Vicat sees 8% like-for-like advance in 1Q sales

Vicat reported a 1.2 per cent YoY (+7.9 per cent like for like (lfl)) uptick in consolidated sales to EUR911m in the first quarter of 2024 from EUR899m in the 1Q23. The company attributes the positive results to 4.1 per cent increase in cement volumes to 6.9Mt, a 5.4 per cent advance in concrete volumes to 2.2Mm3 and a still resilient pricing environment in most markets with a favourable cost/price differential.

“The Vicat Group enters 2024 with organic growth of nearly eight per cent, driven by dynamic markets in the United States and emerging countries. The weakness of the French residential market should be gradually mitigated this year by the ramp-up of infrastructure projects awarded to the Vicat Group.

“This strong performance in the first quarter enables us to confirm our full-year outlook for growth in sales and operating profitability,” said Vicat Chairman and CEO, Guy Sidos.

Geographical breakdown
Consolidated sales in France were down 8.8 per cent (-8.8 per cent lfl) YoY to EUR270m from EUR297m in the 1Q23 as the residential market contracted, but sales in the rest of Europe saw a +14.2 per cent increase (+9.7 per cent lfl) to EUR92m from EUR81m in the same period. European business was supported by the healthy performance of waste treatment and recycling business Altola and the precast business Vigier Rail in Switzerland. An appreciation of the Swiss franc against the euro also supported the company’s local result. In Italy sales remained stable.

In the Americas, Vicat saw its sales advance by 12.5 per cent (+12.4 per cent lfl) to EUR222m in the 1Q24 from EUR198m in the 1Q23. Volume growth, particularly in California and southeastern US, as well as favourable pricing trends were able to offset a 10 per cent drop in operational sales in Brazil, where the group’s cement business slowed down with volumes and prices falling in the 1Q24. Ciplan also faced increased competition in the Brazil’s mid-west region.

In Asia Vicat sales were up 6.8 per cent (+8.9 per cent) YoY to EUR120m from EUR112m in the 1Q23 as Kazakhstan and India delivered a solid performance. Volumes in India saw robust growth as demand was strong while improved price and cost differential since the 2H23 also supported the 8.8 per cent jump (at constant scope and exchange rates) in sales. Kazakh volumes were driven by a dynamic Almaty region, but issues with the rail supply chain hampered performance. Fiercer competition also led to a drop in prices. Sales in Kazakhstan  saw a 12.1 per cent increase in the 1Q24.

The Mediterranean region saw a 0.7 per cent uptick to EUR104m but on a lfl basis, the increase was 58.9 per cent. Volume growth in Turkey was driven by government support to the construction sector and favourable base of comparison. Inflation led to higher production costs and as a result, selling prices increased. Cement sales in Turkey were up 2.6 per cent at constant scope and exchange rates. In Egypt, market conditions remained sluggish and volumes declined, particularly during Ramadan. However, exports of cement and clinker to the rest of the region and Africa were able to partially offset the challenging conditions in the domestic market. In a market regulated by authorities, prices rose in the 1Q24 but cement sales nevertheless declined by 6.3 per cent at constant scope and exchange rates.

African sales fell 6.5 per cent (-5.5 per cent lfl) YoY to EUR101m in the 1Q24 from EUR108m. Power cuts in Mali affected the group’s business in the country with local sales down 18.6 per cent YoY. In Senegal the cement business showed resilience with volumes slipping only slightly due to Ramadan. Strong residential demand and infrastructure projects continue to underpin dynamic market conditions while prices have remained stable since the start of the year. Cement sales in Senegal declined 3.8 per cent at constant scope. Meanwhile, in Mauritania cement sales were up 8.6 per cent YoY at constant scope and exchange rates as a result of dynamic business trends.

Outlook
For 2024 the group expects a continued increase in sales, support by growth in the US and the resilience of emerging markets, despite the weakness of the European residential sector. EBITDA is forecast to be higher than in 2024.

This takes into account further operational savings at the Ragland plant in the US and an easing energy cost inflation over the period.

The group’s capex is expected to total around EUR325 following delays to investments in a new kiln in Senegal, which will now take place in 2024.

In terms of the group’s net debt, the increase in EBITDA, tight grip on the working capital requirement and a disciplined investment approach are expected to enable Vicat to further decrease its net debt to a leverage target of 1.3x.