Market Monitor – Market Comment – In the Spotlight [ manos Chatzidakis ]

Market Monitor  
¢           Market CommentGreek stocks ended higher on Thursday assisted by ECB governor’s comments that Greek banks were solvent and that the 10 billion euros cushion of the Financial Stability Fund could be used if necessary, encouraged trading in Greek bank shares, pushing the bank index more than 6.0 pct up. The composite index of the market rose 0.99 pct to end at 857.54 points, off the day’s highs of 858.19 points. Turnover was low €67.4m. vs Wednesday’s €71.77m.After yesterday’s last hour rebound, we expect market to consolidate around current levels ahead of Monday’s Eurogroup meeting. 


¢           In the Spotlight


Greece:  The European Central Bank will resume normal lending to Greek banks only when it sees Athens is complying with its bailout program and is on track to receive a favorable review, ECB President Mario Draghi said on Thursday. He also made clear the eurozone bank would not raise a limit on Athens’ issuance of short-term debt since the EU treaty barred monetary financing of governments.

Draghi said the central bank had doubled lending to Greece to 100 billion euros in the last two months – equivalent to 68 percent of the heavily indebted country’s economic output – but could not buy Greek bonds under its new asset-buying program. The ECB increased the ceiling on emergency lending assistance for Greek banks, introduced last month when it stopped accepting Greek government bonds as collateral for funds, by 500 million euros to nearly 69 billion euros.

Draghi said the ECB could only go on authorising this liquidity line as long as the banks were solvent with adequate capital, which remained the case despite massive capital outflows in the last two months due to political uncertainty. The ECB had asked euro zone members keep a 10 billion euro recapitalization fund on standby “to face any sudden negative contingency that might materialise now,” he said.


Greece/Unemployment:  Greek unemployment started to rise again in December following 14 months of gradual decline, reaching 26 percent according to figures released on Thursday by the Hellenic Statistical Authority (ELSTAT). The number of employed people declined by 24,453 from November 2014, while the jobless number posted a marginal decline of just 296. That brought about a small increase in the unemployment rate from November’s 25.9 percent. In December 2013 the rate had come to 27.3 percent.

The negative signs had first emerged from the Ergani register figures supplied by the Labor Ministry, showing a negative flow in employment in the last few months of 2014. The unemployment rate had peaked at 28 percent in September 2013 before starting its decline in October 2013, with only February and April 2014 showing no change to the seasonally adjusted rate.


Greece/Consumer confidence:   Consumer confidence in Greece jumped almost 20 points in February to reach the highest level observed in the last six years, and led to an improvement in the economic climate despite the stagnation or decline seen in business expectations in other sectors, according to the latest “Financial Conjunction” report by the Foundation for Economic and Industrial Research (IOBE). This effect is typical of post-election euphoria. The report, published in Athens on Wednesday, showed that the Economic Sentiment Index climbed from 95.3 points in January to 98.2 last month, but remained below the 100-point threshold separating optimism from pessimism. IOBE attributed the growth in consumer confidence to the post-election enthusiasm, noting that the survey was completed before Athens reached an agreement with the eurozone. Citizens’ expectations improved considerably regarding both the country’s and households’ finances.


NBG/Astir: Greece’s top administrative court has blocked the sale of Astir to an Arab-Turkish fund, court officials said on Thursday. The construction of a large number of residential buildings based on the urban development scheme of the property would harm the natural, cultural and urban environment in the area, the judges said, according to the officials.


Alpha Bank: The bank will release its Full Year 2014 Results on Thursday, March 19, 2015, at 17:20 p.m. An analyst/investor conference call will take place at 17:50 p.m.


Attica Group (4Q/12M Results): Group’s full year 2014 financial results, which show consolidated Revenues of Euro 266.66mln (Euro 260.16mln in 2013) and Earnings before interest, taxes, investing and financial results, depreciation and amortisation (EBITDA) of Euro 42.35mln (Euro 27.15mln in 2013). Consolidated earnings before interest, taxes, investing and financial results (EBIT) increased to Euro 18.37mln (Euro 2.03mln in 2013) and Profits after tax increased to Euro 4.27mln (Losses of Euro 10.13mln in 2013). Attica Group’s Consolidated Profits after tax include extraordinary capital gains of Euro 4.0mln from the sale of Blue Star Ithaki and non-recurring foreign exchange loss of Euro 1.45mln resulting from the full repayment of Blue Star Patmos seller’s credit in US Dollars while in 2013 Profit after tax was increased from positive foreign exchange differences of Euro 1.65mln. Total debt of the Group at 31st December, 2014 stood  at Euro 282.16mln from which Euro 270.80mln are long-term loan liabilities and Euro 11.36mln are short-term liabilities. In 2013, total debt stood at Euro 289.94mln, from which the majority was short-term loan liabilities.

