Cementir Holding N.V. ($CEM)

Good afternoon. This is the Chorus Call Conference operator. Welcome, and thank you for joining the Cementir First Quarter 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Marco Maria Bianconi, Chief M&A and IR Officer. Please go ahead, sir.

Thank you. Good evening, and welcome to Cementir Holding First Quarter 2026 Results Webcast. I'm here with our Chairman and Chief Executive, Francesco Caltagirone.

Good afternoon.

We're happy to take your questions at the end of my short presentation. So starting with the key takeaways on Page 2. Q1 2026 results were impacted by marked seasonality and a different maintenance schedule. The harshest winter in the past 20 years in Europe and Turkiye together with a different maintenance schedule and a sharper-than-expected volumes and profitability decline in Turkey has impacted our results. Volumes were down across our business lines, cement minus 3.3%, ready-mix minus 23.7%, aggregates minus 5.1%, mainly driven by weather disruption, a weaker demand in Asia Pacific and lower activity in Turkiye. Positive trends in Belgium and Egypt, following the restart of the second kiln and volume recovery was visible in March in some regions. Revenue was down 7.1% year-on-year, driven by lower volumes across several regions and a negative FX impact of around EUR 21.4 million, mainly due to Turkish lira and U.S. dollar depreciation. EBITDA was down around 40.6% for the quarter, of which around EUR 25 million related to Nordic and Baltic and Turkiye reflecting lower volumes and different scheduling of maintenance activities, while the FX impact was negligible. There was no significant direct impact from geopolitical conflict on our operations in the first quarter, energy cost volatility been largely mitigated through a structural risk management approach and hedging while some pressure still persists on petcoke supply and logistics. The full year 2026 guidance is confirmed despite a highly uncertain macroeconomic and geopolitical environment and pending greater visibility on its evolution in the coming months. Turning to Page 3, a bit more granularity on the results. Revenues reached EUR 345.9 million, so minus 6% year-on-year. Non-GAAP revenue reached EUR 344.1 million, minus 7.1%. Lower volumes across several regions EUR 21.4 million negative FX mainly due to the Turkish lira dollar depreciation. As mentioned, cement volumes were down 3.3%, mainly due to exceptionally adverse weather conditions, weaker demand in Asia Pacific and lower activity in Turkiye, partially offset by a stronger performance in Egypt and Belgium. RMC volumes were down 23.7%, aggregates were down minus 5.1%. EBITDA reached EUR 38.8 million minus 41.6%. Non-GAAP EBITDA was EUR 41.4 million, minus 40.6%. EUR 25 million of EBITDA declined was between Nordic and Baltic and Turkiye, driven by lower volumes on top of a different annual maintenance schedule. Non-GAAP EBITDA margin stood at 12% as opposed to 18.8% in the first quarter of last year. Pretax was EUR 7.4 million and non-GAAP pretax was EUR 14.8 million. Net cash reached EUR 303.7 million, an improvement of EUR 160.5 million year-on-year, including EUR 51 million from the disposal of Kars Cimento EUR 19.7 million of insurance proceeds, EUR 18.6 million of the Just Transition Fund and EUR 52.2 million of dividends paid. Turning to Page #4, focus on Nordic and Baltic, accounting from around 47% share of group EBITDA for the quarter. In Denmark, there were exceptionally adverse weather conditions, especially in January and February, leading grey domestic demand down by around 10%, the coldest start of the year in the last 20 years. There was a partial recovery in March with a plus 6% whereas white cement volumes were up 15%, supported by stronger demand. Exports were down 7% due to lower deliveries to Norway and Iceland partially offset by growth in the U.K., France and Finland. RMC volumes were down 22%, aggregate volumes down 29% with a partial recovery in March. EBITDA was down 44%, again, impacted mainly by lower volumes and higher costs due to a different maintenance schedule. Norway, we have only RMC activity there and sales volumes were down 13%, impacted by weak demand and some delays in infrastructure projects on top of adverse weather, market with overcapacity and price competition. Lower EBITDA was due to lower volumes and higher variable costs, partially offset by pricing actions. The Norwegian krone appreciated by around 2.3% versus the euro average in the period. In Sweden, RMC volumes were down 10%, again due to harsh weather, there was a very strong rebound in March, plus 14% and aggregate volumes were up 14%, supported by the startup of several projects. March volumes were 60% up. EBITDA was impacted by lower RMC volumes and partly mitigated by aggregates performance and pricing. In the period, the Swedish krona revaluated by around 