Cemetir Holding

Good afternoon, this is the Carus Call Conference Operator. Welcome and thank you for joining the Chairman's Holding First Alpha 2026 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 Marco Maria Bianconi, Head of M&A and Investor Relations of Cementir. Please go ahead.

Thank you and welcome to Cementir Holding First Off Results presentation. I'm here with our Chairman and Chief Executive, Francesco Caldavirone, who is happy to take your question at the end of my short presentation. I'll go through the presentation deck that has been distributed ahead of this meeting. starting with page two with the key takeaways on the results. There has been a significant improvement in the second quarter, despite the first quarter that was impacted by exceptionally adverse weather conditions. At constant perimeter, Q2 cement volumes were up 3.4%, non-GAAP revenue was up 5.3%, and EBITDA was up 12.9%, confirming a positive reversal compared to the weak start of the year. On a reported basis, consolidated volume declined across all business lines with cement minus 2.9%, ready mix minus 10.9%, and aggregate minus 2.6%. At cost and perimeter, though, excluding the disposal of car cemento, cement volumes were up 1.4% in the first half of the year. There was a positive trend in Belgium and Egypt following the restart of the second kill. Reported performance was affected by forex headwinds, mainly due to the depreciation of the Turkish lira and of the US dollar. This negative impact amounted to €37.4 million on a non-GAAP revenue and €2.6 million on non-GAAP EBITDA. EBITDA was also affected by lower volumes in Nordic, Baltic and Turkey due to weather conditions, whilst Egypt, Belgium and North America improved year on year. Again, there was a clear improvement in the second quarter, and there was no significant direct impact from geopolitical conflicts on our operations. Energy cost volatility has been largely mitigated through a structured risk management approach and our hedging, while some pressure still persists on petcoke supply and logistics. Our full year 2026 guidance is confirmed, despite the very uncertain microeconomic and geopolitical environments. On page three, a few highlights. I'm not going to read verbatim, but just to give you the highlights that revenue was up 0.2% year-on-year, non-GAAP was down 1.7, and our constant perimeter was flat. 37.4 million euro negative FX, mainly due to Turkish year-end US dollar. We talked about the cement volumes already and RMC volumes as well. On the EBITDA basis, The group reported €163.9 million, minus 5.5%. Non-GAAP EBITDA was minus 10% at €153.6 million and was down 9.5% at constant perimeter. The decline in EBITDA was mainly driven by Nordic and Baltic and Turkey, €26.6 million, lower volumes and negative FX impact of €2.6 million. Non-GAAP EBITDA margins stood at 19.3% versus 21.2% on the first half of last year. Group net profit was down 15.7% to 62 million. Non-GAAP net profit was down 18.9% to 66 million. Net cash at half year was 276.8 million, an improvement of 132.8 million euro. year-on-year, including 51 million of car cemento disposal, 19.7 million euro of insurance proceeds, 18.6 million of the Just Transition Fund, and 54.9 million of dividend distributions. We now go to page four, starting with the biggest division, accounting for 45% of Group EBITDA, Nordic and Baltic. In Denmark, the construction market remained relatively weak, especially the residential part, due to restrictive financing conditions and energy costs uncertainty and some projects postponement. Great domestic cement volumes were down 4% year-on-year, impacted by exceptionally harsh weather and delays to the ferment projects, although deliveries improved during the second quarter. White cement, was up 12% supported by stronger demand. Exports were down 16%, mainly due to lower deliveries to Norway and Iceland, partially offset by growth in Poland, France, and Finland. RMC and aggregate volumes were down 11% and 21%, respectively. EBITDA was down 21% year-on-year, impacted by lower volumes, higher CO2 taxes, and increased variable costs. In Norway, sales volumes were down 5% due to weak demand, lower activity on major projects, and some market overcapacity in price competition. EBITDA increased, driven by higher prices, partially offset by increased variable cost. The Norwegian krona was up 4.2% versus the Euro average. In Sweden, at ready-mix sales, volumes were up 10% driven by the recovery from March. with the restart of some postponed projects and several new contracts. Aggregate volumes were up 24% supported by new projects and a temporary closure of a competitor's quarry. Also EBITDA was up and the Swedish krona appreciated by 2.8% versus the Euro average. Moving to page five, Belgium and France accounting for around 32% of H1 EBITDA. Domestic cement volumes were up 5% supported by new customer and the major infrastructure projects in the Antwerp area. Despite adverse weather at the beginning of the year and unusually high temperatures in the second half of June. Exports were up 17%, mainly to France and Netherlands, driven by new customers and the major projects in Antwerp. Leading mix volumes were down 6% due to weaker performance in Belgium and adverse weather conditions, some Easter-related shutdowns, and a high comparison base in the first half of last year. In France, volumes were up 3%. Aggregate volumes were up 2%, mainly in France and the Netherlands, benefiting from stronger infrastructure and construction activity from March onwards. EBITDA was