Market Comment

Greek stocks ended moderately higher in the Athens Stock Exchange on Tuesday, after a nervous and volatile trading in the market as General Index changed 18 times sign. The index ended at its highest closing since August, 4 2011 to 1,073.47 points, up 0.77 pct, after falling as much as 0.92 pct during the session. Turnover remained a strong 108.4 million euros.

Fitch upgrade could give a positive kick start as it will be welcomed by the financial sector as a strong indication of further improvement of country’s interest spreads and a step towards investment grade in the following months. However strong gains in the financial sector (+82% since the beginning of May) may tempt investors to lock some short term profits. Thus we would expect volatility to remain as the main characteristic in today’s session while Titan, METKA, Mytilineos, Jumbo results could give incentives for selected action.

¢           In the Spotlight

Greece/ Fitch: Greece raised to B- from CCC and given a stable outlook at Fitch Ratings, which cited the country’s progress in rebalancing the economy and bringing its deficits under control.

ASE: Foreign investors cut their participation in the capitalization of the Athens Stock Exchange in April to 52.3 pct, from 53.2 pct in March, while Greek investors raised their share to 46.3 pct in April from 45.4 pct in March. Foreign investors accounted for 42.6 pct of all transactions made in the Greek market in April, down from 48.8 pct in March. The value of transactions totaled 1.322 billion euros in April, up 12.1 pct from the previous month and up a spectacular 171.6 pct compared with April 2012. The average daily value of transactions was 62.96 million euros in April, down from 65.62 million in March, but sharply up compared with 28.64 million in April last year. The number of active investor codes rose to 45,120 in April, form 35,841 in March.

Greece/PDMA: Greece sold €1.3b of 13-week Treasury bills with a uniform yield of 4.02%.

Greece/Imports: Greece's import price index in the industrial sector fell 4.3 pct in March, compared with the same month last year, after a 6.6 pct increase recorded in March 2012. This development is attributed to the so-called imported inflation basically to a 7.6 pct decline in the import price index from countries outside the Eurozone, reflecting lower international oil prices.  The import price index fell 1.2 pct in March from February, after an increase of 1.3 pct recorded in the corresponding period last year.

PPC: Government will release today a plan for the restructuring and privatization of Public Power Corp. as government spokesman Simos Kedikoglou stated earlier this morning.

Titan (Results 3M 2013): Turnover for the first quarter of 2013 stood at €243m, posting an 8% increase compared to the first quarter of 2012. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) declined by 29% reaching €24m. 

The Group posted a net loss, after tax and minority interests, of €27m, compared to a net loss of €19m in the first quarter of the previous year. Results are below market consensus in bottom line due to foreign exchange differences which had a 4% negative effect on Group turnover and a 7.7% negative effect on EBITDA. Market trends differed markedly across the Group’s countries of operation: a clear, by now, recovery in the USA, a continuation of the decline in Greece, resilience despite adversity in Egypt, anemic yet stable demand in the countries of Southeastern Europe, further growth in Turkey. In specifics:

¡         In Greece, the unparalleled slump in building activity, both private and public, continued. Demand for cement and other building materials continued to decline from the extremely low levels reached in 2012, albeit at a slower rate. In order to sustain capacity utilization at its cement plants in Greece, Titan has reoriented sales volumes to exports. Supported by higher export volumes, turnover for region Greece and Western Europe stood at €51m, posting an 11% increase. EBITDA was a €3m loss versus a profit of €13m in the first quarter of 2012.

¡         In the USA, a multitude of market indicators confirm that building activity has firmly entered the recovery phase, owing particularly to the strong momentum of the housing market. Demand for building materials is growing substantially. For the first time in four years, first quarter operating results were in the black, albeit marginally. Group turnover in the USA reached €89m, posting a 12% increase, while EBITDA reached €0.5m versus a €1.5m operating loss in 2012.

¡         In Southeastern Europe, demand for building materials was higher compared to the same period the previous year, largely due to less unfavorable weather conditions. Turnover increased by 18% reaching €32m. Operating profitability stood at €3m, versus €4m in 2012.

¡         In Egypt, cement demand has proved resilient despite the political and economic challenges the country faces. In Turkey, the construction sector continued to grow, both in terms of private activity and public works. In total, turnover for the Eastern Mediterranean region, after accounting for the negative foreign exchange translations resulting from the decline in the Egyptian Pound, posted a 3% decline and stood at €71m. At constant exchange rates, turnover would have increased by 8%. EBITDA stood at €23.6m, compared to €19m in the previous year. (It should be noted that the employee profit sharing payout in Egypt was booked in the first quarter of last year whereas this year it will be booked in the second quarter of the year).

¡         Group net debt at the end of the first quarter stood at €630m, increased by €35m compared to the end of 2012, but €158m lower compared to the same period the previous year. The increase in first quarter net debt is largely due to the seasonality of sales and working capital requirements.

Titan	Results Q1 2013			Estimates Q1'13
In thous. Euro	2012	2013	Δ	3M 13 E	Δ (Est)
Sales	225,379	242,964	7.8%	233,233	4.2%
EBITDA	34,074	24,314	-28.6%	25,100	-3.1%
(% of sales)	15.12%	10.01%	-511 bps	10.76%	-75 bps
Net Income	-19,409	-27,067	-39.5%	-24,331	-11.2%
(% of sales)	-8.61%	-11.14%	-253 bps	-10.43%	-71 bps

Mytilineos/METKA (Results 3M 2013):  The Group will announce its Q1 results today before market opening. We expect flat group sales at €355m on lower METKA sales and the contribution of three energy plants (Q1:2012 2 energy plants), EBITDA +44% on lower AoG costs and net profit at €12.5m (+25%). ΜΕΤΚΑ is expected to post a soft quarter in the absence of Syria sales (Q1: 2012 €80m). Specifically METKA is expected to post sales 131m (-23%), EBITDA €21m (-24%) and net profit of €15m. In other news Metka announced its third project in Algeria in partnership with General Electric. METKA will build an open cycle gas turbine power plant and the value of the contract is worth €92.8m.

Jumbo: Jumbo announced that profit in the first 9 months of its fiscal year may be 29% below comparable period a yr-earlier due to Cyprus crisis.  Based on the evaluation of the up to date official statements of the Central Bank of Cyprus it is estimated that the 37,5% of the uninsured amount of the bank deposits will be impaired by subsequent net loss of approximately € 20 millions. As a result the profitability of the Group will reach € 48 million decreased by approximately 29% yoy. The Group expects the final decisions of the Cyprus Republic that may be reverse the above company’s choices.  Profit expected to be €48m, down 29%.  Sales rose 0.4% in period while on comparable basis, profit would be 3.4% lower. Official statement results will be released on May 29 and management sees Cyprus sales down as much as 25%.

Frigoglass: The company announced the completion of a book-building process for the issue of a bond loan worth 250 million euros through its subsidiary Frigoglass Finance BV. The five-year bond issue, maturing on May 15, 2018, carries an annual interest rate of 8.25 pct. The proceeds from the bond issue will be used to refinance some of the group's existing loans, while the new bonds will be listed for trading in the Euro MTF market of the Luxembourg Stock Exchange.