Cemetir Holding

Good afternoon, this is the Coruscall Conference Operator. Welcome and thank you for joining the Cementir Holding 2024 first nine-month 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 to Chairman Tirol's nine-month results presentation. My name is Marco Bianconi. I'm here with our chairman and chief executive, Francesco Beltagirone. And I will go through about 11 slides of our presentation deck, and then Francesco is happy to take your question at the end. starting with the first page number two of the presentation, key takeaways. The first nine months, 2024 results are in line with our expectations with volumes up and a decline in both revenues and EBITDA also due foreign currency headwinds. Seven volumes were up 0.6%, revenue volumes were up 4.5%, and aggregate volumes were up around 4.9% versus the same period of last year. Revenues and EBITDA declined by 4.6% and 9.3% respectively, impacted by weak volumes in some areas and a foreign currency headwind. If we exclude €15.5 million of one-offs, EBITDA would have declined by 5.4% versus last year. After several quarters of contraction, signs of a market turnaround in some geographies emerged in the third quarter of 2024. The 2024 cash flow was impacted by perimeter change, about €48 million, a higher dividend distribution, and a higher capex, mainly linked to the Belgium K-4 upgrade, in line with the industrial plan. The guidance for 2024 is confirmed. Moving to the next page on the financial highlights, revenues reached €1.235 billion, down 4.6% year-on-year. Non-GAAP revenues were €1.227.3 billion, down 4.8% year-over-year. Seven volumes were up 0.6%, mainly because of Turkey, Malaysia, and the US, offsetting volume reduction in all other regions. ReadyMix volumes were up 4.5%, driven by the positive performance in Turkey, Sweden, and Denmark. Aggregate volumes were up by 4.9%. Lower revenues were due to volume decline and strong foreign currency headway mainly because of Turkey and Egypt. EBITDA reached €296 million, down 9.3% year-over-year. Non-GAAP EBITDA at €289.1 million was down 10% year-over-year. Lower EBITDA in all regions, with the exception of Egypt. Foreign currency headwind reduced EBITDA by around €27 million. If we exclude non-recurring charges and incomes from last year of 15.5 million euro, non-GAAP EBITDA was down 5.4% versus the first nine months of last year. Non-GAAP EBITDA margin declined from 24.9 to 23.6%. EBIT was 194.5 million euro, and non-GAAP EBIT was 196 million euro, down around 16% year over year. Property before taxes reached 210 million euro, and non-GAAP, 214 million euro. Net cash at 79.9 million euro was an improvement of 34.4 million in the last 12 months, which includes 43.5 million euro of dividends by the parents plus extraordinary 14 million euro dividends by subsidiaries to third parties, and extraordinary investments for 54 million euro. We turn to page number four, Nordic and Baltic. You can see that in Denmark, domestic cement volumes declined moderately due to harsh weather conditions in the first quarter and still stagnant markets. There was a volume improvement, though, in the third quarter, thanks to cement supply for the Ferman Belt project. Ready Mix volumes were up 3%, while aggregate volumes declined by 12%. If we exclude €6.8 million of non-recording income in 2023, EBITDA declined by 8.4%, mainly due to lower volumes despite a number of cost efficiencies. Norway, in Norway, already mixed sales volumes were down by around 21% due to widespread weak demand, adverse weather conditions, and delays in some infrastructure projects. The EBITDA contraction was due to lower volumes and higher transport costs. Also, the Norwegian krona depreciated by around 2%, 2.1% versus the Euro average. In Sweden, Revenue sales volumes increased by 30% thanks to the contribution of major projects, while aggregate volumes were down around 15%. EBITDA was up versus last year, and the Swedish krona revalued by around 0.6% versus the euro. Turning to page 5, on Belgium and France, which account for around 24% of group EBITDA, Here, domestic volumes decreased moderately in the first nine months of the year, whereas the construction market contracted by 6% to 7%. Exports to especially France and the Netherlands declined more sharply due to the slowdown in construction activity, also influenced by the Paris Olympics and strong competition. Ready Mix volumes were down 11% due to the general weakness of residential and commercial sector. where aggregate volumes were slightly up in the nine months of 2024. EBITDA was stable, impacted by lower sales volumes, offset by higher sales prices, lower fuel costs, lower clinical