Cementir announces 2% drop in revenue in 2023

Cementir has announced that its 2023 group revenues from sales and services have dropped 1.7 per cent to EUR1694.2m (US$1852.02m) after a record year of EUR1723.1m in 2022. The slight fall in revenues has been attributed to a reduction in volumes sold and weak local currencies, against a moderate increase in prices. Cementir added, in their press release that, had exchange rates remained constant from 2022, revenues would have increased 10.5 per cent to EUR1901.5m.

This drop in revenues is, in part, due to the reduction in sales volumes across all of Cementir’s products. Sales of grey, white cement and clinker (the company’s flagship products) fell to 10.674Mt, down 1.6 per cent from 2022. The company has attributed this decline to market slowdowns in Denmark, Belgium, the USA, Egypt and Malaysia. 

Sales of aggregates and ready-mixed concrete fell 10.1 and 11.1 per cent, respectively. Their drop in sales volume was offset slightly due to the fact that revenues in Turkey rose 142.3 per cent from EUR30.88m to EUR74.834m.

Despite the significant reduction in total sales volumes, Cementir’s 2023 EBITDA reached EUR411.1m, up by 22.6 per cent from EUR335.2m in 2022, marking two consecutive years of record-level EBITDA for the company.

Profit before taxes for 2023 was EUR290.7m, a 23 per cent increase on EUR236.4m in 2022. The group made investments of approximately EUR147.9m, showing a substantial increase of 20.6 per cent from EUR122.6m in the previous year. At EUR1315.8m, operating costs fell 7.8 per cent compared to 2022 (EUR1427.7m). 

Raw materials costs amounted to EUR728.9m, which is a 10.8 per cent decrease on the EUR817.2m in 2022. This decrease is likely caused by lower production and the local currency dynamics previously mentioned.

Cementir’s net financial debt amounted to -EUR217.6m, down from -EUR95.5m in 2022. This negative financial debt mean that the company’s net cash position increased by 127.9 per cent in 2023. 

Geographical breakdown
The group’s EBITDA in Denmark has increased, by 19.3 per cent, from EUR141.1m in 2022 to EUR168.3 in 2023. This return to pre-COVID average levels of profitability is due to lower energy usage, lower CO₂ usage and capital gain on the sale of land (in the amount of EUR6.8m). In Norway and Sweden, the group’s EBITDA fell by 57.5 per cent, from EUR20.8m in 2022 to EUR8.8m in 2023. This is due to higher variable costs in the region, lower sales volume and the devaluation of local currencies. However, these factors were slightly offset by higher sales prices and lower fixed costs.

Cementir’s EBITDA in Belgium increased by 27.5 per cent, from EUR76.5m in 2022 to EUR97.6m the following year. This increase is due to a sales revenue increase of 7.6 per cent as well as careful management of operating costs, selling prices and CO₂ consumption throughout the period. 

In the North American region, the company’s EBITDA fell 9.2 per cent from EUR28.9m to EUR26.3m, in the period 2022-23. This was because of a 6.9 per cent reduction in sales revenue which only reached EUR182.8m in 2023, compared to the EUR196.4m of the previous year. This was also affected by higher variable costs for cement purchases and distribution costs.

In Turkey Cementir’s EBITDA rose by 142.3 per cent, from EUR30.8m to EUR74.8m. This was as a consequence of a 21 per cent increase in revenues in the country, with ready-mix concrete and aggregate sales rising seven per cent and 11 per cent, respectively. The growth in Turkey was partly attributed to an increase in demand for cement, in response to resources being allocated for post-earthquake construction.

The group’s EBITDA in Egypt has risen by 6.3 per cent, from EUR11.8m in 2022 to EUR12.5m the following year. This increase was achieved despite the significant devaluation of the Egyptian pound, thanks to carefully managed production costs and selling prices.

EBITDA rose 8.4 per cent in China, from EUR17.1m in 2022 to EUR18.5m in 2023. This came as a result of higher sales volume and saving on energy and raw materials costs. This increase was achieved notwithstanding the yuan being depreciated by 8.2 per cent against the euro in 2022.

Sales revenue in Malaysia decreased by seven per cent, from EUR58.3m in 2022 to EUR54.2m in 2023. However, the company’s EBITDA increased by 49.6 per cent from EUR5.6m in 2022 to EUR8.3m the next year. This drastic increase in profitability was due to careful management of distribution costs.

Cementir’s economic outlook
Cementir’s economic outlook is one of uncertainty, with geopolitical tensions and economic downturns being faced by many of its major trading economies. The group forecasts that it will achieve consolidated revenues of roughly EUR1.8bn in 2024. It further expects to achieve an EBITDA of approximately EUR385m, which would mean a YoY decrease of 6.3 per cent on 2023. Cementir also expects to have a net cash position of EUR300m by the end of 2024, which would be a 37.9 per cent increase on the previous year.

Therefore, despite the expected reduction in consolidated revenues for 2024, the company does not foresee the need to pursue external financing. This is due to the cash generation and net cash position that is expected by the end of the year.