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Cementir Holding

CR
Bloomberg   CEM IM
Cement & Aggregates  /  Italy  Web Site   |   Investors Relation
Also operates in : Holding Companies
Positioned in a niche market
Target
Upside 39.6%
Price (€) 9.69
Market Cap (€M) 1,542
Perf. 1W: -4.25%
Perf. 1M: -5.19%
Perf. 3M: 5.73%
Perf Ytd: 4.40%
10 day relative perf. to stoxx600: -1.93%
20 day relative perf. to stoxx600: -1.94%
Earnings/sales releases13/05/2024

Q1 24: a rebound is expected in the H2

Cementir Holding released its Q1 results, indicating a positive group volume performance, primarily driven by robust demand in Turkey. Despite the ongoing low volumes in many markets, the company has reiterated its FY24 guidance, anticipating a rebound in volume during the second half of the year. Since the guidance aligns with our expectations, we do not intend to make significant adjustments to our model.


Fact

  • Revenue: €368.3m (vs €414.8m in Q1 23)
  • EBITDA: €66.5m (vs €81.2m in Q1 23)
  • PBT: €58.7m (vs €63.9m in Q1 23)
  • Outlook for the full year re-iterated

Analysis

Cementir Holding has released its Q1 results, revealing growth in group volumes. Cement and clinker volumes increased by 2.3%, RMC by 3.7%, and Aggregates by 8.9%. This growth was primarily driven by strong demand in Turkey, which offset the decline in volumes in other regions. However, despite this positive trend, sales decreased by 11.2% and EBITDA by 18.1%, leading to a 1.6pps decrease in the company’s margin. The decrease in sales was mainly due to low volumes in Europe, caused by fewer working days, adverse weather conditions and a sluggish residential market. Additionally, sales were also impacted by a negative currency effect of €50m, mainly due to the devaluation of the Turkish lira, which partially offset the positive operational results from Turkey.

The cost of raw materials, which accounts for half of total operating costs, decreased by 18% due to a reduction in certain production inputs. This reduction is expected to continue throughout the year. However, the company may still experience wage inflation, as personnel costs increased by 2.4% this quarter despite a decrease in the number of employees.

Performance by division

The Nordic and Baltic region, which contributed 39% of the group’s EBITDA, experienced low volumes across all countries, leading to a decline in sales (down 16%) and EBITDA (down 35%). In Denmark, volumes were affected by a reduction in the number of working days, severe weather conditions and a sluggish residential market. Norway faced challenges due to poor weather conditions and delays in certain infrastructure projects, impacting volume sales. In Sweden, there was a mixed performance with a 13% increase in RMC sales but a 12% decrease in aggregates volumes.

The Belgium and France segment demonstrated resilience, with a 2% increase in EBITDA despite lower volumes leading to a 12% decrease in sales in that region. This performance was attributed to the effective management of energy costs and selling prices.

Turkey experienced the strongest demand of all the regions, with domestic cement volumes increasing by 22%, cement exports up by 8% and RMC by 31%, along with positive dynamics in aggregates demand. Despite this strong performance, sales were down by 2.6% due to the 65.8% devaluation of the Turkish lira. However, EBITDA increased by 19% due to higher volumes and pricing, despite the devaluation.

In Egypt, domestic white cement volumes dropped by 16%, while export volumes rose. Despite a 17% increase in revenues in local currency, driven by higher selling prices, this growth was entirely offset by the devaluation of the Egyptian pound. Consequently, sales declined by 1.7%, and EBITDA decreased by 1.8%, attributable to lower volumes and higher costs.

In China, a 17% decrease in revenue resulted from both lower volumes and prices, leading to a 12.9% decline in EBITDA. In Malaysia, although volumes increased by 6%, sales and EBITDA dropped by 10% and 17%, respectively. This decline was attributed to currency devaluation and a less favourable sales mix, with domestic volumes down by 9%.


Impact

Despite the decline in sales and EBITDA, the results were in line with the company’s expectations. There is anticipation of a volume recovery in the second half of the year across most markets, driven by the commencement of significant infrastructure projects that were previously delayed. Consequently, the company has reaffirmed its guidance for fiscal year 2024, with sales projected to be around €1.8 billion, EBITDA around €385 million, and maintaining a net cash position of approximately €300 million. We too have a similar view and, hence, we will stick to our current estimates with no upward revisions to our numbers.


Updates

13 May 24 Earnings/sales releases
Q1 24: a rebound is expected in the H2

13 Feb 24 Earnings/sales releases
FY 23: A conservative look to the future

08 Nov 23 Earnings/sales releases
Q3 23: Conservative guidance

31 Jul 23 Earnings/sales releases
H1 23: positive price-cost spread

10 May 23 Earnings/sales releases
Q1 23: Pricing boosts profitability

18 Apr 23 EPS change
Price hikes boost the EPS

13 Feb 23 Earnings/sales releases
FY 22: Price hikes to manage inflation.

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