up 7%, reflecting higher cement volumes and lower raw materials and CO2 costs, partially offset by higher costs related to different maintenance schedules and lower RMC volumes and higher variable costs. Moving to page number six on Turkey accounting for 5% of Group EBITDA in the first half of the year. In this country, challenging operating environment continued, impacted by hyperinflation, high interest rates, and exceptionally adverse weather in the first quarter of the year, and weaker post-earthquake reconstruction demand. Domestic cement volumes were down 13%, 2.2% excluding the disposal of cars, mainly affected by adverse weather, gradual completion of major post-earthquake reconstruction projects, and mixed regional trends. with Aegean up 15, Marmara minus 2, and Eastern Anatolia minus 32%. Export was up 2%, whereas domestic RMC volumes were down 15%. Aggregates were down 26 due to a slowdown in the reconstruction activity, although June showed a strong recovery supported by some major infrastructure projects in the area of Izmir. Revenues were down 19% also because of the Turkish lira depreciation. EBITDA declined, reflecting lower volumes and higher variable and fixed costs, only partially offset by price increases. I remind you that we divested of Corsimento on December the 1st, 2025, in the period that the Turkish Lira devalued by around 27% versus the Euro average. Moving to North America, accounting for 7% of our group EBITDA, Volumes in the U.S. were broadly stable, demonstrating a certain resilience, despite a generally softer market environment and weak residential demand. Florida recorded a 10% increase, mainly from demand from new customers, whereas in Texas volumes were down 7% due to a general snowstorm and a competitive pressure from imports. In California, volumes were down 9% due to intense competition. EBITDA was up 1.8% with cement business impacted by higher variable costs from FX effect and only partially compensated by higher selling prices. The dollar in the period depreciated by around 6.8% versus the euro. Moving on to Egypt, accounting for 5% of group EBITDA in the period, revenues were up 57% despite a 7.3% depreciation of the Egyptian pound. Macro context remains challenging with high inflation, currency volatility, and rising energy costs. Domestic cement volumes were up 31%, supported by stronger commercial positioning and market share gains. Export volumes were up 78%, benefiting from deferred shipment from December of last year and the resolution of some technical issues following the restart of the second production line, particularly supporting sales to the U.S. EBITDA was up 43%, Driven by higher volumes, a more favorable geographic mix focused on higher margin export destination, which more than offset higher energy and production costs. Moving to page number nine on Asia Pacific, which is the last business unit we're going to talk about, 3% share of group EBITDA. In China, volumes kept declining, 6% year-on-year impacted by weak demand, Intense competition and adverse weather. There was also slowdown around the Chinese New Year. Market environment remains weak despite government stimulus. Revenues were down 10%, 10.5% year-on-year, reflecting lower volumes and average lower selling prices. EBITDA, as a reflection of the top-line decline, was down 21.4% due to lower volumes and prices and higher fixed costs, partially offset by variable cost savings. that may be depreciated by 1.1% versus the Euro average in the period. In Malaysia, on the contrary, total volumes were up 2%, with domestic volumes, although marginal, declining by 11% due to order timing effect and weaker retail demand. Semen exports grew 14%, supported by air deliveries to Australia, the Philippines, and Vietnam, while clinker exports declined by 24%, mainly due to shipment timing difference to Australia. Revenue was up 8.3%, supported by higher export volumes and more favorable product mix. EBITDA was down 55% due to higher variable and fixed costs, particularly distribution logistics expenses. The ringgit was up 2.8% in the period versus the euro. A few words about the acquisition of Nemole. Both on acquisition, the aggregate businesses Enhancing Vertical Integration, Securing a Stronger Nordic Platform. On July the 1st, we completed acquisition of 100% of the share capital of Niemolle Stein Industries with an enterprise value of Danish krona 900 million, which is equivalent to around 120 million euro on a cash and debt-free basis. The expected synergies are around Danish krona 30 million or 4 million euro within 24 months. through integration with existing Nordic and Baltic operation. Niemolle is the largest aggregate player in Denmark with around 10% share. It operates 26 land-based aggregate pours across Denmark and holds a well-developed reserve base. The full year results ending April 2026 are for revenues of Danish Krona 230 million pro forma EBITDA of 93 million. Moving to the last line of my presentation, guidance, which is confirmed. Despite the uncertain microeconomic and geopolitical environment, we reiterate our four-year guidance, which is for revenues to reach around 1.7 billion euro, and EBITDA range between 400 and 420 million, net cash position of around 590 million euro, after a CAPEX of around 128 million euros. As you know, our guidance refers to like-for-like, ongoing operation, non-GAAP, and excluding any extraordinary items. That said, thank you for your attention, and I'll now leave the floor to you for any questions to our chairman and chief executive. Thank you.

