Vicat Sa Unsp/Adr

Welcome to the VICAT 2026 half-year results presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, all the participants are able to ask questions. Now, I will hand the conference over to Hugues Chomel, Deputy CEO and Group CFO, and Pierre Pedrosa, Head of Investor Relations. Please go ahead.

Good afternoon, ladies and gentlemen. Welcome to the WCAG 1st half 2026 research presentation. I am Hugues Chomel, Deputy CEO and CFO of the WCAG Group. I am joined today by Pierre Pedrosa, Head of Investor Relations. On slide 2, as a preliminary remark, we would like to draw your attention to the fact that the forward-looking information presented here reflects Our current assessment of expected trends across the big markets and should not be regarded as forecasts. Let me start with the key highlights of the first half on slide 3. In an international environment that remains complex, the group delivered strong results. Organic sales growth reached 10.8%, driven by the stabilization in Europe, recovery in the United States, and an acceleration in emerging countries. EBITDA was 367 million euros, up 13.6% light for light, with a particularly strong contribution from emerging countries. At the back of this solid performance, we are upgrading our full year 2026 guidance to light for light growth of 7-9% in both sales and EBITDA. Last but not least, under Climate France, we achieved an important milestone with the startup and the inauguration of the Cash4Climate, our joint venture with three other leading cement producers. This R&D pilot in Germany, dedicated to second generation of secure technology, represents Slide 4 provides for simplified P&I. Group sales came in at €2,036,000,000 at 10.8% on a like-buy basis. On the reported basis, sales growth was 8%, taking into account ethics that remained headwind through the past half. Didier, which created €67,000,000 at 13.6% like-buy, with the margin improving to 18%. Net income group share was up 14.7% on a reported basis to 117 million euros and diluted EPS amounted to 26 euros over the past half, up 14.5%. Overall, the first half numbers demonstrate our ability to convert supply momentum into profit growth despite persistent currency headwinds. On slide 5, we take a closer look at our sales performance, which was primarily driven by strong momentum in emerging countries. As I mentioned, organic growth reached 10.8% in the first half, while all four regions posted positive organic growth in the first half Starting with Europe, which posted a moderate organic growth of plus 0.9%, volumes were slightly down in France, in the context of the continued soft landing of the residential market. They were stable in Switzerland, despite a particularly high comparison basis in the first half of 2025. Prices continued to rise across Europe, reflecting the integration of CO2 costs as well as higher energy electricity costs in France following the implementation of the CRPM contract with UBF at the beginning of the year. In the Americas, sales were up 7% organically. In the US, cement activity rebounded in each one thanks to volume growth in all two regions. In Brazil, salmon continued its strong momentum, supported by demand even when it was sweeter, the integration of organics which supports volume growth and a positive price momentum. The Aegean-Mediterranean region was particularly dynamic, with organic growth of 27.7% thanks to the contribution of all countries. In particular, volume was in India, Turkey and on the Egyptian domestic market, while pricing was very dynamic in Egypt and Kazakhstan. Euro currency effects remained strongly negative, with solid performance still resulted in the 14% reported growth of the region. Africa delivered similar strong growth at 26.2% organically, mainly driven by Senegal. Cement benefited from higher volumes and some recovering domestic prices, while aggregates posted strong growth supported by major infrastructure projects. Ali and Mauritania also contributed positively. Overall, the first half showed solid sales momentum for the group. Europe is stabilizing thanks to positive pricing. US volumes are recovering. and we are clearly benefiting from your presence in emerging markets. Changing Scope added 0.9% points to the Group Revenue Broke, reflecting the contribution of RealMix in Brazil. As expected, CoinExchange remains a significant headwind with a minus 3.7% impact. However, FX Pressure is materially in Q2, where the impact was limited to 1.7% compared to 5.9% in Q1. Moving now to EBITDA on slide 6. Blackfriar growth was 13.6% or 45 million euros in the first half of 2026. Volumes contributed a positive 33 million euros effect Thank you very much. Thank you. Both volume and prices, as well as high maintenance costs in Turkey and at Raglan in the United States, which are expected to normalize in