US Court Cancels Titan Cement Florida Quarry Permit

This is the second time that the court has ordered a halt to Titan Cement - and two other companies' - operations in the Lake Belt, Florida area over environmental concerns.

"Titan views this as another flawed decision and plans to vigorously appeal," the company said in a statement.

At 1428 GMT, Titan shares were down 8.6% at EUR13.08.

In July 2007, the U.S. South Florida Federal District Court first canceled nine operating permits in the Lake Belt region, pending the results of an environmental impact study.

That decision was reversed on appeal, and in May last year the 11th Circuit Court of Appeals returned the decision for review back to the South Florida district court, which has now ruled on the permits for a second time.

Titan Cement has been hit hard by the slump in the U.S. housing market. In its latest financial results, for the third quarter of 2008, Titan reported a worse-than-expected 31% drop in net profit, mainly as a result of the U.S. housing slump.

The Pennsuco quarry alone, when combined with an associated cement factory at the site, accounts for 40% of Titan's total U.S. operations.

However, analysts say that since the U.S. operations have shrunk considerably in the past two years, the impact of this second closure will be less than it was two years ago.

Before the crisis, Titan Cement's U.S. operations accounted for 38% of the group's total operating profit. Now that contribution is just 13%.

"The news is negative for Titan; however, it seems that it is now in a better position to handle the ban given that demand for (products) is significantly lower," said Proton Bank in a note.

"Hence, it seems that the effect of the decision will not be as intense as it was before both in volumes and margins," it added. "We are not changing our forecasts for the moment."

At the same time, having experienced the impact of the first closure, Titan has since developed contingency plans that include building up stockpiles and opening quarries in other parts of Florida. It has also applied for new permits that take into account the latest environmental impact assessment.

Combined, those measures should ensure continued operations for the company through the end of 2009, said analysts.

"This decision won't have a big impact in 2009, but 2010 is another question," said Kostas Ntounas, an analyst at National P&K Securities. "This decision increases uncertainty for the company pending any new permits for mining operations."

Company Web site: www.titan.gr

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