Excuse me. This is the chorus call operator. We will now begin the question and answer section. Anyone who wishes to ask a question may press the start and 1 on your touch tone telephone. To remove yourself from the question queue, please press the start and 2. Pick up the receiver when asking questions. Anyone who has a question may press the start and 1 at this time. The first question is from Wim Host of KBC Securities. Please go ahead.

Yes, good evening and thanks for the opportunity to ask questions. I would have two, please. The first one would be on cost inflation and pricing initiatives. In the first quarter results conference call, I think a figure of 38 million inflation was mentioned in the context of the conflict in the Middle East. So can you maybe update on that number and also update on the pricing initiatives you might take in some of the zones in order to offset that inflation. So that's the first question. And my second question would be on the strategy. There has been some rumors about M&A recently in Latin America where has been mentioned. Without asking you to confirm the rumors, I would like to get a reminder of the overall strategy and priorities when it comes to the cash deployment and the growth of the company, if you can maybe elaborate a little bit on that. Those were my questions.

Thank you.

Okay. Thank you for your question. Yes, so on the cost inflation, you're right, there's been a hit in the first quarter due to the increase in especially input costs and raw materials. I would say that in the second quarter, we clawed back some of these hits, and thanks to our hedging, we managed to like offset the majority of the price increases due to, you know, average higher input cost, especially for thermal energy and electricity. So, I would say that has not been, as we said also in the communique and in the presentation, a meaningful impact on our figures. So, if we compare also the electricity and fuels bill in the second quarter compared to the second quarter of last year, there is a delta fill unchanged of around 8 million. So, I would say that the delta of the first quarter has been capped.

I would add, so good afternoon to everybody, that if you see in the first six months, we saw a decline in the sales in cement slightly, ready mix concrete around 10% and aggregates. And then you can see that in the first half at the same perimeter, the revenues are almost in line. This means that almost everywhere there is, let me say, a hike in the price, as we also told in the first quarter, took over and this is also the reason why, I mean, from the gap compared to last year of around 28 million in APDA that we had in the first quarter, now we nearly have this gap because of, let me say, this price increase. Going to your second question about the strategy of of the possible enlargement of the perimeter of Cementeer Holding. As I said in the past, we look at, as it happens, several opportunities that might arise from the market. You know that the only part of the world where we are not active today is South America, for sure. Asset, I mean, CSN is an asset that is on the market because, I mean, the seller is forced to sell it. We are looking at it, let me say, as other possible competitors are doing. We are today in a phase that we are estimating and evaluating the asset to, let me say, understand if part of this perimeter, because the perimeter alone is, let me say, too big for us, might fit in our perimeter. But let's say we are still in a sort of creative phase, and at this stage, I can only say that it's an opportunity like A lot arrived in the last four or five years, and it might be and might not be.

