Cemetir Holding

Good afternoon, this is the Coruscall Conference Operator. Welcome and thank you for joining the Cementir Holding Third Quarter 2023 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. Please go ahead, sir.

Thank you, and welcome everybody to Chairman Tiroldi's first nine-month results highlights. I'm here with Mr. Francesco Caltagirone, our Chairman and Chief Executive. Good afternoon. Who is ready to take your questions at the end? I have a few pages deck that has been distributed. So I will immediately comment on page two with the results highlights. The group reported 1.295 billion euro of revenues on a gap basis and on a non-gap basis revenue reached 1.288 billion euros up 0.8% year over year. Cement volumes were down by around 3.1%, mainly due to Denmark, Belgium, US, Malaysia and Egypt partially upset by growth in Turkey and China. Both ready mix and aggregate volumes were down in the period by 10% and 11% respectively. EBITDA reached 326.2 million euro up 36.9% year over year and non-GAAP EBITDA was 321.1 million euro up 32.6%. It was the higher EBITDA in all regions except for the US. EBITDA includes the no recurring income of 13.5 million euro mainly related to gains on asset sale. Excluding those no recurring items, non-GAAP EBITDA reached 307.6 million euro up 27% on a life-for-life basis. Non-GAAP EBITDA margin grew from 18.9% to 24.9%. Non-GAAP EBIT reached 234 million euro, up 49.5% year over year. GAAP EBIT was up 59.7% to 231.7 million euro. Pre-tax was 241.3 million euro, up 50% year over year. Non-GAAP pre-tax was up 60%. to 246.4 million. The net cash position at the end of the period was 45.5 million euro, an improvement of 75.4 million euro year on year, including 34.2 million euro dividend distribution, and an impact IFR 16 of 84.2 million euro versus 66 of the last year. To turn the page to the most important subsidiary, that's Nordic and Baltic, accounting for 44% of Group EBITDA in the period. Here you can see that Denmark, cement volumes in Denmark declined because of low demand in mainly the residential markets, partially compensated by the infrastructure segments. Both ready mix and aggregate volumes were down by 20 and 8% respectively. EBITDA, though, increased thanks to careful management of energy and distribution costs, and we returned to pre-COVID profitability levels. EBITDA includes also a non-recurring 6.8 million gain from asset sales. In Norway, academic sales volumes were down by 24%, mainly due to residential and commercial slowdown, higher competition, and some delays in new infrastructure projects. there was an EBITDA contraction due to lower volumes and higher operating costs. On top, the Norwegian krona depreciated by around 13.4% versus the euro. In Sweden, ready mix and aggregate sales volumes were sharply down around 46 and 15% respectively as a result of a residential demand plan. EBITDA contraction was due to lower volumes and higher operating costs. On top, the Swedish krona depreciated by around 9% versus the Euro. If you turn to page four, Belgium and France accounting for around 22% of Group EBITDA, demand volumes declined by 8%, mostly due to a generalized demand slowdown, and also ready mix volumes were down by around 8%, both in Belgium and in France. Aggregate volumes were down 13%, both on the domestic and on the export market. also due to particularly good performance in the previous period. EBITDA increased thanks to tight operating cost control and increasing selling prices. Turning to page five, Turkey accounting for around 18% of Group EBITDA. Here, we have to remind you that from April 22, Turkey is considered hyperinflationary and the result results are prepared according to IAS 29 accounting principles. Those figures are non-GAAP to make them comparable with the operating performance of last year. In Turkey, revenue increased by 31.5% with domestic cement volumes up 19%, thanks to significantly higher sales in Marmara and eastern Anatolia. Part of this demand is due to many projects driven by anti-seismic investments. Cement exports were down by 34% as sales were redirected on the more profitable domestic markets. Redemix volumes were up 8% and aggregate volumes were stable due to temporary operational issues. EBITDA reached €58 million, driven by cement prices, more than upsetting production cost increase and currency devaluation. This figure includes a non-recurring €4.5 million of gain on asset sales. and excluding such non-recurring items, EBITDA would have reached 53.5 million euro, up 163% on a line for light pieces. We have to remind you that there was a devaluation of the Turkish lira of 43.1% versus the euro average exchange rate in the period. Turning to page number six, United States. White cement volumes in the USA declined by 16% in line with the residential markets, especially deliveries to Texas and Florida suffered from stronger contraction due to competitive pressures from imports and lower demand. More modern decline was visible in New York and in California. EBITDA was down due to lower cement volumes and higher variable costs, only partially offset by higher average prices. There was also a higher contribution from our subsidiary, Dianini Pipe, operating in the concrete products business. Also here, there was a 1.8% U.S. dollar devaluation versus the U.S. average exchange rate. Moving to Asia Pacific on page seven, here you can see that China, in China revenue was broadly flat due to 15% volume growth, offset by lower cement prices. In Q1 of this year, cement sales were negatively affected by lockdowns. In Q2 and Q3, volumes were up, but competition put pressure on pricing. EBITDA includes a non-recurring €2.1 million gain from asset disposals. Excluding such non-recurring items, EBITDA would have been down by around 6% year-over-year, as higher volumes could not offset declining prices. was also an 8.6% remaining depreciation versus the average. In Malaysia, on the other hand, revenue declined by 7.9% with a 16% volume growth. White cement exports were down 19%, driven by a decline in clinker exports, a different calendar for shipments, and lower deliveries to some countries. Domestic volumes increased by 22% as a result of good recovery in the construction market. As a result of higher prices and careful management of free cost and variable cost, EBITDA increased in Malaysia. But there was also a 6% Malaysian Ringgit devaluation versus the Euro average exchange rates. On page eight, the last business unit, Egypt, here revenue declined by 14.2% because of the strong devaluation of the Egyptian pound versus the Euro. In local currency, revenue were up by 49.6%, while cement volumes were stable both on the domestic deliveries and exports. EBITDA was up thanks to tight production cost control and higher selling prices, despite the negative effect of a 74% EGP devaluation versus ZILO average. The last slide of this presentation is the full year guidance. We are further upgrading our EBITDA expectations. The revenue forecast for the year is unchanged at around €1.8 billion. The EBITDA is up by around 4% from the previous guidance of €365 million. We now expect to reach around €380 million for the year. It is unchanged, the target of reaching over €200 million of net cash and a capex of around €113 million. This guidance refers to like-for-like ongoing operations, non-GAAP, and excluding any extraordinary items. With this, my presentation ends, and I leave the floor to our Chairman and Chief Executive for any questions you may have.

Thank you.