issue. Industrial performance improved, notably 10.6 in Senegal. Scope added 1 million euros, and foreign exchange represented a value of 10 million euros, or minus 3%. All in all, reported EBDA rose by 10.8%. This is a solid performance of the group, demonstrating our ability to improve our profitability despite an economic environment that remained highly challenging. Let's now take a look at EBDA growth by region on slide 7. As you can see from the chart, or 13.6% like-for-like EBITDA growth was entirely driven by emerging markets. Starting from the left, in Europe, EBITDA was down by 2 million or minus 1.3% like-for-like, demonstrating resilience in the context of low volumes in France and rising costs, thanks to solid pricing momentum. and the Americas. The Americas were slightly similarly stable, down by only 1 million, as the marked improvement in the profitability in Brazil was offset by the United States, affected by a negative price-cost differential and exceptionally high maintenance costs in the Southeast, which again should normalize any issue. Our emerging markets made the difference. Aegean-Mediterranean added 11 million of EBITDA in the lifetime basis, up 13.8%, on the back of a strong performance in Egypt and Kazakhstan. As expected, Africa was clearly the major driver, contributing 36 million euros as the Senegal delivered a strong improvement in local space, compounded by 7.5 degrees. So, the United States are showing some... Sorry. Let's now deep dive in some of our key geographies, starting with the US on Site A. Recovery is underway in U.S. markets. In California, 7 volumes rebounded in the first half, turning to positive growth in both Q1 and Q2 2026. This recovery was supported by a particularly favorable Bayes effect. In Q1 2025, activity had been affected by the Los Angeles fires as well as Angus River. The pick-up in volumes is broad-based across the different segments in California. This is illustrated by the projects such as the Beverly Plaza mixed-use development in Beverly Hills that you can see on the first picture. In the Southeast, volume growth accelerated in the first half of 2026 after having already outperformed a subdued market throughout 2025. The name remains well-oriented, driven in particular by the non-residential segment and data center's demand. The second picture shows the construction site of Equinix's new high-pressure-scale data center in Georgia. The United States are showing some encouraging signs of volume recovery and strong exposure to some of the most attractive segments in the non-residential market. Looking ahead, we did announce price increases early summer on Wall. Turn in to Egypt on side 9, where the group is delivering another semester of strong profitability. The BDA margin in Egypt progressed further in the first half of 2026 to 41.7%. This is an outstanding turnaround story, as we were only breakeven in 2022. Our Egyptian business continues to benefit from strong export momentum, drawing on two significant competitive advantages, industry-leading cash costs, and a clear logistic advantage, with Orsina a plant located 50 km away from Alarich Port. Over the period, export volumes were slightly lower, largely offset by strong price realisation across all export markets. At the same time, domestic markets continue to pick up, supported by large-scale real estate developments and by major infrastructure projects like the Cairo Monorail. Demographic and economic growth should support long-term tenant consumption patterns. On top of this, Egypt provides exposure to attractive long-term opportunities in the region including potential reconstruction needs in post-conflict areas. Moving to Senegal on slide 10 and starting with our cement activity. The new transit is already contributing to the improvement of our industrial performance, energy efficiency and profitability. In the first half of the year, cement APTA in Senegal increased very significantly by 23 million euros to reach 22 million euros. This achievement reflects more the impact of Chem 6 and the increase in domestic prices. The industrial ramp-up of Chem 6 is progressing and it has already allowed us to pre-substitute thin carrying ports, shut down two older chems, start improving energy efficiency. It is a major step forward in terms of industrial efficiency and margin in enrichment. Team 6 is clearly a major mid-term epidemiological driver for the group. Once fully ramped up and operating with a 70% alternative fuel substitution rate, the plant will generate run rates of savings of around €20 per tonne. Let's stay in Senegal on slide 11, but moving to the aggregate business, which is also delivering strong results. And look at APDA rose by 80 million euros to 30 million euros in the first half. This performance was driven by an acceleration in volumes, Since the second quarter of 