Cemetir Holding

Good afternoon. This is the Coral School Conference Operator. Welcome and thank you for joining the Chimentil First Quarter 2025 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 the 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. Good afternoon and good morning. Welcome to Chairman Tiroldi's first quarter results conference call. I'm here with our chairman and chief executive, Francesco Caltagirone, who is happy to take your question at the end of my 10-page presentation. So without further ado, I'll go ahead and on page two highlight the key takeaways for these results. The first quarter 2025 results are in line with management expectations. Revenue was modestly up despite cement volumes decline, but revenues were up in a number of countries. despite the Egyptian currency and the Turkish currency devaluation against the euro. There was a significant improvement in EBITDA in the Nordic and Baltic region and in Malaysia offset by a reduction in all other regions and a 4.8 million euro negative exchange rate effect. Net financial income was down from 2024 because comparable figures included extraordinary income related to the over 53% Egyptian pound evaluation against the Euro in the first quarter of last year. Cement volumes were down 6.2% year-on-year, mainly due to a one-off Turkish government ban on exports to Israel, active from the second quarter of 2024. Dynamics volumes were up over 2%, and aggregates were broadly in line with last year. 2025 guidance is confirmed, despite a very uncertain commercial and geopolitical backdrop. Going through a more granular detail on page three about our results, revenue reached €368.1 million, and non-GAAP revenue was actually up 0.9% to €370.5 million. The high revenue was recorded in Nordic and Baltic, Turkey, and Malaysia. with FX headwinds in Turkey and Egypt. Ready Mix volumes were up 2.1%, driven by positive performance in Nordic and Baltic and Belgium, while declined in Turkey. Aggregate volumes broadly in line with previous year. CEMET volumes were down 6.2%, mainly due to the Turkish government ban. and a general decline in all main regions with exception of Malaysia, Egypt, and China. EBITDA reached 66.4 million euro. Non-GAAP EBITDA was up 0.5% year-on-year to 69.7 million euro. There was a higher EBITDA in Nordic and Baltic and Malaysia offset by a reduction in other regions and a negative headwind of 4.8 million euro. Non-GAAP EBITDA margin was broadly unchanged. EBIT reached 31.1 million euro, and non-GAAP EBIT reached 37.2 million euro, minus 5.9% year-on-year. Financial results was 2.5 million euro, down from the 24.6 million euro of last year, mainly due to lower FX income as previously commented. Profit before tax was €30.3 million, non-GAAP profit before tax €39.7 million. Net cash reached €143.2 million, an improvement of over €66 million year-on-year, including €43.5 million of dividends by the parent company, €4.3 million dividends to minorities, and extraordinary investments of €48 million. Going through the single and each region on page four, starting with the most important one, accounting for around 47% of our quarterly share of Group EBITDA. Nordic and Baltic. In Denmark, the largest contributor. Grid cement volumes were in line with last year, with a slight reduction in wet cement. The residential sector is still weak. Partly balanced by buoyant infrastructure activity. Exports increased by 3% due to higher deliveries to Norway and Iceland. ReadyMix volumes were up 3%, whereas aggregate volumes increased by 12% with demand remaining strong. Increasing demand for sustainable products. EBITDA improved by 20.2% year-on-year, mainly due to the positive contribution of cement, some savings in purchasing cost, fuel, and electricity consumption. In Norway, academic sales volumes were up 13% due to more favorable weather conditions and the startup of some major programs. There are signs of a slight market recovery, although marked by some price competitions. EBITDA improved due to higher volumes and savings on cost, and the Norwegian krona depreciated slightly by 2% versus the Euro. In Sweden, ready-mix sales volumes were up 7% thanks to the contribution of a major project, whereas aggregate volumes were