Cementir Holding: Board of Directors approves consolidated results
Published by Sol Klappholz,
The Board of Directors of Cementir Holding N.V. today examined and approved the consolidated unaudited results for the first nine months and the third quarter of 2022.
As of June 2022, the Turkish economy is considered hyperinflationary according to the criteria set out in “IAS 29-Financial Reporting in Hyperinflationary Economies”. For the purpose of IAS 29 application, reference should be made to the relevant paragraph. The impacts of hyperinflation on the income statement of the first nine months of 2022 are shown in the Annex.
“In the first nine months of 2022 the Group reported a set of results in line with our expectations. Despite the severe geopolitical tensions and the significant increase in raw materials, energy and logistic costs, the Group is showing great capacity to keep profitability unchanged, thus compensating cost inflation." commented Francesco Caltagirone Jr, Chairman and Chief Executive Officer.
The following comments refer to the consolidated income statement for the first nine months of 2022 excluding IAS 29 impacts in Turkey. This representation allows a more direct understanding of Group performance compared to the same period of the previous year.
During the first nine months of 2022, cement and clinker sales volumes, amounting to 8.2 million t, decreased by 1.7% compared to the same period of 2021. The decline is mainly attributable to the performance of Turkey, Denmark, China and Egypt.
Sales volumes of ready-mixed concrete, equal to 3.5 million cubic metres, were down by 6.0% due to the decline recorded in Turkey, Denmark, Belgium and Sweden.
In the aggregates sector, sales volumes amounted to 7.9 million t, down 4.9% compared to the first nine months of 2021, with growth in Turkey and Belgium, offset by negative trends in Sweden and Denmark.
Group revenue from sales and services reached €1.2482 billion, up 23.8% compared to EUR 1,008.3 million in the first nine months of 2021. The increase in revenue is mainly due to price increases, offsetting higher costs for fuel, electricity, raw materials, transport and services.
At constant 2021 exchange rates, revenue would have reached EUR 1,342.6 million, up by 33.2% on the previous period.
At €1.08 billion, operating costs increased by 34.2% compared to €804.9 million in the first nine months of 2021.
The cost of raw materials was €616.5 million up by over 51% compared to €406.8 million in the first nine months of 2021, due to the increase in fuel prices on international markets.
At €148.3 million, personnel costs increased by 7.5% compared to EUR 138.1 million for the same period in 2021.Other operating costs, equal to €315.4 million, were up by 21.3% compared to €260.0 million in the first nine months of 2021, mainly attributable to the evolution of transport costs.
EBITDA amounted to €252.9 million, up 17.6% from €215.1 million in the first nine months of 2021. EBITDA included non-recurring income of €10.7 million related to the updated value assessment of non-industrial real estate in Turkey. The increase in EBITDA is attributable to better results in Belgium, Denmark, Turkey, the United States and Egypt, while the Asia Pacific region and Sweden saw a decline in results.
The EBITDA margin was 20.3%, compared to 21.3% in the first nine months of 2021.
At constant 2021 exchange rates, EBITDA would have amounted to €256.9 million, up 19.4% year-on-year.
EBIT, taking into account depreciation, amortisation, write-downs and provisions of €85.6 million (€81.8 million in the first nine months of 2021), amounted to €167.3 million, up 25.5% from €133.3 million in the first nine months of the previous year. Depreciation and amortisation due to the application of IFRS 16 amounted to €21.5 million compared to €20.6 million in the same period of 2021.
At constant 2021 exchange rates, the EBIT would have amounted to €169.9 million. The share of net profits of equity-accounted investees was positive by €0.4 million (€0.6 million in the first nine months of 2021).
Net financial expense of €2.9 million (expense of €12.8 million in the same period of the previous year), included net financial expenses of €8.4 million (€8.3 million in the first nine months of 2021), net foreign exchange income of €9.6 million (net foreign exchange expenses of EUR 2.8 million in the first nine months of 2021) and the effect of the valuation of derivatives.
Profit before taxes was €164.8 million, an increase of 36.0% on €121.2 million in the first nine months of 2021.
During the first nine months of 2022, the Group made overall investments of approximately €68.2 million (€64.4 million in the corresponding period of 2021) of which approximately €12 million (EUR 10.8 million in the first nine months of 2021) relating to the application of IFRS 16.