2025, supported by strong infrastructure demand. In particular, the business is benefiting from the demand from those that require to use major public work projects. Altogether, Senegal is becoming a robust regional growth platform for WICAP, with a step change in cement industrial performance and profitability. as well as the fast-growing AK business supported by major infrastructure needs. Let me now return to what was stated on slide 12. Energy costs, excluding transport, increased by 11.6% in the first half. This increase was mainly volume-driven. Excluding the volume effect, energy costs in patients remained contained, reflecting the effectiveness of our hedging policy. Transportation costs were also impacted by higher oil prices, at 27% in the first half. Most of the group transportation contracts include indexation closings, allowing us to pass through higher diesel costs to the market. As we have explained in the past, our hedging policy provides Protection against short-term volatility, basically 6 months on average, but does not make us immune to a prolonged increase in energy prices. Even with the global energy cost inflation we are facing, we expect the impact on OPML to become more visible in the second half of the year. So, to summarize, cost inflation remains the headwind, and the increase in energy costs should accelerate in the second half. A group successfully implemented price increases in the first half in most markets to absorb these higher costs and limit their impact and profitability. Slide 13 illustrates how EBITDA momentum translates into EPS growth. Net financial income improved by €11 million compared to the first half of 2025. This reflects two factors. foreign exchange gain on hard currency cash in emerging countries, and a lower average cost of gross debt after hedging. Our effective tax rate of the group came down slightly to 26.1%. Altogether, this translated into earning per share growth of 14.5% in the first half on the diluted basis, a direct result of strong proportional execution Combined with unabated financial discipline. Turning to investments and cash generation on slide 14. Net capital expenditures amounted to 130 million euros, broadly stable year-on-year, and still including payments related to PN6 in Senegal. We are maintaining strict investment discipline, and we consider a full year objective of net industrial capex disbursed around 290 million euros. Free cash flow stood at minus 36 million euros in the first half, including working capital outflow in stage 1 driven by strong revenue growth, business seasonality, and full cost inflation. Let me remind you that our free cash flow generation is highly seasonal, both from an EBITDA and working capital perspective as you will see on the next slide. On slide 15, this is the monthly evolution of the group year-to-date free cash flow. You can see the pronounced seasonality pattern where on free cash flow generation is heavily weighted towards the second half of the year. You can also see that the H1 profile Each one 2026 profile is fully consistent with that usual pattern. We are highly confident in our ability to deliver another year of strong free cash flow generation in 2026. The good balance sheet on slide 16 is characterized by a balanced debt structure and strong liquidity. All deleveraging continued into H1 2026 with a net debt of 1.3 billion euros at the end of June, down 48 million euros over one year. This brought leverage ratio to 1.65 times from 1.81 a year earlier. It was lower at H1 2025 at 1.49 times due to the seasonality of our working capital requirements. Our gross debt of 1.8 billion euros is well diversified across instrument and maturity with an average maturity of 4.7 years and an average interest rate of 3.78% after hedging which is down from 3.9% at the end of June 2025. With 491 million euros of cash and 578 million euros of unbound credit line at the end of June, ICA benefits from a solid financial structure and ample liquidity to pursue its development. Turning now to climate performance on Site 17. In the first half, all specific emissions were temporarily penalized by higher emissions in the United States and India, and by an unfavorable geosarctic mix driven by strong sales growth in territories which carry a higher income content, in Maharashtra and India, in Egypt and in the United States. We continue to make strong progress in Europe, and particularly in France, where the alternative fuel rate rose by 5 points in a year, to more than 70%, with three plants, Echy, Zeuillet and Montalieu, now worth about 80%. The tincture factor in France is also decreased, supported by the commercial success of the Dicat Ranch. Together with PAPEC, we also commissioned a new waste recovery facility with a 50,000 tons capacity, capable of processing refuse-derived fuel to supply our