Okay, very clear. Thank you very much.

The next question is from Matteo Bonizzoni of Kepler Chevrolet. Please, go ahead.

Thank you, and good evening, good afternoon. Two questions. Guidance. You have done this 10% EBDA decline in the first half on non-GAAP basis, despite the recovery in the, encouraging recovery in the second quarter. So you still need to do a mid-to-high single-digit EBDA growth in the second half to meet the low part of the guidance range, which doesn't seem to be a walk in the park in the current market conditions, in which Turkey could continue to be weak, and also there is uncertainty on the potential recovery in Scandinavia, no? So I would like to know more precisely what are the bases and the grounds of your confidence to achieve even, I would say, the low part of the guidance range, if you can specifically maybe comment to different geographies. And then I follow up on the question on the potential M&A in Brazil. So correct me if I'm wrong, but what we read is that it's a pretty crowded context with a lot of potential buyers. And we also read from newspapers, so it's not maybe insider information, but it's public information, that the multiples could be pretty stretched. So it seems that compared to your usual M&A style, not to overpay, doesn't fit very much. But maybe can you add a little bit more color also on the general framework as regards the valuation of these assets? Thanks.

Starting from your second question, I agree with you that on the newspaper, all the expectations, because everybody that sells something wants to sell at a higher price. But I am also aware that we have our discipline. For this reason, I told the two previous questions that, let's say, it might be or it might not be, because, let's say, one thing is that There is an opportunity to enter in a country. One other thing is that the assets are in a good shape and fit for the strategy. The third thing is that the price is reasonable or not. So I can say that, as you are saying, that at the price that, let me say, you see or you read in the newspaper is something that probably we are not interested. So it's a crowded process. and let's see where and when it will end up. As I said, we are interested, but at a certain condition. And on the other side, as I also said, besides also the price, there is also the size of this, let me say, company. It can be, let me say, carved out. So it is in the end of the sale that is aware that it has a few, let me say, bidders, probably some of them for the whole and some of them for part of it. So today, we are still in a sort of non-binding phase, and so we are not aware of what, let me say, even the seller will decide at the end. On your first question, As I said, we are still confident that we can, let me say, reach the guidance. I think that what we have done in the second quarter is in line and the trajectory is to have this kind of recover. And we are aware that for sure there are still some headwinds, especially from the from the two worlds that are active now, but not more, not on the coast side because, as you know, we are mostly , so we don't expect weird things from coast side. As probably in other geographies are experiencing, there are some delays in some, let me say, projects, and these might affect the pipeline of the quantity of the SIG, but as I said before, even so far, with a mild decline in our footprint, let me say, market, we were able, let me say, to balance and to recover. So we are confident, probably, let's say that I am more confident now than three months ago.

Thank you.

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

Yes, good afternoon, everybody. Thanks for the presentation and for taking my question. I have a couple. The first one is a follow-up on extra cost. During the first quarter conference call, you mentioned around 38 million of extra cost which are expected from geopolitical tension. Now we're talking about around 8 million in the first quarter and around 0 million in the second quarter, if I'm right. Could you elaborate on this delta? What has changed during the quarter to have this reduction in your expectation? And the second one, if you have any update on the Axion project in Denmark.

