we should benefit from tailwinds in energy costs and transportation and logistics costs. While we are preparing for all eventualities, we are making sure our long-term initiatives and strategic priorities remain on track, improving our customer orientation, taking operating excellence to the next level, leveraging new digital technologies and perhaps most importantly, reducing our carbon footprint, as Michael earlier alluded to.

We don’t know exactly how and when but we do know and we don’t know what it will look like, but there will be a next day after coronavirus, and we want to hit the ground running when it comes. And among all this gloom, let me leave you with a positive thought. History suggests that when the health-related emergency starts to ebb, a boost in construction activity, encouraged and funded with cheap money by governments as a way to kick start economic growth and create jobs is a plausible scenario.

And with that, let me open it up for questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from the line of Siya Brijesh with HSBC.

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Brijesh Kumar Siya, HSBC, Research Division – Analyst [2]

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I have 2 questions. First one is probably on COVID-19. You have certainly said 2.5 months of this year has been pretty good. But in recent weeks, can you probably elaborate a little more how things have evolved in the last couple of weeks? Whether you are seeing any change in customer behavior or closer of site — construction sites coming through? So any further color on them will be great. And the second one is on energy. What kind of energy outlook you are seeing for this year in terms of energy cost inflation?

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [3]

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Let me take the first question. Yes, the 2 last — the 2.5-plus months have been pretty good up to pretty much today. We are beginning to see sporadic small warnings of things to come. So even — so let me give you some examples. Demand even to this week is still up, on average, in the U.S. and Greece, for example, for us and Egypt for that matter. We do see pockets of weakness, Italy and France, for example, or areas because of the interventions what has happened there that we’ve seen some changes, some decline, but these are very small presences for us. The U.S. is mostly positive, as I said. But if you look at specific pockets, for example, New York was shut down before New Jersey. So a little bit of weakness has emerged in New York, which is not yet in New Jersey. So the early signs of there, even though net-net even this week, the numbers are good. Is that helpful?

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Brijesh Kumar Siya, HSBC, Research Division – Analyst [4]

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Yes, certainly. And…

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [5]

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On the energy question, sorry.

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Brijesh Kumar Siya, HSBC, Research Division – Analyst [6]

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Go on.

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [7]

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On the energy front, 2020, even before the recent collapse of oil prices, was expected to be much better to have a significant benefit as pet coal prices have already declined dramatically towards the end of 2019 and early 2020. And we have made significant purchases. So we are talking about a benefit of well over EUR 10 million, maybe double that in the year.

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Operator [8]

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Our next question comes from the line of Bromehead Yves with Exane BNP Paribas.

Mr. Bromehead, can you hear us?

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Yves Brian Felix Bromehead, Exane BNP Paribas, Research Division – Analyst of Building Materials [9]

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Sorry, excuse me. I hope you’re all safe in Greece. I’m just wondering if you could comment on the (inaudible) financial covenants. Is there a limit in terms of net debt-to-EBITDA that we should think about? And also, is there a possibility that you could refinance your debt earlier than expected given the current scenario with the coronavirus?

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [10]

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We do have a net debt-to-EBITDA covenant of 4, which is still — but still a long way from that. That is on a rolling 12-month EBITDA basis. That we’re not worried about. We’re comfortable on the liquidity front. Regarding debt refinancing, indeed our regional plans were to refinance within the year, the 2021 bond from the board market. The situation has obviously changed the last few weeks. We’ll have to wait and see. We are 15 months ahead of us until the maturity. There is a good probability that we may go back to the bank market. We have been approached by banks already suggesting, as we proactively take more cash today. And there has been a rush by many corporates to raise large amounts of cash the last couple of weeks for what we hear from the system. We feel that we are pretty comfortable and we don’t have to rush.