During the period January – December 2014 the Group’s vessel’s carried 4.13mln passengers compared to 3.76mln in 2013, 537.65 thousands private vehicles compared to 503.42 thousands in 2013 and 263.96 thousands freight units compared to 258.82 thousands in 2013.

In the Adriatic Sea and in particular in the Patras–Igoumenitsa–Ancona route (in joint service with one vessel of ANEK) and in the Patras–Igoumenitsa–Bari route, the traffic volumes of the vessels Superfast XI, Superfast XII, Superfast I and Superfast II, in 1.8% less sailings compared to the same period in 2013, decreased by 0.2% in passengers, increased by 1.7% in private vehicles and decreased by 4.8% in freight units.


Titan (4Q/12M Results):  Titan announced FY 2014 results that came in below market estimates in terms of sales, while they stood 3.7% below in terms of Operating Profitability and 12.7% below in terms of “clean bottom” line. Net Debt came in at EUR 541mn up 6.6%. Surprise came from the dividend front: management proposed the payment of a dividend amounting to EUR 0.15/share plus the payment of EUR 0.15/share from special reserves (x-dividend date on 24-Jun-2015). More specifically:


¡  Total turnover for Group region Greece and Western Europe in 2014 increased by 14% and stood at €285m. EBITDA more than doubled from €14m in 2013 to €37m in 2014.

¡  In the USA, demand for building materials is recovering. Group sales increased across the whole spectrum of building materials it produces, propelled mainly by the high growth rates recorded in Florida where a substantial share of  operations is located. According to the Portland Cement Association, cement consumption in Florida, grew by 18% mainly due to new residential construction. Cement consumption across the USA as a whole grew by 9% in 2014. The USA currently account for above one-third of Group turnover and an increasing share of EBITDA. Higher sales volumes and improved prices led to the increase in turnover at Titan America, which stood at €469m, posting a 14% increase in 2014. EBITDA reached €46.5m from €32m in 2013.

¡  In Southeastern Europe, construction activity remained subdued due to the anemic economic development of the wider region. The slight improvement in operating results was mostly due to lower energy costs and the increase in the use of alternative fuels at Group plants. Turnover in 2014 in Group region Southeastern Europe, declined by 3.5% to €208m, while EBITDA grew to €67m from €63m in the previous year.

¡  In Egypt, the construction sector continued to grow and cement demand was higher by 2.4% compared to 2013. Nevertheless, the repeated interruptions in the state-provided gas supply, coupled with the considerable administrative delays in the issuance of the required permits for the investments necessary to allow for the utilization of solid fuels, lead to a considerable loss of production. Under these conditions, the Group’s capacity utilization rates dropped below 50%. Part of the shortfall was made up through imports, which however curtailed profit margins. In 2014, turnover in Egypt declined by 22% to €197m. EBITDA dropped by 60% to €31m. The Group is implementing a comprehensive investment program which will allow for the utilization of solid and alternative fuels, with a view to gradually achieving fuel autonomy. The first solid fuels grinding mill was brought on stream at the Beni Suef cement plant at the end of 2014.

¡  Construction activity in Turkey continued to grow. The Group’s share in the Turkish operations’ net profit, which as of 2014 is consolidated via the equity method, was €4.6m, versus a €0.1m loss in the previous year.

¡  n 2014, the Group generated €90m in free cash flow versus €136m in 2013. Net debt at the end of the year stood at €541m versus €509m at the end of 2013, reflecting the step-up in capital expenditure and increased working capital requirements in growing markets. Group net debt is less than half of what it was in the beginning of 2009.

¡  Outlook for 2014: Improving results in USA and Egypt, Greece and SE Europe at same levels 2014 supported by road work activity.


TITAN 2013 2014 Ε Y-o-Y 2013 2014 Ε Y-o-Y
EUR thous. 12M 12M (%) 4Q 4Q (%)
Sales 1,158,400 1,127,936 -2.6% 306,599 248,204 -19.0%
EBITDA 181,600 186,359 2.6% 35,097 39,703 13.1%
EBITDA Mrg 15.7%  16.5%  +85 bps  11.4%  16.0%  +455 bps 
Net Income -36,074 30,947 185.8% -21,522 443 102.1%
Net Mrg -3.1%  2.7%  +586 bps  -7.0%  0.2%  +720 bps