down 14%. EBITDA was up from last year, and the Swedish krona was brought in line with the Euro average. Turning to page five, to Belgium and France, accounting for around 28% of group EBITDA in the first quarter. Belgium and France here, domestic cement volumes declined by around 8% due to weak demand. Exports declined more sharply due to the slowdown in construction activity in northern France. Readiness volumes, on the contrary, were up 8% with more marked growth in Belgium. thanks to the continuation on some major projects launched at the end of last year, and despite very harsh weather conditions in January. Aggregate volumes were in line with last year. EBITDA was down mainly due to cement, penalized by lower sales volumes and prices. Turning page number six, Turkey here accounting for 11% of group EBITDA, From April 2022, Turkey has considered high penetration, as you know. Domestic cement volumes were down 5%, mainly due to slowdown in the Aegean region, while in other regions, volumes continue to grow, also supported by post-earthquake reconstruction. Cement and clinker exports were down 54%, penalized by the said Turkish government ban on export to Israel. from the second quarter of 2024. Ready Mix volumes were down 3%, mainly because of weakness in the Aegean region, whereas aggregate volumes were up 8%. Revenues in Euro were increased by 5.7%, thanks to higher selling prices in all business segments, despite a 14% Turkish Lira devaluation versus the Euro. EBITDA was down by 14.3% year-on-year, following volume reduction and higher cost. Turning over to page seven, North America, accounting for 6% of our EBITDA. United States volumes were down 7%, with a more significant decline in the state of Texas, which suffered from snowfall and frost, especially in January and February. In the York region and in Florida, there was a moderate reduction due to bad weather, whereas in California, sales were up. EBITDA was down 19% because of lower volumes and higher costs. There was also a 3% U.S. dollar revaluation versus the Euro average in the period. Turning over to page 8, Asia Pacific, we have China and Malaysia. This region accounts for 4% of Group EBITDA in a quarter. In China, revenue was down 5% due to lower selling prices and stagnant demand, high inventory, and delayed effects from government stimulus measures. Volumes were in line with previous year, but EBITDA was impacted by lower sales prices. There was also a 1.9% renminbi evaluation versus the euro. In Malaysia, on the contrary, revenue was up 17% driven by higher export volumes, Total volumes were up 36%, mainly due to timing differences in clinkier shipments to Australia. Domestic volumes were down 11%, also due to some orders being brought forward to December 24. Export grew by 8%, supported by higher deliveries to the Philippines and Cambodia. EBITDA increased thanks to higher volumes and some cost savings, partially offset by lower average selling prices. resulting from sales mix. The Malaysian Revit revalued by 8.7% versus the Euro average in the period. Turning over to the last geography on page nine, Egypt accounting for 3% of Group EBITDA. Here revenue declined by 7.5% mainly due to the 38% depreciation of the Egyptian pound. despite the 27.7% increase in local currency revenue. Y7 volumes were up 3% thanks to exports, which more than offset the decline in domestic volumes. Export volumes were driven by higher shipment to the United States, Israel, Greece, while sales to Europe were down. EBITDA decreased by 27.6% due to different sales volume mix and a higher operating cost, only partially offset the by higher selling prices. To note, a 38% Egyptian pound evaluation versus the Euro average in the period. This brings me to the last slide, number 10, with a guidance, a 2025 guidance, which is confirmed with a revenue around 1.75 billion Euro, an EBITDA around 415 million Euro, a net cash position of around 410 million Euro, and a CAPEX of around 98 million euro. This guidance refers, as usual, to like-for-like ongoing operation, non-GAAP, and excluding any extraordinary items. This ends my short presentation. I would now like to leave the floor to a Q&A session for our chairman and chief executive. Thank you very much.