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Yves Brian Felix Bromehead, Exane BNP Paribas, Research Division – Analyst of Building Materials [11]

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If I could add just one more on the fly ash shortage in the U.S. Could you maybe give us an indication of how this has evolved? Is it — do you see this easing? Or are you looking at other solutions in terms of your ready-mix concrete in the U.S.?

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [12]

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The fly ash supply is on a declining trend. It cost us significantly in 2019 in terms of profitability, order of magnitude $10 million of lost earnings. We are expecting a smaller decline this year since the base has already shrunk. There is a side benefit in the sense that we can — we use more cement rather than replacing part of the fly ash. So we have some margin there. But in the short term, as long as the price differential between natural gas and coal, if it stays as it is, then there is little room for coal to replace, we go back to replace natural gas.

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Operator [13]

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The next question comes from the line of Chabran Paul with On Field Investment Research.

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Paul Chabran, On Field Investment Research LLP – Analyst [14]

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2 quick questions. First of all, still on the impact of coronavirus because this is the (inaudible) today, right? Could you give us some comments maybe on the impact that you could — that you can see on your trading flows? And second, regarding the share buyback program that you announced today. I think you mentioned that you can — you could buy back up to EUR 10 million worth of shares. What is the rationale here considering that you would like to also preserve as much cash as you can to face potentially more critical situation in the coming months?

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [15]

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Okay. Well, it’s — the second, I would like to answer the second part, which is basically a financial decision. Our feeling is that at current levels, it’s a good opportunity to buy our stock, which is something like close to 50% down compared to what it was 6 months ago. We feel comfortable on our cash position that it is an affordable investment. And I think we have demonstrated also last year that we have been investing in our existing business rather than expanding, the squeeze-out was EUR 50 million of investing in our own companies. Buyout of IFC was also investing in our existing operations. And I would say, it’s following the same rationale that we make this month.

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [16]

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Coming to the trading flows, we don’t see any important change in the short term. As Michael indicated, we have basically exited the clinker markets, but we continue to sell to mostly the U.S., parts of Europe and elsewhere, cement. At this point, we don’t see any changes, but as earlier indicated, developments have been so all over the place and so fast, we have to wait and see how things develop.

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Operator [17]

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(Operator Instructions) The next question comes from the line of Gkonis Argyrios with Axia Ventures.

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Argyrios Gkonis, Axia Ventures Group Ltd, Research Division – SVP [18]

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Could you be able to discuss a bit in more detail the weaker margins that we saw in the U.S. in the fourth quarter and the associated decline? And potentially, how was this impacted by import volumes versus production?

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [19]

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Q4 in the U.S., we had a good Q4 last year. So the comparison was fairly strong Q4. But also Q4 this year, and I mentioned in my speech, the weather was particularly bad, and that affected consumption.

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Argyrios Gkonis, Axia Ventures Group Ltd, Research Division – SVP [20]

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Okay. And if you could make a comment on your thoughts regarding a potential drop in demand, what level would you feel that at current company size would you be able to cope with a drop in demand? And what levels would make you think taking some more drastic actions?

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [21]

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At this point, I don’t think it is appropriate to put numbers on the table that we haven’t really tested. So there is so much volatility and so much uncertainty that at this point, the important thing is to prepare for all eventuality and have contingencies and flexibilities in place. It’s more about reacting intelligently rather than having specific trigger points.

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [22]

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That’s a question of how long there will be a reduction in demand.

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Operator [23]

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The next question comes from the line of Kourtesis Iakovos with Piraeus Securities.

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Iakovos Kourtesis, Piraeus Securities S.A., Research Division – Research Analyst [24]

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Would it be possible to split U.S. sales between public works and residential? What part goes towards infrastructure works or — and what part goes to residential? And if you have any signs at the moment that there will be delays due to the situation with coronavirus in public works?

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [25]

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Could you repeat the second question, please?

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Iakovos Kourtesis, Piraeus Securities S.A., Research Division – Research Analyst [26]

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If you have any signs at the moment that there will be delays in the infrastructure projects in the U.S. due to coronavirus for 2020?