4.8% versus the euro. Turning to Page 5, Belgium and France, accounting for around 42% of group EBITDA in the period. Here, domestic cement volumes were up 8%, supported by new customers and strong precast segment despite adverse weather and weak residential demand. Exports were up 30% in France and the Netherlands, driven by new customers, and there were signs of recovery in the French construction sector. RMC volumes were up 4%. Aggregate volumes were up 4% as well, mainly in France and the Netherlands. EBITDA was down 12%, mainly because of the cement segment due to higher costs related to a different maintenance schedule only partially offset by higher volumes. RMC was impacted by lower volumes in Belgium and higher production costs. Turning to Page #6 on Turkiye. I remind you that from April '22, Turkiye has considered hyperinflationary, and the reported figures are non-GAAP, i.e., they exclude the impact of hyperinflation and the valuation of nonindustrial property. In Turkiye, there was a highly challenging market environment impacted by hyperinflation, higher interest rates and exceptionally adverse weather in January and February. It was also the impact of Ramadan seasonality, and weaker post-earthquake reconstruction demand. As a consequence, domestic cement volumes were down 18% year-on-year, affected by severe winter conditions, weak macro and the disposal of the Kars plant. Exports were up 80%, mainly due to higher deliveries to Albania, Bulgaria and other countries. RMC volumes were down 34% and aggregate volumes were down 30% on the quarter, impacted by weaker demand. Revenues were down 31.3% also because of Turkish lira devaluation. The EBITDA was negative, reflecting lower volumes and higher variable and fixed costs only partially offset by price increases. The divestment of Kars Cimento was completed on December 1st, 2025. I remind you that the Turkish lira devalued by 34% against the euro in the period. Turning to Page 7. North America, accounting for 10% of group EBITDA in the period. White cement volumes were up 4% in the U.S., showing a resilient performance, despite competitive pressure, adverse weather and select pricing dynamics. Texas volumes were moderately down due to no storm in January and strong competition. In the York region, it was slightly down again due to harsh weather. California volumes were broadly flat, while Florida recorded a significant increase supported by a dynamic market despite aggressive competition. EBITDA was down 1.7%, impacted by higher transport, cement purchase, energy and maintenance costs and some FX effect, partially offset by higher volumes and prices. The new aggregate business contributed positively. In the period, the U.S. dollar devalued by around 11.2% versus the euro. Turning to Page #8, Asia Pacific accounting for 1% of group EBITDA. In China, volumes were down 15%, impacted by stagnant demand, intense competition and heavy snowfall in January and the slowdown around the Chinese New Year. Market environment remains weak despite the government stimulus. Revenues were down 24.7%. EBITDA was down 43.4% and the renminbi devalued by around 5.8% in the period. In Malaysia, total volumes were down 30%, mainly due to timing difference in clinker shipments to Australia, while domestic volumes though marginal declined by 13% due to residential weakness. Cement exports were slightly down. Revenues were down 19%, while EBITDA at breakeven due to lower volumes, higher freight rates and scheduled maintenance despite better product mix. The Malaysia ringgit was up by 0.9% versus the euro in the period. The last geography on Page 9, Egypt, accounting for 6% of group EBITDA. Revenues were up 41.5% despite the devaluation of the Egyptian pound of around 7.7%. Domestic cement volumes were up 50%, also benefiting from the timing shift of deliveries from December and the macro context, though, remains challenging with high inflation, currency devaluation and high energy costs. Export volumes were up 68% supported by the restart of the second production line in 2025, strengthening presence in the U.S. and Western Europe. EBITDA was up 6.4%, driven by higher volumes, partially offset by lower average price due to destination mix and higher energy costs. Last Slide #10, regarding guidance, which is confirmed for 2026, despite a weak Q1 and the turbulent geopolitical scenario pending greater visibility on its evolution, we reiterate our full year guidance, which you can see here with the revenues up from the pro forma of last year, 5% to EUR 1.7 billion, EBITDA between EUR 400 million and EUR 420 million, net cash up EUR 125 million to EUR 590 million. This guidance refers to like-for-like ongoing operations, non-GAAP, and excluding any extraordinary items. This ends my short presentation and now I leave the floor to Mr. Caltagirone, who is happy to take your question. Thank you very much.

