Release Date: February 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cementir Holding NV (STU:3PC, Financial) achieved a revenue of €1.68 billion in 2024, showing a slight increase year-on-year.
- The company reported an increase in cement volumes by 0.5% and aggregates by 7.1%, driven by growth in Turkey, Denmark, and Sweden.
- Cementir Holding NV (STU:3PC) has set aggressive CO2 reduction targets, aiming for a 42% reduction in CO2 emissions by 2030.
- The company announced one of the largest onshore CCS projects in Europe, set to be operational by 2030, which will significantly reduce CO2 emissions.
- Cementir Holding NV (STU:3PC) expects a revenue increase to €1.75 billion in 2025, representing a 6% growth from 2024.
Negative Points
- The company faced strong foreign currency headwinds, particularly in Turkey and Egypt, which impacted revenues.
- EBITDA decreased by 0.9% year-on-year, with a notable decline in all regions except Turkey, Egypt, and Sweden.
- Non-recurring expenses in 2024 amounted to €4.4 million, contrasting with net non-recurring income of €11.6 million in 2023.
- The company anticipates increased electricity and fuel costs, which could impact future profitability.
- Cementir Holding NV (STU:3PC) is short of around 200,000 tons of CO2 allowances over the next three years, which could affect operational costs.
Q & A Highlights
Q: Can you explain the phasing of your EBITDA growth across the next three years, particularly the significant acceleration expected in 2026 and 2027?
A: The forecast for 2025 is affected by foreign exchange views, especially for Turkey and Egypt, which together account for nearly half a billion in revenues. We have cautiously put a linear evaluation, but if the Turkish Lira devaluation aligns more closely with inflation, we might see a recalibration of around €10 million. Additionally, the new line in Egypt is expected to reach full capacity over the next two to three years, contributing to growth. - Unidentified_3
Q: Compared to the previous plan, there's an improvement in the margin. What are the reasons for this, and is it due to pricing assumptions or something else?
A: The improvement is mainly due to exchange rate considerations, particularly in Turkey, which is expected to exit the hyperinflationary environment by 2026. The real profitability of the company remains unchanged, but the exchange rate impacts the reported figures. We also anticipate a mild recovery in markets like China, which should contribute to better margins. - Unidentified_3
Q: Can you provide more details about your expectations for the Turkish market in 2025 and the impact of the carbon border adjustment mechanism from 2026?
A: We expect a slight downturn in Turkey for 2025 due to exchange rate effects. However, the reconstruction needs in Syria and potentially Ukraine could create a bullish environment for Turkish cement, potentially offsetting the carbon border tax impact. The Turkish Cement Association estimates significant demand from Syria, which could absorb 8 to 10 million tons of cement annually for a decade. - Unidentified_3
Q: What is your strategy regarding capital allocation, given the expected increase in net cash by 2027?
A: We are ready for potential M&A opportunities but are cautious due to the current market conditions. We anticipate that some European plants may face challenges due to CO2 pricing, which could present acquisition opportunities at more favorable valuations. We aim to continue piling up cash until market conditions improve. - Unidentified_3
Q: Could you provide an update on the Axion CCS project in Denmark, including the next steps and funding details?
A: We aim to complete the bureaucratic processes by mid-2025 and start implementation by the end of 2027. The total project cost is around $550 million, with a grant covering $220 million. We will finance approximately $90 million directly, with the remaining costs covered by our industrial partner, who will recover costs through a fee on captured CO2. - Unidentified_3
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