agrar-to-pay plant in France. So, beyond short-term volatility, we stay firmly committed to our decarbonization trajectory. On slide 18, I would like to focus on catch-4-climates, the major step forward in CO2 capture in our industry. Together with three other leading cement producers, we inaugurated the Catch4Climate facility on July 8th in Nagelstedt in Germany, dedicated to second generation oxy-fuel technology to facilitate carbon protection. The principle is to produce skincare using pure oxygen in the can instead of ambient air. This generates highly concentrated CO2 exoskeletons. With the standard, the plant is already showing promising results with CO2 concentration above 90%, compared with only around 30% for conventional salmon plants. This is a world premiere. This higher concentration is the key to the economics. Carbon capture is very costly because of the separation step required. The more concentrated CO2 stream allows for a simpler, less expensive carbon capture process. Studies show that this second generation of sea-fuel technology could lower the cost of capture combining both CAPEX and OPEX by around 30% compared with the conventional normal anion-based technologies. So this project is a breakthrough innovation in the cement industry and a concrete illustration of how we intend to make decarbonization technically and economically viable at industrial scale. Moving to artificial intelligence on slide 19. On June 16, we announced the acquisition of Araico, a French startup specialized in AI solutions for industrial companies. and many more. Paralco brings strong expertise in generative AI, Agile PPI, multi-agile systems and data science, with a focus on improving knowledge sharing within industrial organizations. His expertise is highly complementary to Vika Hinault's digital factory, the DigiCell which has been developing AI-driven solutions since 2021, particularly in machine learning, real-time optimization, industrial process, and product formulation improvement. These combinations really accelerate the AI roadmap. It is also in line with our strategy to build AI capabilities in-house. For us, this means not only protecting our data, but also retaining control, the models, algorithms and know-all that increasingly support industrial competitiveness. Lastly, it creates opportunities for external expansion through client-portfolio synergies. We have big ambitions in AI, which we view as a powerful operational lever that can deliver meaningful gains. Let's now turn to full-year guidance on slide 20. Following a strong first half, we are upgrading our 2026 four-year guidance. We now expect like-for-like growth of 7 to 9% in both sales and APJ, up from the slight growth we guided previously. The net capex objective is unchanged at around 290 million euros. The guidance takes into account More demanding second half with higher energy costs and a tougher comparison rate in some countries namely Turkey, Brazil, Egypt, Senegal. It also assumes no further significant deterioration of the Middle East complex, leaving its potential impacts on more activity. Overall, this upgrade guidance confirms both the quality of the first half performance and our confidence in IPCA's ability to continue delivering profitable growth in a still uncertain environment. Slide 21 recaps our medium-term priorities. The first priority is to maintain strong profitability with an EBITDA margin of at least 20% over the 2025-2027 period. Our second priority to continue the leveraging with a leverage ratio at or below 1 by 2027. This is subject to potential Bolton acquisition opportunities in world-wide steam geographies as we want to remain agile and keep the flexibility to see value-creating opportunities. Our priority is to accelerate our climate roadmap and continue promoting our low-carbon products. Together, these priorities reflect the balance we want to maintain in the medium term, strong profitability, financial discipline, and continued progress on decarbonization. Finally, on site 22, I would like to reiterate that DECA is well positioned to benefit from mid-term growth catalysts. June 6th in Senegal is already contributing meaningfully to our performance. Territory railway infrastructure project in France has only started to contribute. Other levels, additional levels of site over the coming years, including the recovery of residential market in France and in the United States. Lastly, the Mediterranean region offer attractive growth optionalities with the reconstruction of post-conflict areas when it materializes. This is what gives us confidence in the VKR medium-term trajectory. We combine a well-balanced geographical footprint, high quality industrial assets, financial discipline, and clear operational levels to drive profitable growth. Thank you for your attention. I will now take your questions.