purchase and production efficiencies. Turning to page number six, Tertia, which accounts for around 17% of EBITDA. From April 2022, Tertia is considered hyperinflationary Therefore, all reported figures are non-GAAP. Domestic cement volumes increased by 9% thanks to significantly higher sales in the regions of El Azig and Kars, supported by post-earthquake reconstruction. Cement exports were up 8%, although penalized by the lack of exports to Israel because of the embargo. Ready-mix volumes were up 20%, thanks also to new plant openings. aggregate volumes were up 41% due to the opening of a new quarry in Eastern Anatolia and higher underlying demand. Revenue decreased by 4.3% because of the Turkish lira devaluation versus the euro. If we exclude 4.5 million euro of non-recurring capital gains income in 2023, EBITDA declined by 9% year over year due to higher operating costs and negative effects partially offset by higher volumes and prices. The Turkish Lira devalued by around 45.5% versus the Euro average in the period. Moving to page seven, North America. In the United States, white cement volumes were slightly up. Especially in Texas, they moderately improved aided by better weather conditions and effective commercial actions. Even if rainfall in the first quarter and fewer working days and intense competition affected prices. Florida, New York, and California deliveries increased versus last year. EBITDA was down by 4% because of a lower selling prices due to strong competition and higher fixed costs. The US dollar was broadly in line with the euro average. Turning to page eight, Egypt. Domestic white cement volumes declined by 6% due to weak residential market and the postponement of major public projects. Revenue in local currency was up 28% while in Euro declined by 8.8% because of an Egyptian pound 44.3% devaluation versus the Euro average. EBITDA increased by 25.1% due to higher sale prices partly offset by higher cost and EGP devaluation. Lastly, we have Asia Pacific, where in China, revenue declined by 19%, with volumes down by around 14% and modest price reduction, and the Renminbi devaluation versus the Euro. Volumes were affected by real estate crisis, early year low temperatures, heavy June rains, summer floods, and longer national holidays. EBITDA was impacted by lower sales volumes and prices, higher transport and fixed costs. If we exclude 2.1 million euro of non-recurring capital gains we made last year, EBITDA decline was 19.4%. On top, there was around 2.6% devaluation of the Airbnb versus the euro average. In Malaysia, domestic cement volumes were slightly down due to stagnant residential and commercial sector. Exports were up by 9%, driven by higher shipment to Australia, the Philippines, and South Korea. EBITDA declined due to lower average prices, also influenced by export mix and exchange rates partially offset by higher volumes and savings on variable cost. Here, the Malaysian Ringgit devalued by 2.9% versus the Euro average. On page 10, a few highlights of sustainability. Our decarbonization commitment continues with €35.3 million of investment in sustainability, mainly for kiln upgrade in Belgium, which will allow alternative fuels to reach over 70%. The science-based target initiative validated our near and long-term climate targets, aligned with a 1.5 degrees scenario, and approved the overall net zero emission target by 2050. We have been included in Europe's Climate Leaders 2024 ranking by the Financial Times and Statista, and we've been confirmed as a leader in the ESG Identity Corporate Index for the second year in a row. We also launched a new range of low-carbon white cement brands named DECAR in Europe, with 15% lower CO2 emissions versus Albor white Portland cement. And last but not least, on the 22nd of October, 2024, the consortium formed by Albert Portland and Erlichied was selected by the European Union to receive a 220 million euro non-refundable grant under the European Innovation Fund. This project is one of the first fully onshore carbon capture storage systems in Europe with the aim of reducing CO2 emissions by approximately 1.5 million tons per year. The last slide, page 11, is the guidance which we confirm with revenues of around 1.7 billion euro for 2024, EBITDA of around 385 million euro, and net cash position at constant perimeter of 300 million euro, and a capex of 135 million euro. With this, I end my presentation, and I leave the floor to Mr. Castagirone to take any of your questions. Thank you very much.

This is the call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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 Emanuele Gallazzi-Eguita. Please go ahead.