Imerys Sa Unsp/Adr

Good day and thank you for standing by. Welcome to the EMERIS 2026 first nine months and third quarter results conference call and webcast. At this time all participants are in listen only mode. After the speaker's presentation there will be the question and answer session. To ask a question during the session you need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw a question please press star 1 1 again. Today with us Alessandro Dazza, and Pierre Lebreuil, CFO. Please be advised that this conference is being recorded. I would now like to hand the conference over to our first speaker today, Alessandro Dazza. Please go ahead.

Thank you and good evening to all of you. Thank you for joining us today to review IMERI's first nine months 2026 results. With me here, Pierre Lebreuil, our CFO. Let me start by giving you some highlights on the first nine months of the year. Imerys posted another strong quarter in Q3 26, the third consecutive quarter of growth for all key indicators. This led to a solid first nine months performance with higher sales, higher volumes, firm pricing, costs under control, and the first benefits of the newly acquired businesses. The result is another material expansion of EBITDA and margin. In detail, revenue was above 2.6 billion euros or up 2% versus last year at constant FX and perimeter with a positive volume and pricing effect. In detail, Sales volume rose 0.4% thanks to a strong performance of our sales teams and the ramp-up of our new industrial capacities, fully offsetting soft overall demand, particularly in construction. Pricing was firm, plus 1.6% year-on-year. The integration of Great Lakes Minerals NSB Minerasal added about 1% to total revenue. whereas exchange rates had a negative impact of 1.4% year to date mainly attributable to Q126 but even positive in Q3 finally. Adjusted EBITDA for the period amounted to 450 million up 10% at constant FX and perimeter. As a consequence of this overall good performance, solid performance, Imerys is raising its EBITDA guidance for the year 2026 to 570 to 590 million euro. I will come back on this at the end of my presentation. Let's take a look at our main underlying markets as usual and the trends during the third quarter. Construction activity remains, I would say, flattish overall with a positive trend in infrastructure and AI related data center construction. On the contrary, demand for residential construction remains weak, and that's our main exposures as Emerys. Even declining in the US, impacted by high interest rates. Recovering Europe, which we saw at the beginning of the year, is honestly losing a bit of momentum on the back of high inflation and potentially interest rate increases coming. Consumer goods remain very solid across all geographies, Aramodi production is still down, decreasing fundamentally in all geographies, including China, for the first time after many positive quarters. The only exception, the good news, is around electric vehicles, which continues to grow on a strong path in Europe, as well as China. And finally, general industrial activity, which typically follows the overall economy, soft in Europe, strong, very strong in the US, as recently published, and SOLID for us also in China. On this page, on these slides, Imerys sales performance by geography for the first nine months of 26. I would start with the top right. Sales in Asia were strong and confirmed the trend of H1. Growth in all businesses, but of course, especially for conductive additives for polymers. China is performing particularly well I think thanks to a very solid local team. And in the meantime, China has become Emery's second largest market, surpassing Germany for the first time, of course, after the US. Finally, we can also report a significant growth in India, although in absolute terms, it remains still small for the group. Europe, as in H1, still negative, impacted by low activity in several markets, Partly really driven by high energy costs. Performance remains solid in consumer goods and prices are holding well. Sales in North America were strong in Q3 at plus 9.3% after an already very solid Q2, reinforcing the ongoing positive trend. The housing market is the main issue, remains soft, but we had very strong sales in consumer goods and industrial applications. Prices holding well. South America, okay, in line with H1, solid sales in consumers, a bit weaker construction market, and I believe this quarter a bit of slowdown due to the recent election. If we deep dive with more detail on our three business segments, starting with performance minerals, the most important, representing more than 60% of Imerys Group sales, Revenue of 1.556 billion in the first nine months of 26 with positive organic growth, strong activity in the U.S. from Q2 onwards. And focusing on Performance Minerals America, volumes year-to-date are up 1.6% versus last year. Most of applications doing well except for construction. Q3, volume growth accelerated. to 4.6%, driven also by market share gains. Pricing remains solid. EMEA APAT region revenue is largely in line with last year. Volumes dropped slightly year on year, especially because or due to sales to the ceramics industry, which were severely impacted by high energy costs and an overall soft construction demand. This effect was partially offset by very good activity in polymers and in consumer goods. Prices rose more than 2% in the period. It was necessary because of high energy costs. Let's look at our solutions for refractory abrasives and construction business. Revenue reached $865 million for the first nine months of the year in line with last year at constant FX and perimeter. Sales volumes were flat over the period. You see a decline in Q3 in revenue, basically attributable to our refractory business. We were expecting that tighter EU imports on Chinese steel, implemented from July 1, July 1, would have brought some benefits, but for the time being it proved insufficient to offset an overall soft demand for steel in Europe. There might be supply chain effects we will see as we move along. We know that steel mills are slowly ramping up capacity, so I believe we should see a positive development going forward. On a good note, sales to the construction sector improved from their H1 level, and abrasive and advanced ceramic segments continued on the solid positive momentum. Here in this business, the integration of Great Lakes minerals in the US is progressing well. If we now complete the segment review with solutions for energy transition business, the very good news come from our graphene and carbon activity. Another quarter of strong growth, posting a 16% increase year on year at constant exchange rates. If I look at Q3 alone, organic growth even accelerated to 21%, exceeding the pace recorded in the first part of the year. Top line performance is supported also by favorable market conditions, of course, electric vehicles, but also a booming energy storage system business. Good development also for conductive polymers in general. I have to also to underline that we have gained market share and we have launched new products that are already contributing. For the TQC, our quartz, high purity quartz business, I think the business overall is stabilizing with good growth in semiconductor, normalization in solar, which is welcome. I hand over now to Pierre for a detailed analysis of our financial results.