Please note that we will take audio questions from analysts only. You can request to speak via the green hand icon. We kindly ask investors to submit questions via the chat box below the player.

Hello. This question comes from Ebrahim Homani from CIC.

Hello Eric, thank you for your question.

I have two emails. The first one is on your patent. Given the organic rules, depending on which one, the lower cost of your patent to pay IMQ is, let's say, 7 million euros in H2. My question is very simple. What would be the clinical distribution issue?

Your line is not very clear, so it's difficult to understand your question. I'm sorry.

Yeah, so it may be better. My first question is on your guidance on the organic growth. If we take the lower part of your guidance, it's an increase of 7 million euros in H2, so what will be the cynical contribution in H2? and what are the geographies in which we have to be more cautious. And my second question is about free cash flow generation. I understand the seasonality H1 versus H2, but just to be clear, do free cash flow generation will increase in 2026 or will be at the same level than 2025? Thank you.

Thank you, Edwin. So, when guidance reflects on assessment of expected performance of a group through H2 and considering the strong validation of H1, you have to keep in mind that we will have less easy or less favorable comparison days in quite a few countries that did who accelerated last year, mainly Brazil, Egypt that was very strong in H2 last year, Turkey that did accelerate at the end of each one last year, as well as the aggregates of Senegal. And as well, Senegal as the kiln 6 started to contribute already in H2 last year. So the comparison base is very different from the one we had in each one. as stated during the presentation, we do expect the energy costs to pick up in H2 and to be therefore less favorable even if we have implemented price increases to offset those costs. So an additional point you may keep in mind is that all guidance does not integrate anymore a volume recovery inference If this was to materialize, we would be ready to supply it, as we have the industrial setting to do it, and happy to do so. And it would be an upside rate, of course. To respond more specifically on the free cash flow, as you know, we do not guide on the free cash flow. We have provided in the backup slides of the presentation a mystery of a semi-annual free cash flow generation, but this was critically The seasonality both of EBITDA generation and of working capital requirement variation. Regarding working cap, I may give a word of explanation. We have delivered in H1 a strong organic growth. We do see the usual seasonality pattern and there is already some inflation impact of energy in inventory. But just in terms of days, you have to keep in mind that working capital has increased only by three days of operations, so that's a minor variation. Most of it is activity and seasonality driven. So I reiterate your commitment to deliver strong free cash for VCM.

Thank you very much and congrats for the results.

The next question comes from Artus Pio from On Field Investment Research. Please unmute your microphone.

You are very far away.

Sorry, is it there now?

Yeah, it's there.

Okay, amazing. So I was saying I've got three questions. So the first one is, are price increases currently planned for U.S. cement markets like California, Georgia and Alabama. The second one is given the recent improvement in French indicators, do you think from conversation with your clients that it can translate into volumes in H2 this year or next year? And the last one is, is there any additional price increases or fuel energy surcharges being implemented in France or Switzerland in H2? Thank you.

We have announced price increase in the United States in both Southeast and California. California is July 1 and Southeast is, depending on the states, July 1 or August 1. and it's $5, so it is, of course, too early to know what will be the effective part of it, but as mentioned, we have a negative price-cost differential in the US. It was already the case last year, so the industry needs price increases and we are committed to it. Crensh indicators. Well, you are right, both StarMix and Star have been positively oriented for a few months already. We have not seen any signs of it materializing into cement consumption as of now. So, as mentioned previously, Our guidance does not include a recovery of the French market in second half with this materialized. We are fully ready to serve it and it would be an outside tour guidance. But, as mentioned, we are not expecting this to happen as of now. There is a correlation between Those are the indicators of semi-consumption, usually with a rather long timeline. You have to keep in mind as well that the permits and starts do include, I would say, some heavy renovation or extensions of constructions. and those are not always cement in density. So this is difficult to track and to modelize what is the actual differential of those specific projects compared to purely new buildings. So this may be one of the factors to explain the gap we are witnessing as of now. Regarding price increases to compensate higher energy costs, of course we are monitoring energy costs carefully, especially transportation crews that are the most volatile ones. It is obviously changing day after day. Thanks a lot, and just to bounce back quickly, you quantified the price increase in the US to $5, right?

Or did I hear it?

Yes. This is the announcement. I don't know what will be... Yeah, perfect.

And just to make sure, so you did not announce any additional price increases in France or Switzerland for H2 yet?

Yes.

Okay, amazing. Well, thank you very much.

As a reminder, please note that we will take audio questions from analysts only. You can request to speak via the green hand icon. We kindly ask investors to submit questions via the chat box below the player.

So we have a question on the capital allocation and more precisely on the dividend. Please comment on the dividend per share growth for 2026 and 2027. Can we assume growth in line with EPS, keeping in mind our debt averaging and the stock market not fully recognize your execution with low valuation?

It's obviously early in the year to speak about dividend decisions and those are essential challenges. I can nevertheless remind you of a few A few elements we shared in the full year presentation. Where we had a specific capital allocation side, I advise you to look at. We consider that at current level, the payout rate has reached, I would say, a more or less normalized level, and that going forward, Dividend will follow results. Now it is a general trend, it is not always a year by year evolution. That is what I can share at this stage of the year.

Thank you. There are no more questions at this time. So I hand the conference back to the speakers for the closing comments.

Ladies and gentlemen, thank you for joining us today. Our next event will be our 9-month 2026 review release on November 5. In the meantime, Pierre and myself remain available and look forward to meeting many of you during world shows and conferences. I wish you all a relaxing summer.