What we said is that at the end of the first quarter, if the condition would have remained the same, we would have expected $38 million in extra, let me say, cost. You have seen that beside, I mean, the last week that then the price of oil went down, I mean, from $120 to around $70. Now, the last 10 days is again up. So, it's difficult. So, we took, let me say, $8 million because, well, the one part of this, let me say, hype that we had like everybody, let me say, felt in the second quarter. So going forward, I can say that if one week from now they agree on, let me say, to calm down the things again, probably the extra cost will be lower, will be more or less, let me say, what we have seen so far. If the global context will, let me say, Again, I think that we might speak to our forecast. On the action project, as you know, we have been approved, let me say, by the Danish fund financing for 15 years. up to 2.2 billion of euros. Now, I mean, as we said, we are waiting because we are part of the project. As I said, the part of the project is the capturing the plant, then to ship by pipeline, let me say, the CO2 to the site, and then there is also the storage area. to be aligned and we expect by early 2027 to be fully aware of the agenda of the other two players that are outside the plant just to confirm the agenda and also because we are at the latest stage, I mean there are just a few months, to wait to understand that everything is okay in the storage area from seismic, from, let me say, leakage. There are no possibility of the leakage in the atmosphere. So this will take nearly 30 months. It already started. but the company that is not ours says that we think they say that early in 2027 we will release the final opinion. So far, let me say there are no red flags. This is what I can say.

Thanks a lot. Thank you.

The next question is from Igor Sonin of Alfa Value. Please go ahead.

Good afternoon, everyone. Thank you for picking up my question. I have a question on petcock because you've called out petcock supply and logistics as the one area where cost pressure still persists. But at the same time, the part of the group growing fastest is white cement and Egypt specifically. It's actually the part that can substitute away from it since your own target for white cement is only 8% for color reasons. So you cannot easily substitute Petcock. So my question is, how do you manage that specific exposure through long-term supply contracts, stock levels, or mainly pricing, for example? Could you give more colors regarding this? Thank you.

Thanks, Igor, for the question. It's a very good one. As you know, Petcock is a peculiar product. fuel because supply is generally concentrated in the U.S. Gulf. So there are a few suppliers coming from the U.S. and it's one of the few commodities that you cannot really hedge unless you run a significant delta risk. So actually the only way that we can materially hedge is just buying forward what we need, and that's what we've done, and that's the reason why you don't see a meaningful movement in the thermal energy bills so far, because we've been able to actually buy forward quite a lot of quantities for our needs. Clearly, going forward, we need to monitor very closely the dynamic of this commodity. There is a double effect. One is the dynamic of the dollar, and the other clearly is of the commodity itself in our accounts. But, you know, we have a minor third leg to diversify, to try to hedge, to try to, like, split the purchase into two different suppliers. But, again, you don't have a very huge alternative. So, we watch the space very carefully. Clearly, in this particular commodity, there's very little you can do in terms of hedging, as I said. besides buying forward. So we see, we've clearly said in the presentation that this is probably one commodity that has a particular dynamic. But, you know, we believe that by buying forward plus diversifying the supply base, we can manage to not control but at least limit the price hikes. Francesco would like to add something. Yes.

I want to add that today, especially in Europe, our consumption of petcoke is going lower and lower because of the use of alternative fuels that both in Denmark and in Belgium is around 75%. In Denmark, we are going at natural gas, and in Belgium, it will happen next year. In the United States, we are using natural gas. And in Turkey, we use just an opportunistic way, lignite, that is a natural, let me say, coal. So let's say that the only countries that today go full petro are Egypt, China, and Malaysia. That is a count in terms of quantity that is less probably than 15%. So let's say For sure, it's an issue. For sure, there is a limited framework where you can hedge, but compared to other players, let's say, the increase of the petcock affects, let me say, our balance sheet in a minor way.

Okay, thank you very much for the very detailed answer.

The next question is from Emanuele Galazzi of Equita. Please, go ahead.

Yes, good afternoon everybody. Two questions from my side. The first one is on the Turkish market. I know that it is a very volatile market, but I would like to understand how do you see this market evolving in the coming quarter? And do you think that the carbon border adjustment mechanism could change the competitive environment there? And the second one is on the CAPEX because it seems to me that you are a little bit ahead of your target for the full year at 130 million euros. Can you just comment on it? Are you, say, accelerating the green investments just to understand the target for the full year? Thank you.

