HIGHLIGHTS
 


The improvement in the international economic cycle, started in 2016, stabilised and became stronger in 2017; the pick-up in investments in the majority of the economies is stimulating the trade on a worldwide basis, favouring a decisive recovery as from the end of 2016. The improvement in the economic activities of emerging economies and the strengthening in global demand are the main trend of year 2017. The reinforcement trend affects all the advanced economies and the raw materials producing emerging countries which have benefited from the rise of the commodities’ prices, stimulated by the positive course of the international economic cycle. The mid-term global growth prospects are overall favourable, but risks of a downwards trend remain, linked to the uncertainty of the economic policies and the possible escalation of geopolitical tensions.

With particular reference to the coal market, the Group corporate strategies were confirmed by the recent publication of the traditional report on energy issued by the IEA – International Energy Agency, World Energy Outlook – 2017. In its reference scenario entitled ‘new policies’ forecasts a 0.2% annual growth in coal demand until 2040 thanks to the rise of the demand of India and the South East Asian countries and of the industrial sector. Indications of geographical areas (South East Asia vs OECD) and sector-related areas (industrial vs energy) converge with the vision and the action plans implemented by the Group involving focus on the coal trade with greater added value, therefore addressing the industrial sector, and geographic areas with higher development (Far East).

As far as coal prices are concerned, after a slight drop seen in the first quarter with respect to the peaks reached in the fourth quarter of 2016, a significant and constant trend of appreciation was noted in the subsequent three quarters, which brought the API2 and API4 indices to an average price in December of 94.5 USD/T and 94.8 USD/T, respectively. The average price of the API2 and API4 indices in 2017 reached 84 USD/T, well above the average values registered in the previous year of 60 USD/T (+40%) and 64 USD/T (+31%), respectively, albeit with moderate volatility. The satisfactory trend of coal prices was also confirmed in the first months of 2018, remaining on average at around 85 USD/T.

During the year the Group achieved important operating results, significantly better than the already positive ones of 2016. The EBITDA and the EBIT generated over the period amounted respectively to Euro 46.7 million and Euro 28.7 million (+50% and +39% compared to the results achieved in 2016), while the Group net profit amounted to Euro 20.2 million (Euro 13.5 million in 2016). These important results were achieved thanks to the good operating performances of all divisions of the Group. At balance sheet level, a considerable improvement was achieved in the net financial position, which reached Euro 51 million, down by Euro 78 million compared to 2016 and Euro 97 million compared to 2015, thanks to the significant generation of cash resulting from operating activities (Euro 63 million) and the disposal of our stake in PT Asian Bulk Logistics (Euro 32.7 million).

 

CC_finance_highlights_2016
 

 

The Mining Division disclosed a good operating performance, confirming the excellent results already achieved in the previous year. The rise in turnover (which came to Euro 51.4 million) was driven by local sales, while the extraction activities, 1,165 thousand tonnes, reported a slight drop with respect to expectations at the start of the year due to the changes to the medium/long term production plans reflecting the new architecture of the mining site. The reorganisation process implemented in previous years has allowed the Group to stabilise the results of the Division and, together with the investments aimed at improving the production efficiency, confirms the Group strategic interest towards its mining site in Kuzbass, in the region of Kemerovo. In the relevant period EBITDA reached Euro 9.0 million (Euro 9.2 million in 2016) and the EBIT totalled Euro 5.6 million (Euro 6.3 million in 2016).

 

The Trading Division managed to achieve excellent results in a market context characterised by satisfactory coal price levels, on average higher than those of 2016, albeit affected by moderate volatility. Even if volumes were 11% lower than those of 2016 the Division reported a considerable increase in turnover attributable to at least two main factors: the substantial rise in coal prices, the API2 increased 40% with respect to the comparative balance in 2016, and the business strategy adopted, aimed at trading products with a higher added value. During 2017 it was registered a further increase of the market share of PCI, a product with a higher calorific value and greater margins. The Asian activities deserve particular notice, as during the year achieved significant operational results thanks to the consolidation of related core business and a greater differentiation of products and customers. The increase in margins made it possible to achieve an EBIT of Euro 24.9 million (Euro 11.4 million in 2016), considerably up with respect to previous years. The results of the Division do not include both those of the US affiliated company, Coeclerici Coal Network, and of the German affiliated company Dako Coal. These companies were no longer considered strategic for the Division and were sold to their management. The agreements reached allow the new entities to continue to operate within their reference market providing their usual services, without substantial limits to the operations and the development of the business of the Trading Division. As a result of these operations, the Division has come out stronger in financial terms and fully dedicated to the growth of its core business.  

 

The weak demand of new industrial projects caused by the low price level of raw materials, combined with the low charter rates which do not allow an adequate return on huge initial capital investments, in countries characterised by high geopolitical risks are the main reasons behind the crisis of the transshipment sector. Effective from 1 August 2017, Coeclerici Logistics sold off its 49% stake in PT Asian Bulk Logistics to the Singapore based company Chartswood Logistics (PTE) Ltd. As it was contractually agreed technical and operational services were rendered to the four vessels until December 2017. Furthermore, the contract with the customer PT Kaltim Prima Coal ended in December 2017. Despite this unfavourable market scenario, in 2017 transshipment activities in Mozambique and Indonesia, remunerated on a time charter or take and pay basis (minimum guaranteed quantities), generated a fair operating cash flow and achieved satisfactory economic profitability, which permitted the Logistics Division to generate an EBITDA of Euro 16.8 million. The Shipping Division, operating through the company dACC Maritime d.a.c, continued the shipping business for the transportation of dry bulk cargo via the operating fleet comprising of four 60,000 ton Supramax sister ships owned in joint venture with the d’Amico Group; this business is still affected by low charter rates, even if the market is showing the first signs of recovery making it possible the generation of an operating profit. Overall, the two divisions disclose a turnover level of Euro 38 million, good profitability with EBITDA and EBIT respectively for Euro 14.8 million and Euro 6 million and a net result of Euro 4.5 million.

 

The Group, in line with its traditional innovation capacity and propensity for new challenges, has acquired IMS Deltamatic, operating in the industrial sector, entering into the business for the design, manufacturing and marketing of high-technology automatic industrial machineries for the converting, packaging and automotive sectors. IMS Deltamatic, through several acquisitions carried out over the years, has become a leading player with a steady growth rate on a global scale, involving four plants – of which two in Italy, one in Germany and one in the United States, a sales office in China, serving customers located all over the world, with more than 300 employees. This acquisition took place in two stages: in December 2016, with effect as from January 2017, a majority stake was acquired in the IMS Deltamatic Group, which was followed in December 2017 by the acquisition of the remaining share.
 
In line with the general pick up of the global economy, and in particular of the reference sectors, 2017 reported an important growth of 40% in the value of backlog compared with December 2016, with an overall value of production amounting to Euro 72.4 million and an EBITDA margin of 10%. Among the main markets of the Group’s products, it’s worth mentioning North America for the Automotive Division and Asia for the Converting plants, with a wider geographic diffusion for the Packaging Division.