This is the call for conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 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 Galazzi from Equita. Please go ahead, sir.

Good afternoon everybody, hope you can hear me. I have three questions, one on volumes and the other two on the input cost. Starting from the volume, I saw that in the press release you mentioned a volumes recovery in the remaining part of the year, which I think is something also embedded in your guidance. Can you just comment on the end of March or April dynamics, just to understand the exit speed, and specifically on the US market, basically everyone is flagging a bad weather in the first quarter, but have you seen any kind of improvement in demand in April? Moving to the input cost, the first one is on the variable cost. We have seen some volatility in electricity and in fuel cost, but they are generally down. If I remember correctly, your guidance was based on higher variable cost for 2025 Can you comment on the current situation on the variable cost if they are more or less in line with your expectation? And the last one is on fixed cost, just because I saw that you reported a mid-single digit increase in labor cost related to contractual renewal. So is this something that we can assume also for the whole year? So for 2025 assuming a mid-single digit increase in fixed cost labor cost? Thank you.

Okay, can sum up this first quarter in a few words. As many think that the Trump administration for sure slow a bit the pace of the recovery. So far what we have seen is that we have some headwinds in terms of low consumption in some scattered areas and tailwind from a lower cost of energy. I think that these two forces are balanced our risk in terms of what we see for the next nine months. So let's see that besides the fixed cost of personnel that are indexed and especially in the high-inflation countries, Turkey and Egypt, that brings up the local cost, partly recovered on Euro because Turkish lira this year is, I mean, the last six, nine months have been, let's say, stronger than the inflation. So it seems that the personal costs are higher. So if the Turkish lira evaluation align with the pace of inflation, these costs should be streamed a little bit, but more or less what we see is that, and it's also in our figures, this kind of increase should last for the whole year. About the weather in special demand, this is usually a small quarter and part of our perimeter, especially USA, Eastern Turkey, and Scandinavia is impacted by weather conditions, so It is difficult now to say what we expect, but let's say also in April, as you know, we have the Easter holiday, and so it has been a month that, let's say, doesn't give the full broad picture. But what we see so far is that it's completely in line with our forecast. And as you know, we just increased about 2% or 3% our view compared to last year in terms of EBITDA. So, so far, we see, as I said, a bit of lower consumption in some areas, but better input price. And so far, the results are balanced.

Very clear. Thank you.

The next question is from Emanuele Negri of Mediobanca. Please go ahead, sir.

Yes, good afternoon, everybody, and thanks for the presentation and for taking my question. I have a couple. The first one, if you can give us any update on the decarbonization plan in Alborg. And the second one is kind of a follow-up from the previous question. So do you confirm to expect kind of a tailwind to materialize in the coming quarters from lower energy costs? Is it correct? Thanks.

The decarbonization process is continuous. It's a four-year plan and for quarter by quarter there hasn't been, let me say, much updates. We are in line with our forecast, the time schedule, so we expect by this year, let me say, the end of all the I mean, the planning of, let me say, where we have to drill the pilot well for the capture. And so the program is going forward. And as you know, it is brought forward by our industrial partner. So nothing, let me say, to flag so far. In terms of the cost, let me say, deflation, So far, we have seen, and probably especially in the oil market, a sharp drop in the cost of oil. Our mix, as you know, is mainly natural gas and petcoke, and we are partly or mostly hedged. So I can confirm that we see this, let me say, drag of the price during the next month. But as I said, the savings that we should book, let me say, are more or less with, let me say, the loss of volume that we expect or that are already materialized because, let me say, we expect, especially from May, some, let me say, mild pickup of the consumption, especially in the Scandinavian market.

Thank you very much. Thank you.

As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. The next question is from Bruno Permutti from Intesa San Paolo. Please go ahead, sir.

Thank you. Thank you for my question and good afternoon, everyone. I'm I want to ask you something about the price environment. So it seems that you have a quite mixed picture. Do you see some, the changes of the first quarter are structural or you believe that, so how do you see the pricing environment in the remaining part of the year? and a second question concerns the difference, different dynamics between ready mix and cement sales. Is there any specific region for this divergence and you believe that it will continue in the next month?

Okay, so for the price volume, we see mostly everywhere a slight increase of price, and this is also confirmed by the figures because despite a decline of 6% in cement volume, the revenues are in line with the previous year. So this is the first. The second question is about The difference of the gap in Samaria between cement and ready-mix has also specified in our presentation. Most of this cement gap is because of the ban of the export from Turkey to Israel. Looking at mainly local situation from Scandinavia to even northern Trans-Belgium, we have some radio mix projects that are a bit ahead because mainly they are infrastructure and the residential market is still lagging a little bit behind. But more or less, let me say, if we carve out the export to Israel from Turkey, at the end we are talking just about minus 1.5% on cement versus 2% plus in ready mix. So there are very small difference considering also that in the first quarter the absolute quantities are very, let me say, limited.

Okay, thank you. And if I may follow up also on the Nordics. In the first quarter perhaps we started to see sequential improvement. Do you believe that this trend will enhance in the next quarter?

What we also flagged in the last quarter of last year that we will start to see a rebound in the Nordics. Now this rebound that started mainly in Denmark is also picking up in Sweden and in Norway. So if, let's say, we don't think that any macro shock will arrive, I think that this recovery, because compared to last year, same period, we have now booked two or three degrees of the rates from the central banks that usually are supportive. So now also we have in place a new government in Germany and so what we expect for that part of Europe is that especially in the second half if nothing word would come out from the United States administration with the tariff spread we don't think that this increase should, let me say, stop.

Thank you.

For any further questions, please press star and one on your telephone. Gentlemen, there are no more questions registered at this time.

Okay, so then thank you very much for your interest in Chairman Tirolding, and I wish you a pleasant rest of your day and evening. Thank you.

Thank you.

Have a nice evening. Bye. Bye-bye.