EBITDA

These indications lead to detailed investigations of the processes, e.g., from a financial perspective this might be revenue, contribution margin and earnings before interests, taxes, depreciation and amortization (EBITDA) of certain product groups and customers, cost analysis for specific processes, overall equipment efficiency or research and development costs. 

Gross margin/EBITDA (1) Earnings before interests, tax, amortization, depreciation also contribution margin I (CM I)... 

EBITDA has a more short-term perspective focusing on variable costs... 

EBIT and EBITDA are common indicators used in company-internal decision making supporting operative profitability analysis as basis for... 

For instance, in its 2002 annual report, Barr Laboratories mentions as major highlight of the year Launched and shipped 100 million generic Prozac capsules in first 48 hours of FDA approval. KUDCO, the US subsidiary of the German Schwarz Pharma, launched a generic version of Prilosec (omeprazole) on the day after the patent expiry (Dec. 20, 2002), and matured sales of 150 million until the end of the year, bringing the turnover up by 20% ( ) for the full year, and YULE CATTO, producer of the API for omeprazole, reported a 30% increase of its EBITDA for 2002. 

EBITDA Earnings before interests, taxes, amortization, and depreciation... 

For an average chemical company or business unit with sales of EUR one billion, an EBITDA margin of ten percent, and a purchasing volume of EUR 500 million, reducing its overall spend by ten to 15 percent will result in an EBITDA margin improvement of five to seven and a half percentage points, if sustainable. 

Having sold all these base chemicals - most of them at peak value - UCB focused on innovative specialty resins such as UV cure resins, powder coating resins, and high-solid resins for automotive, graphic arts, and industrial applications. At the end of 2004, just before the closure of the sale to Cytec and two years after the acquisition of the Solutia activities, UCB s chemicals activity had a turnover of EUR 1.1 billion, around 40 percent of which was outside Europe, an EBITDA of EUR 147 million, and a leading position in most of its markets. 

Financial markets value companies. The cycle of equity markets measured as a multiple of the current EBITDA performance of a company is important, as it influences the value and the timing of exits for financial sponsors. The availability of debt markets is equally important because LBOs require sophisticated debt financing arrangements. Conditions in both equity and debt markets have an impact on private equity investments. 

Sector Allowance price scenario Emissions Physical production output EBITDA ... 

In the following sections we present, for various scenarios, the results for 2008-2012 of some model outputs 8 cement production cost, prices, consumption, production, EBITDA and C02 emissions in EU-27. 

Some of the insights, especially under OB-90%, do not depend only on the C02 price but also on the amount of allowances allocated, so we performed some sensitivity tests. However, we will present them only for the model outputs that we judge the most important when studying the impacts on competitiveness of climate policies production and EBITDA. 

These results, as well as the following (except EBITDA), are independent of the amount of GF allowances allocated. 

Under GF, EU firms see their production decreasing and their margin over variable production costs increasing with C02 prices. These facts have opposite effects on their EBITDA from cement sales, the EBITDA on cement. 

EBITDA on cement = ar is (Price - Variable cost - Transportation cost) Production... 

As we see in Figure 7, the EBITDA on cement increases with low C02 prices and then decreases. The net profit realized on the emission market, or simply the profit on emission , is given by ... 

Note that this is the only output of the model presented here which depends on the volume of GF allocation. For a GF allocation equal to 90% of historic emissions, cement manufacturers emit less than their allocation, because their production and their unitary emission drop enough for all the C02 prices tested. They are thus sellers on the C02 market, so their profit on emission is positive. Their emissions decrease and their profit on emission increases with rising C02 prices. As a result, the total EBITDA increases significantly with C02 prices, as does the share of profit arising from emission sales. 

This is positive and increases with price because they sell more and at a higher value. The aggregate impact on EBITDA is weak under OB-90%, even for high C02 prices. 

Obviously, this conclusion about EBITDA depends on the amount of OB allowances allocated, which impacts both the profit on emissions and the EBITDA on cement.12 Figure 10 indicates that, for allocation over 75% of 2004 unitary emission, our qualitative conclusion remains valid the expected EBITDA drop is less than 5%. 

To sum up, under GF and for allocations over 50% of past emissions, the EU EBITDA increases. Under 50%, it decreases. It is not highly impacted under OB as long as the amount of output-based allowances allocated is over 75% of 2004 unitary emission. 

If, conversely, the allowance allocation system is similar to output-based allocation for an allowance allocation ratio of 90% of historic unitary emissions, neither the production level nor the EBITDA is significantly impacted, even for a very high C02 price ( 50 per tonne). Only if the allocation ratio were to drop below 75% of historic unitary emissions (a very unlikely policy choice) would competitiveness impacts (on production and EBITDA) be severe (above 5%). For any allocation ratio, abatement is reduced compared with auctioning or grandfathering, but so is leakage, and finally world emissions are almost the same. 

The lower it is, the lower is the production and the higher is the margin on production cost, so that the effect on the EBITDA cement is not trivial, as under GF. Conversely, the lower the OB allocation, the lower is the profit on emission. 

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