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Votorantim Cimentos ends first quarter of 2024 with better margins, higher sales volume and lower costs

Published by , Editorial Assistant
World Cement,

Votorantim Cimentos ended the first quarter of 2024 with better margins due to higher sales volume and lower costs.

In the first quarter, the company’s global cement sales totalled 8.1 million t, up 1% compared to 1Q23.

The company posted global net revenue of R$5.5 billion in the first quarter of 2024, down 4% in local currency (excluding the effect of exchange rate variation) compared to the same period last year. This resulted primarily from lower volume in North America, which was partially offset by positive results in countries in Africa, Asia, Europe and Latin America.

Consolidated adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) was R$766 million in 1Q24, a slight drop of 1% in local currency compared to the same period in 2023, reflecting better results abroad and lower costs, which offset the results in Brazil. The higher volumes and lower fuel, electricity and raw material costs resulted in an EBITDA margin of 14% in 1Q24, an increase of 1 percentage point compared to 1Q23.

Votorantim Cimentos’ net profit was R$17 million in 1Q24 (compared to R$78 million in 1Q23) due to the company’s lower operating result, higher net financial result and mark-to-market of future energy contracts.

Leverage, measured by the net debt/adjusted EBITDA ratio, ended the quarter at 1.76x, 0.02x lower than the same period in 2023 but still in line with the company’s financial policy and investment grade indicators. At the end of 1Q24, Votorantim Cimentos had strong liquidity, with total cashflow and financial investments worth R$4.4 billion, allowing the company to meet its financial obligations for more than four years.

Votorantim Cimentos’ investments (CAPEX) in the first quarter of the year totalled R$413 million, 23% higher than in 1Q23. This increase is primarily due to the company’s global strategy to invest in modernisation and structural competitiveness, in addition to projects linked to its decarbonisation commitments. Expansion projects accounted for 8% of the total capital invested in 1Q24. Highlights included projects in new businesses in Brazil, such as a R$145 million investment to increase the capacity of Viter (agricultural solutions) and Verdera (waste management and co-processing) at the Itaperuçu (in the state of Paraná) site, started at the beginning of April.

“Our solid and consistent financial results reflect the execution of our strategic mandate, which includes the recently announced R$5 billion investment plan to increase structural competitiveness in Brazil focusing on cost reduction, decarbonisation, capacity expansion, regional diversification and acceleration of new business”, said Osvaldo Ayres Filho, global CEO of Votorantim Cimentos.

At the beginning of April 2024, the subsidiary St. Marys issued on the international market a new bond in the amount of US$500 million, with a coupon of 5.75% per year, fully guaranteed by Votorantim Cimentos, to be paid semi-annually and maturing in April 2034. This issuance also reflected the company’s solid financial position by recording the lowest credit spread among Brazilian issuers for this maturity period.

The issuance is aligned with Votorantim Cimentos’ strategy for liability management and extension of the average debt term. It was an innovation in the company's debt management approach for being its first sustainability-linked bond issued in the international capital market. This bond is linked to an environmental key performance indicator (KPI) related to the intensity of scope 1 net CO2 emissions (kg CO2/t of cement) and the percentage of thermal substitution, highlighting the company’s commitment to decarbonisation, in line with its 2030 sustainability targets.

Performance by region

In Brazil, Votorantim Cimentos’ net revenue in the first quarter of 2024 was R$3 billion, on par with 1Q23. Adjusted EBITDA was R$512 million, 6% lower than 1Q23, due to lower maintenance prices and timing, which were enough to mitigate cost reductions in the period. EBITDA in the New Business area continued on a positive trend, increasing 40% compared to the first quarter of the previous year.

In North America, net revenue totalled R$1.1 billion in the first three months of the year, 3% lower than the same period in 2023 in local currency, as a result of slightly lower demand and a harsher winter, which were partially mitigated by price increases. The region’s adjusted EBITDA in the period was negative at R$17 million compared to a negative R$47 million in the first quarter of 2023. Despite the increase, first-quarter results are traditionally impacted by winter in the northern hemisphere, a seasonal phenomenon that was partially mitigated by positive price dynamics.

In Europe, Asia and Africa, net revenue rose 1% in local currency in 1Q24 compared to 1Q23, totalling R$975 million. The result was impacted by higher volumes in Türkiye and positive price management in most countries. Adjusted EBITDA in the region was R$243 million in the period, a 5% drop in local currency compared to 1Q23, a result of above-average rain in Morocco and Spain, and investments in information technology.

In Latin America, net revenue grew 3% in local currency in the first quarter of 2024 compared to the same period in 2023, totalling R$195 million, as a result of higher sales volumes and prices in Bolivia. This increase in sales, combined with the positive effect of a lower cost of raw materials, was also reflected in adjusted EBITDA of R$30 million in 1Q24, an increase of 13% in local currency over 1Q23.

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