Regarding the investment, as we shared in the first quarter, due to the very, let me say, unfavorable conditions Climatic Condition, we sped up the part of the year, but it's not in our, let me say, pipeline to speed up. Also, we just, let me say, invested in CAPEX more in the first part of the year because part of the perimeter was, let me say, was difficult to sell cement due to this unfavorable. So I think that probably we will be even a little bit less at the end of the year than the forecast. The second question, the other question was... On the Turkish market. The Turkish market, let me say, besides a very slow start, even for weather condition, today, let me say, it's gathering pace, and so we don't think for sure that the Turkish market as a whole will be lower than last year, considering that we also had the calfs that we sold the plants, so today we have one, let me say, plant less, or 12% of the perimeter less in terms of quantity, but we think that what we are seeing now, even in July, that there is a recovery in the market in consumption, and also in part of the perimeter, the hiding of the price, because remember that Turkey today still has an and inflation that is around 30%, and so every month or every two months, you need to adjust, especially now, because, as you know, Turkey, they don't, like most of the European countries, they don't have, let me say, energetic power resource, and so every increase, what we are seeing in the last 10 days, then arrives directly, let me say, in the cost of any product. as also what we saw in the last two or three years, that it's easier when you have inflation to increase the price, and this is what is happening in the market.

And do you think that the carbon borer adjustment mechanism may change the competitive environment?

The carbon, let me say, the C-BARM should, let me say, when it will, let me say, be in place... like what we saw in Europe should start, let me say, to freeze to make the market because then if you don't have the free allowance, even if the free allowance is 10 or 15 euro, because as you know today in Turkey, I mean, the EBITDA per ton is between 10 and 20 euro. So if you have an extra cost of 10 or 15, then you are not, let me say, you are not willing to expand capacity to give the extra profit to the profitability. So what we think is that when this mechanism will be in place, and for Turkey it's a must because they export a lot of steel, a lot of aluminum, besides cement. So it's in the interest of Turkey to start, let me say, this carbon leakage system to put in place this because otherwise they cannot export to Europe and they will be taxed in a heavier way because for sure to be taxed at 80 euro like it is today, the CO2, instead of 10, 15, it's a big difference. But anyway, I believe that this should start to simplify the competition framework in Turkey like what we saw in Europe starting from 15-20 years ago.

Okay, thank you.

As a reminder, if you wish to register for a question, please press a star and one on your telephone. Once again, if you wish to ask a question, please press a star and one on your telephone. The next question is from Bruno Permutti of Intesa San Paolo. Please, go ahead.

Good evening, everyone, and thanks for taking my questions. The first one concerns Denmark. There was a recovery in the second quarter of the year, probably, and you highlighted that also the volumes of white cement were higher. So I was wondering, how do you see the second half of the year, if you see the recovery continuing? And in particular, why this different dynamic? So the quite good performance of the white cement, in a relatively weak market in the first half. It can explain the dynamic of this. And a second question concerning the new customers in France and Belgium. I was wondering if the positive impact of the new customers will be seen also in the second half of the year.

The dynamic of white cement is different from gray cement. So it's affected in the high and the low of the cycle much less than gray cement. So the reason why, let me say, white cement is, let me say, performing better is because of this. Regarding what we expect in the second half of the year is that, let me say, besides the macro shocks that can arrive even tomorrow, let's say, we see that There is still a mild recovery. There is some delays in the project, but delays means that it's not canceled. So if you delay something, let me say in January, now probably you are going to start. So this is what we are starting to see in Northern Europe. That is not only Nordics, but even Netherlands or Belgium and even France. We think that, especially in France and Belgium, let me say, there has been the possibility just to market adjustment, just to, let me say, grab some, let me say, customers. But this is a normal situation that has happened. So I cannot, let me say, say that this customer will stay with us forever, but let's say that What we are talking about the next five months, because we are at the end of July and probably next year, I am positive on this.

Thank you.

For any further questions, please press the start and 1 on your telephone. Mr. Bianconi, there are no more questions registered at this time.

Okay, so then thank you very much for your interest in Chairman Thiel and for following this conference call, and we wish you a pleasant rest of your day. Thank you. Thank you.

Bye-bye.

Bye.