Thank you, Alessandro. Good evening, everyone, and thank you for joining us tonight. Let me recap some of the key aspects of our financial performance, starting as usual with revenue. Group sales amounted to 2.62 billion euros for the first nine months of 2026. This represents a 2% organic growth year over year, driven by a 0.4% growth in volume. Prices rose by 1.6%, accelerating in Q2 and in Q3, driven by the pass-through of higher energy and logistic costs to customers. Organic growth accelerated throughout the year, rising from 0.7% in Q1 to 2.3% in Q2 and then reaching 2.9% in Q3. Currencies had a negative effect of 37 million euros mainly in Q1. As a reminder, the US dollar stood at a strong 1.05 USD per euro in the first quarter of 2025 The 28 million euro perimeter effect, mostly in Q3, is related to Great Lakes Minerals and S&D Minerasao acquisitions. In Q3, sales are up by 7% year-on-year, driven by volume and price increases, scope changes and favourable USD-euro exchange rates in the quarter. Organigros accelerated to 2.9% in the quarter driven by higher prices. Now, let's have a look at the group profitability. For the first nine months of 2026, adjusted EBITDA reached €450 million, corresponding to a 7.1% margin. Looking at Imerys' direct operational performance, highlighted as usual in the box in grey color, you can see that adjusted EBITDA has significantly improved, with a 10% year-on-year growth, driven by positive sales volumes, disciplined pricing, strict cost management, and higher contributions from joint ventures. On a reported basis, EBITDA increased by 7% in comparison to the first nine months of 2025. Those 7% are below the 10% organic growth as a consequence of unfavorable exchange rate, effect of 15 million euros. Just one comment about the strong Q3 2026 performance. Adjusted EBITDA amounted 116 million euros showing a solid 10.8 year-on-year increase at constant exchange rate and perimeter on the same trend than H1 2026 results. Now let's deep dive a little bit on the way we manage our costs in an inflationary environment for the first nine months of 2026. Keep in mind that energy and transportation costs surged on March 1st, impacting costs at September end around 30 million euros net of edges. So how was this offset? First, by maintaining a firm pricing, notably starting April 1st, 2026, as we passed energy and freight cost increases to our customers, mainly European ones. Second, by tightly managing our cost basis, multiple initiatives within Project Horizon are now underway to optimize fixed costs and overheads, notably through production capacity adjustments in Europe. This plan has already delivered 30 million euros in savings as of end of September and is ahead of schedule. In parallel, we have pursued our iQube Excellence Program delivering additional savings at September end. As a consequence of all those actions, the net effect of our price increases and of increases in variable fixed costs and overheads is positive by 23 million euros contributing to EBITDA growth. Let's now move to the bottom of the P&L. The current financial result was negative at 66 million in the first nine months of 2026. This includes a €11 million increase due to interest rates and a €6 million non-cash mark-to-market revaluation of our two virtual power purchase agreements. Other operating expenses are negative by €24 million. Those €24 million include a €34 million charge for restructuring costs related to Project Horizon. This is partly offset by a non-cash revaluation gain on the MED Lithium project. As a consequence, net income group share is positive at 92 million euros. I would like to highlight as well the fact that Imerys investment grade ratings have been confirmed by Moody's and by S&P in the last weeks, respectively BAA3 and BBB-, both with a stable outlook. On this positive note, I am now handing over to Alessandro for the outlook. Thank you.