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [27]

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Let me start with the second question. As I mentioned a couple of examples, how local authorities or federal authorities or state authorities deal with continuation of construction activity is something that’s an ongoing debate. There is no clear line. I think it is fair to assume that in some cases, in some areas, local authorities, for whatever the reason, will stop ongoing projects. So yes, there is likely, in my view, to be a drag from slowing down of public works activity. Now traditionally, very, very rough numbers for the U.S…

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [28]

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It varies by state, the percentage.

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [29]

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The percentage varies a lot by state. I think for the total U.S., a good rule of thumb is that roughly 1/3 of cement and aggregates sales go to infrastructure, 1/3 go to housing and 1/3 goes to what’s called commercial. So offices, hotels, hospitals, everything else, developments. That, of course, varies a lot by geography. So for example, Florida, where we have a significant operation would be much — somewhat heavier or significantly heavier in housing. So it depends. But that’s sort of a rough rule of thumb for the whole of the U.S.

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [30]

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With Florida being residential is over 50%.

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Operator [31]

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Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Colakides for any closing comments. Thank you.

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [32]

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Thank you all for joining — sorry, there is one more question. We can take it from Tobias.

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Operator [33]

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The next question comes from the line of Woerner Tobias with MainFirst Group.

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Tobias Alfred Woerner, MainFirst Bank AG, Research Division – Research Analyst [34]

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Sorry for throwing it in the last minute. But I just wanted to get a better sense of your capacity utilizations in the U.S. at this point in time at your plants. And what plans you did have before what happened over the last 2 weeks in terms of prices? Is it sort of in line with the market of around $6 to $8? Or was your market in Florida and in the Carolina is better than that?

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [35]

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Well, our sales in the U.S. are in excess of 100% of our capacity, well in excess because we balance our needs with imports, exports from Greece. We have, as you know, 3 terminals in the U.S., north of Tampa and New Jersey. And practically, the U.S. plants in recent months, they sell as much as they can produce. There is little, I would say, operational capacity left.

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Dimitrios Th. Papalexopoulos, Titan Cement International S.A. – CEO, MD, Executive Director & Member of Advisory Council [36]

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Having said that, Tobias, let me add a little bit of a twist to that. With new digital technologies one can achieve, let’s call it, digital debottlenecking beyond current capacities. So we are pushing to do more with unconventional ways compared to the past.

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Tobias Alfred Woerner, MainFirst Bank AG, Research Division – Research Analyst [37]

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Okay. And in terms of pricing?

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [38]

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Low price — price increases in Mid-Atlantic are reflected at the beginning of April. So it hasn’t been implemented yet. It has been announced, but I don’t know what will actually be implemented as the extent. I believe that it will probably push if the market continues to operate normally. In Florida, it was $2 to $3 bridge, I would say.

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Tobias Alfred Woerner, MainFirst Bank AG, Research Division – Research Analyst [39]

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Okay, very good. And if I may pick up, before I leave you, on one more point you mentioned Egypt being ahead, which obviously, is welcome. What can you see with regard to prices? I think the last numbers I’ve seen was EGP 770 million or somewhere around that level.

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [40]

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But it’s not exactly 100% full free-market economy in our sector. The good news is that the largest player, which is the [RV] has been suffering as well under the existing price conditions. And we have seen the government initiating meetings to discuss how to address the situation and obviously, some degree of price changes is what everybody is suggesting.

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Operator [41]

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Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Colakides for any closing comments.

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Michael H. Colakides, Titan Cement International S.A. – Group CFO, Senior Strategic Advisor, MD & Executive Director [42]

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Okay. Well, thank you all for being with us tonight. If things were — work well for everybody and the markets operate normally, we should be back with you with the Q1 results towards the end of May. But wish you all good health in your families, and hope we’ll be back in a couple of months to discuss Q1. Thank you.

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Operator [43]

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Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling and have a pleasant evening.

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