Cemetir Holding

Good afternoon. This is the Coruscall conference operator. Welcome and thank you for joining the Cementir Holding first half 2022 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Marco Maria Bianconi, Head of M&A and Investor Relations of Cementir. Please go ahead, sir.

Thank you and welcome everybody to the Cementir Holding 2022 first half results highlights. I will refer to the presentation deck that's been distributed on page two we would like to highlight that revenues, yes, I'm sorry, I'm here with Mr. Francesco Caltagirone, our chairman and chief executive. Good afternoon. And he's happy to take your question at the end of this short presentation that we'll go through right now. So on page two, starting with this highlights on the results, You can see that revenues for the group reached 811 million euros, up 22%. Excluding IAS 29, revenues were 805 million, up 21%. Cement volumes were up by 0.8%, like for like, with negative trends in Turkey, China and Denmark. Alarmic volumes were down 5.1% due to a slowdown in Turkey and Denmark and Sweden. aggregates were down around 0.6%. EBITDA progression was very good, up 7.7% to 143.8 million euro year-on-year. Excluding the impact of YAS 29, EBITDA reached 154.7 million euro, up 16% year-on-year. Positive results from Belgium, Turkey, and U.S. Negative results from Nordic and Baltic and Asia-Pacific. This figure includes €11.1 million of Turkish non-industrial property land revaluation. EBIT was up 4.1%, excluding IAS 29 impact, was up 23.9% to €98 million. Net profit reached €66.6 million, up 39% year-on-year. Net financial debt was around 79.5 million euro, a reduction of 58.1 million euro year on year, including IFRS 16 impact, including 6.3 million euro share buyback, and 28 million euro of dividend distribution. To note that the free cash flow generation was strong at 92.4 million euro in the last 12 months. Let me give you just a few highlights on page 3 regarding the hyperinflation IAS 29 application. We have for the first time after many years reintroduced the hyperinflation accounting for Turkey from June 2022. It is important to underline that this is only referred to Turkey, which accounts for a relatively small portion of our portfolio. It also is just an accounting revaluation, so in order to provide like-for-like figures, we will comment the figures excluding IAS 29 to make comparables easier. Just as a highlight, it is important that due to these IAS 29 accounting rules, the translation of the Turkish lira exchange rate to euro is taken at the end of the period rather than at the average exchange rates. But we can go on the details later on. Let me dive into the results starting from page 4 with the Nordic and Baltic that is our most important division accounting for 41% of Group EBITDA. If you see here on page 4 In Denmark, domestic cement volumes were up 14% due to increased market activity, favorable weather, and new infrastructure projects, whereas exports were down 26% due to the redistribution of sales in the U.S. to other group companies. Ready Mix volumes were down 8% and aggregates were down 16% due to difficult comparable figures. EBITDA overall was down 6.1%, driven mainly by the cement business, impacted by high raw material, energy, and logistics costs, only partially upset by better operating leverage and price increases. Norway results were quite strong, with volumes up 7%, driven by new infrastructure projects. and a higher EBITDA due to higher volumes prices despite cost inflation. There was also a slight appreciation of Norwegian Krona versus the Euro in the period. Sweden, on the contrary, sales volumes in RMC were down 19% and aggregate volumes were down 35%, mainly due to the completion of major infrastructure projects and a slowdown in the residential and infrastructure sector. So as a consequence, there was a somewhat lower EBITDA, and it was compounded by a slight devaluation of the Swedish krona versus the euro. Flipping to page five, Belgium and France, our second largest division, accounting for about a quarter of our EBITDA. Here, cement volumes increased by around 3%, with good performance, especially in Belgium, the Netherlands, and France, and negative performance in Germany. Average price is up. Ready Mix volumes were flat in each one, with a 6% reduction in Belgium and 16% growth in France. Overall, prices were up in both countries. Aggregate volumes as well were up 7%, driven by stronger demand for infrastructure. Overall, EBITDA increased by 27%, thanks to higher volumes and higher prices, despite increasing raw material costs, fuel and electricity costs as well. Moving to North America, 9% of Group EBITDA here. Volumes were up modestly, just 1.5%, mainly driven by Texas and California, whereas in the York region there was bad weather in Q1 that impacted activities. Average prices were up. The net effect was an EBITDA up 31% thanks to better volumes. Better prices and good cost control. There was also an impact of a 10% U.S. dollar revaluation versus the euro. Moving on to Asia Pacific of Pitch 7, accounting for around 7% of Group EBITDA. Here you have two countries. One is China, the other one is Malaysia. In China, revenue was up 11% driven by mainly prices because volumes in the domestic market were down around 10.5%. due to lockdowns, some logistics issues, and weather conditions. Overall, thanks to good cost control, EBITDA was down only 4% due to variable cost increase and lower volumes. There was also a 9% revaluation versus the Euro. In Malaysia, here, revenues were up 31%, driven by good pricing, which compensated higher freight and fuel costs. Volumes were up 5.5%. and export by 8%. Overall, the EBITDA declined by 6% as a result of higher fuel and distribution costs. There was also a 5.5% revaluation versus the euro of the Malaysian ringgit. Moving on to the last two countries, we have on page 8, Tarki, accounting for 15% of Group EBITDA. I remind you that those figures exclude the EF29 impact Here, cement sales significantly increased in local currency, driven by price increases. Domestic cement volumes were down 14%, exports up 30%, but prices were up significantly. Domestic volumes were mainly impacted by bad weather, in Q1 especially, and a sharp contraction in Eastern Anatolia due to the phase-out of some infrastructure projects. Ready Mix volumes were down 8%. The newly acquired aggregate business was up significantly, but that was due to a perimeter change, as the business has been acquired in Q4 of 2021. There was a 71% Turkish Lira devaluation versus the Euro. To note that this figure includes also 11 million Euro of non-industrial property land revaluation. Moving on to page nine on Egypt, the last geography here. You can see it's a small country for us, only 3% of our profits. Here, cement volumes declined by around 2%, with domestic sales down 8%, mainly due to inventory build-up by Egyptian customers during the month of December. Export up by 2%, thanks to higher deliveries to the U.S. and Central Europe. Overall EBITDA was down slightly due to lower volumes and higher fuel cost. The Egyptian pound was stable versus the Euro. The last slide of my presentation is slide number 10 regarding the full year guidance which is confirmed at revenues over 1.5 billion Euro and EBITDA range between 305 and 315 million Euro and net cash position of 60 million Euro. after a capex of around 95 million euros. Clearly, this guidance refers to like-for-like ongoing operations and does not take into account any intensification of the current Ukraine crisis nor any resurgence of the COVID-19 pandemic. With this, I end my presentation and I hand over to Mr. Francesco Castagirone to answer any questions you may have. Thank you.

This is the Coruscant Conference Operator. We will begin the question and answer session. Anyone who wishes to ask a question may press star and one other touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Matteo Bonizzoni of Kepler. Please go ahead.