Cementir reports 36% rise in 1H net profit

Cementir Holding posted broadly stable sales of EUR454.5m in the second quarter of 2023. Growth in Turkey, Asia-Pacific and Egypt was able to partially offset a decrease in revenues in the Nordic and Baltic area, Belgium and the USA.

In the 2Q23 cement and clinker volumes sold declined by 6.8 per cent YoY to 2.8Mt due to a slowdown in sales in Denmark, Turkey, Belgium and the USA, despite the increase seen in China, Egypt and Malaysia.

In the 2Q23 sales of ready-mixed concrete were down 12.7 per cent YoY to 1.1Mm3 as sales volumes across its entire operating area fell. Aggregates also recorded lower sales during this period, down by 12.6 per cent YoY to 2.5Mt.

EBITDA increased by 40.8 per cent YoY to EUR116.8m, including EUR7.5m of non-recurring income from capital gains on the sale of land and machinery. Excluding this income, EBITDA increased by 31.7 per cent over the same period in 2022.

The company invested EUR25.5m in the 2Q23, including EUR4.2m in the application of the IFRS16 accounting standard.

First half of 2023
Cementir also reported revenues up 1.1 per cent to EUR840.7m in the first half of 2023 when compared with the 1H22 when revenue reached EUR831.6m. During the six-month period Cementir sold 5.113Mt of grey and white cement and clinker, down 5.5 per cent when compared with the year-ago period in the 1H22, as well as 2.119Mm3 of ready-mix concrete (-11.3 per cent YoY) and 4.646Mt of aggregates (-15.3 per cent YoY).

In the 1H23 EBITDA advanced 39.5 per cent YoY to EUR200.5m from EUR143.8m in the 1H22.

Net profit in the first six months of 2023 increased by 35.6 per cent YoY to EUR90.3m from EUR66.6m in the equivalent period of 2022.

Performance by geographical area
Nordic and Baltic regional sales were down 5.7 per cent YoY to EUR337.7m in the 1H23 with a 22.1 per cent drop in sales in Norway and Sweden unable to be offset by a 4.7 per cent sales increase in Denmark. EBITDA increased 38.7 per cent YoY to EUR88.3m in the 1H23. The EBITDA margin improved to 26.1 per cent in the 1H23 from 17.8 per cent in the 1H22.

In Belgium 1H sales increased by 11.5 per cent YoY to EUR190.3m in 2023 while EBITDA saw a 17.9 per cent YoY advance to EUR43.5m. The EBITDA margin saw an uptick to 22.8 per cent from 21.6 per cent over the same period.

In North America revenue slipped by 1.1 per cent to EUR95.6m in the 1H23 when compared with the 1H22 as particularly Texan and Florida’s sales contracted due to import pressures. New York and California reported a less pronounced drop in sales.  EBITDA declined by 9.6 per cent YoY to EUR13m over the same period. The EBITDA margin decreased to 13.6 per cent in the 1H23 from 14.8 per cent in the 1H22.

The Turkish operations saw a 37.7 per cent rise in sales to EUR158.9m in the 1H23 with EBITDA up by 179.5 per cent YoY to EUR34.1m. The EBITDA margin sharply improved to 21.4 per cent in the 1H23 from 10.6 per cent in the 1H22. Cement market growth was significant in the Trakya and Kars regions, while more moderate in Izmir and Elazig. Earthquake recovery led to the start of numerous projects in Istanbul. However, the focus on the domestic market led to a ~50 per cent drop in exports.

In Egypt sales revenue in the 1H23 fell by 5.1 per cent YoY to EUR16.2m, but EBITDA saw a 43.5 per cent YoY advance to EUR7.6m. The EBITDA margin improved to 28.8 per cent from 19.1 per cent in the 1H22. The drop in sales revenue was attributed to the -74 per cent devaluation of the Egyptian pound compared to the average euro exchange rate in the 1H22. However, in terms of the local currency, revenues increased by 65.2 per cent.

Cementir’s Asia-Pacific operations returned a one per cent uptick in sales revenue to EUR58.6m in the 1H23 with revenues in China up 1.5 per cent to EUR31.7m and Malaysian revenues up by 0.9 per cent to EUR27m. EBITDA increased by 21 per cent YoY to EUR12.6m in the 1H23 while EBITDA margin improved to 21.5 per cent from 17.9 per cent in the 1H22. While in the 1Q23 sales in China remained significantly affected by COVID, in the 2Q23 they increased although the recovery is not yet consolidated, according to Cementir.

Outlook for 2023
While the first half of 2023 saw solid results in terms of EBITDA growth and profitability, the rest of 2023 is marked by strong uncertainty, with downside risks including the war in Ukraine, high inflation and tight financing conditions.

“In light of the results for the first half of the year, the Group expects to achieve consolidated revenues of around EUR1.8bn (EUR1.7bn in 2022), an increased EBITDA from 2022, to around EUR365m and significant cash flow generation, which would lead to a net cash position of over EUR200m at the end of the period, after EUR34.2m of dividend distributed,” said Cementir in a statement.

“Planned investments are expected to be EUR113m (EUR97m in 2022), of which about EUR28m in sustainability projects. Research and development expenditure is expected to remain stable compared to 2022, as well as the average number of employees. The Group does not envisage the need for new external financing, given the cash generation and net cash position expected by the end of the year,” the company added.