Net financial debt at 30 September 2022 amounted to €29.9 million, a €70.2 million reduction compared €100.1 million at 30 September 2021, including the distribution of €28.0 million in dividends in May. The impact of IFRS16 application on net financial debt at 30 September 2022 is €66.2 million (€75.3 million at 30 September 2021), while no effect is due to the application of IAS 29.
The positive change in relation to the net financial debt at 31 December 2021 was equal to EUR 10.5 million.
Total equity at 30 September 2022 amounted to EUR 1,342.1 million (EUR 1,227.6 million at 31 December 2021 and EUR 1,235.4 million at 30 September 2021). With the application of IAS 29, total equity amounted to EUR 1,528.1 million at 30 September 2022.
In the third quarter of 2022, cement and clinker sales volumes of 2.8 million tonnes decreased by 3.3% compared to the same period in 2021, mainly due to negative developments in Turkey. Ready-mixed concrete sales volumes of 1.2 million cubic metres decreased by 8.0% due to the negative performance in Turkey, Belgium and Denmark.
In the aggregates segment, sales volumes amounted to 2.4 million tonnes, down by 13.5% mainly as a result of the performance in the Nordic & Baltic area and in Belgium.
Revenues from sales and services amounted to EUR 443.0 million, an increase of 28.9% compared to EUR 343.8 million in the third quarter of 2021. The increase in revenues affected all geographical areas mainly in Turkey (45%), Nordic & Baltic (20%), the United States (38%) and Belgium (17%).
Operating costs amounted to EUR 365.2 million (EUR 268.2 million in the third quarter of 2021), an increase of 36.2%. This increase is mainly due to the increase in purchasing cost of raw materials, fuels and transport as well as other operating costs.
EBITDA, amounting to EUR 98.1 million, increased by 20.3% compared to the third quarter of 2021 (EUR 81.6 million).
EBIT amounted to EUR 69.3 million (EUR 54.3 million in the third quarter of 2021). The share of net profits of equity-accounted investees was EUR 0.3 million (EUR 0.2 million in the same period of 2021).
Net financial expense was EUR 4.9 million (expense of EUR 2.7 million in the third quarter of 2021).
Profit before taxes was EUR 64.7 million, an increase compared to the third quarter of 2021 (EUR 51.8 million).
Investments in the third quarter of 2022 amounted to EUR 13.8 million (EUR 20.1 million in the third quarter of 2021).
Significant events during and after the first nine months
In May 2022, the rating agency Standard & Poor's confirmed a rating BBB- with Stable Outlook. With reference to the Russian-Ukrainian conflict, the directors have identified no significant direct impact on the financial statements as a whole, in light of the Group‘s substantial lack of activities in these areas and dealings with them.
The Group Chief Financial Officer, Giovanni Luise, has decided to resign due to personal reasons, effective from the date of approval of results as at 30 September 2022, in agreement with the company. The Company has already started the search of a successor with an adequate profile, whose appointment will be communicated as required by law. Pending this process, the Chief Executive Officer will take on the role of CFO ad interim.
It should be noted that, as of today, Giovanni Luise does not own any Cementir Holding shares.
Outlook for 2022
In the third quarter, the global economy continued to be affected by the exceptionally high inflation, worsening financial conditions, the uncertainty linked to the conflict in Ukraine, weak economic activity in China and, less so than at the beginning of the year, supply chain difficulties. The latest forecasts by the international institutions expect global growth to weaken further next year, with risks tilted to the downside.
In light of the good results for the first half of the year, the targets announced on 8 February 2022 are confirmed, i.e., to achieve consolidated revenues of more than EUR 1.5 billion, an EBITDA of between EUR 305 and 315 million and a net cash position of about EUR 60 million at year-end, including industrial investments of about EUR 95 million. The Group's workforce is expected to remain stable during the period.
These expectations do not take into account any intensification of the current crisis in Ukraine or any new resurgence of the Covid 19 pandemic and the potential negative effects on demand deriving from the worsening of the macroeconomic situation related to the increase in inflation in the euro area. Since the expectations described above are based on a number of assumptions that are beyond the scope of management's control, results could deviate even significantly from these forecasts.
The foregoing solely reflects the views of the company's management, and does not constitute a guarantee, promise, operational suggestion or even investment advice. Therefore, it should not be taken as a forecast on future market trends and of any financial instruments concerned.
Please find the full consolidated results here.
Read the article online at: https://www.worldcement.com/europe-cis/03112022/cementir-holding-board-of-directors-approves-consolidated-results-as-of-30-september-2022/
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