Cementir post decline in 1H revenue but improves net profit
Cementir’s consolidated revenue slipped by 3.4 per cent YoY to EUR811.8m in the first half of 2024 from EUR840.7m in the 1H23. Non-GAAP consolidated revenue declined by 7.5 per cent YoY to EUR803.3m from EUR868.2m over the same period.
The company saw higher sales volumes across its product range. Volumes of grey, white cement and clinker edged up by 0.3 per cent YoY to 5.127Mt, supported by higher sales in Turkey, the USA and Malaysia. Meanwhile, ready-mixed concrete volumes picked up by four per cent YoY to 2.203Mm3 as the Turkish market delivered a positive performance, followed by higher sales in Sweden and Denmark. Sales in Norway and Belgium were affected by adverse weather and a slowdown in demand. Aggregates volumes increased by six per cent YoY to 4.925Mt in the 1H2, again driven by Turkey where a new quarry was opened. In Belgium aggregates volumes remained stable but in Sweden and Denmark they declined.
Cementir’s EBITDA was down 3.9 per cent to EUR192.7m in the first six months of 2024 when compared with EUR200.5m posted in the year-ago period. Non-GAAP EBITDA saw a 16.4 per cent YoY drop to EUR120m from EUR143.6m.
Group net profit improved by 7.4 per cent YoY to EUR97.0m in the 1H24 from EUR90.3m in the 1H23. However, non-GAAP net profit declined by 6.9 per cent YoY to EUR102.2m from EUR109.8m over the same period.
Cementir Chairman and CEO, Francesco Caltagirone Jr, commented: “Results for the first half of 2024 were in line with our expectations, with sales volumes up but revenues and EBITDA down, compared to the first half of 2023. The adverse weather conditions in the first months of the year and a still weak residential market in the most important geographies, as well as a significant negative exchange rate impact, affected the results for the period, which nevertheless benefited from the reduction of main operating costs.”
Regional breakdown
In the Nordic and Baltic region sales revenue was down 9.2 per cent YoY to EUR306.8m as sales in Denmark fell by 7.5 per cent to EUR235.6m on the back of harsh weather conditions in the first quarter. High interest rates continued to impact the residential sector. Meanwhile, the Fehmarn Belt tunnel between Denmark and Germany has not yet reached the expected volumes. In Norway and Sweden revenues were down 17.6 per cent to EUR68m as the residential and commercial demand decelerated and some major infrastructure projects failed to start. An additional factor were adverse weather conditions. The company also closed three plants in February. EBITDA fell by 12.2 per cent YoY to EUR77.5m while the EBITDA margin slipped to 25.3 per cent from 26.1 per cent in the 1H23.
In Belgium revenue was off by 9.8 per cent YoY, falling to EUR1171.5m in the 1H24. Cement sales remained stable in the 1H24 with moderate growth in the second quarter as the adverse weather conditions of the first quarter abated. However, a slowdown in construction in France and The Netherlands resulted in falling exports to these markets. However, lower production costs drove EBITDA, which increased by 13.4 per cent YoY to EUR49.3m while the EBITDA margin improved significantly to 28.7 per cent, up from 22.8 per cent in the 1H23. The company invested EUR28.8m, mainly in the renovation of Kiln 4 at its Gaurain unit, which is expected to be completed in the 2H24.
North American revenues slipped by 2.7 per cent YoY to EUR93m, supported by increased white cement sales. Sales in Texas were affected by rainfall and two fewer working days than in 1H23. In addition, prices were impacted by strong competition. Florida saw stable sales thanks to some new customers while California saw a growth in deliveries in all market segments. Due to lower prices, high cement purchase costs and higher fixed costs compared to the 1H23, EBITDA in the 1H24 shrank 12 per cent YoY to EUR11.4m. The EBITDA margin was down to 12.3 per cent from 13.6 per cent YoY.
In Turkey sales edged down 1.1 per cent to EUR157.2m in the 1H24 when compared with the year-ago period, affected by the devaluation of the liar compared to the average euro exchange rate in the 1H23. Sales volumes in the domestic market were up by 10 per cent YoY, supported by post-earthquake reconstruction. In addition, cement and clinker exports advanced by 10 per cent YoY although there was a lack of exports to Israel due to the embargo. EBITDA dropped 21.5 per cent YoY to EUR26.7m in the 1H24, resulting in a decline of the EBITDA margin to 17 per cent from 21.4 per cent in the 1H23.
In Egypt sales declined by 10.2 per cent YoY to EUR23.5m as the domestic market contracted and exports had a different geographical mix. Sales volumes were down 12 per cent due to a weak construction market and delays and cuts in some large public construction projects. The devaluation of the Egyptian pound by 36.7 per cent against the average exchange rate of the euro also affected revenues. EBITDA improved by 2.8 per cent to EUR7.8m while the EBITDA margin saw an uptick to 33 per cent in the 1H24 from 28.8 per cent in the year-ago period. The company invested EUR1.4m, mainly in the reactivation of the second kiln.
In Asia-Pacific sales revenue was down 15 per cent to EUR49.8m with revenue in China hit by an 11 per cent drop in sales volume, a modest reduction in prices and the 4.2 per cent devaluation of the yuan compared to the average exchange rate of the euro. Malaysian sales contracted by 12.1 per cent. EBITDA fell by 25.9 per cent YoY to EUR9.3m with Chinese EBITDA particularly hard hit. The EBITDA margin shrank to 18.7 per cent in the 1H24 from 21.5 per cent in the 1H23.
Outlook
Results for the 1H24 were overall in line with management's expectations in terms of EBITDA and cash generation. However, thegGroup's revenues were affected by the persistent weakness of the residential sector in some markets, the crisis in the Chinese real estate sector with repercussions also in neighbouring countries, and the weakening of some currencies.
Against this backdrop, the group believes it can confirm some of the targets set for 2024, namely EBITDA of approximately EUR385m and a net cash position of around EUR300m at the end of the period, at constant perimeter. Revenues should settle at a level in line with 2023 (equal to EUR1.7bn), below the previous guidance of EUR1.8bn.
Planned investments are equal to approximately EUR135m (EUR104.2m in 2023), of which around EUR48m in sustainability projects. Research and development expenses are expected to remain stable compared to 2023, as is the average number of employees. The group does not envisage the need for new external financing, given the cash generation and the net cash position expected by year end.