Before you start the question, I want to point out a few things because for sure, this has been a difficult quarter and whatever could went wrong, went wrong and in a small quarter this is exacerbate the number. But let's say that, as Marco said, we reported EUR 41 million of EBITDA and our budget that you are not aware of was EUR 53 million. So anyway, 26 -- sorry EUR 16 million below last year. This means that today, in our forecast, we see a delay of EUR 12 million -- the real delay is EUR 12 million and is 100% linked to weather situation in Scandinavia and in Turkey. The other part of the delta with the previous year, it is mainly due to the maintenance of different let me say planning, and this should be reabsorbed during the week the year. The second thing is that March, but even April seems promising. We are seeing a picking up of demand mostly everywhere except for China. Even, as you know, last year, the weakest part of our [ perimeter ] was Belgium, France and even in this difficult situation, Belgium and France performance quite well. So now I am open to receive your questions.

[Operator Instructions] The first question is from Wim Hoste of KBC Securities.

Yes. My first question would be on raw material and energy costs and your pricing actions. So I'm wondering how much inflationary pressure are you seeing for the various cost items? And can you also maybe elaborate on how you are adjusting pricing to that? And so that's the first question. And then the second one on me would be an update on the Nymolle acquisition. And are you still expecting closure there in the third quarter? And can you maybe give us some updates on the process and whether you see any antitrust issues popping up? Or do you expect that to be a smooth transaction. Those are my questions.

Okay. Starting from your second question about Nymolle. I can say that, so far, the communication with the antitrust are smooth and regular. We expect probably by end of June, early in July an answer. And so far, we don't see any kind of let me say an issue. Regarding the cost pressure, hyperinflation pressures as, let me say, say recently in a meeting in the Milan Stock Exchange is that if the situation will continue as it is today with sort of happen down in the energy prices and special logistic prices, we are going to book nearly EUR 38 million of extra cost. And we have more or less in all regions already has applied a new list price. As you know, there is a lag, but as I said, what I'm saying is that already in April, we are seeing that we are recovering most of this cost inflation. So this is our forecast as we see and now the things and with, let me say, the oil around 100. Then if the situation might change abruptly, we are -- we have to design a different scenario. But so far, let's say that this EUR 38 million that are the energy and especially logistic land and sea logistics can altogether bring, let me say, the sum of the extra cost to EUR 38 million.

The next question is from Emanuele Gallazzi of Equita.

You have, let's say -- I can start with two questions. The first one is on the volume side. You clearly mentioned some volume recovery in March and let's say, positive indication on April. Can you just discuss a little bit more on tier specifically on the Nordics and on the Turkish market? And still on the Turkish market, can you say, elaborate on your expectation for the full year given the weak start to the year. And the second one is on the guidance because basically, the guidance is pointing to a flat EBITDA, and you started the first quarter short of EUR 30 million year-on-year or EUR 12 million versus your budget. Can you guide us on how and when do you expect to recover this EUR 12 million versus your budget? And if there is any specific country supporting this improvement in the remaining part of the year?

In terms of volume recovery, we are seeing -- continue to see some recovery in France, Belgium, let's say that Norway is still flat because let's say also the pickup in consumption in April, we have also Easter holiday. So to see the full recovery we might, let me say, check at the end of May. But we are seeing a recovery in France, Belgium and also in Turkiye. In Turkey, in our budget, we already discounted some lower volumes because of the end of some, let me say, big projects for the earthquake, so in our, let me say, scenario and guidance was already booked that Turkey would have been a bit weaker than this year. But let's say, so far, besides, as I mentioned, the weather issue, we are not seeing other issue other than, let me say, cost inflation, but let's say, we are recovering this cost inflation by, let me say, adjusting the least price almost everywhere. And it seems -- let's say, I cannot say that, as you can imagine, you can update the list price every week, but for the gap that we saw for the first let me say, two months of this war. Let's say, we have, let me say, already align the prices. So we think that we might recover let me say, this cost inflation that is EUR 38 million during the year. In terms of recovering the EUR 12 million of gap weather, let's say, statistically, when you have this, let me say, harsh winter, more or less, you recover during the year between 2/3 and the whole amount because, let's say -- so I cannot say that the weather in the next 8 months will be beautiful, but let's say that usually, you should recover around -- to 75% of this gap. So if we leave, let's say, a gap of EUR 4 million, EUR 5 million so far to be recovered, let me say, in the perimeter during the remaining 8 months of the year. So something that we see affordable now.

The next question is from Matteo Bonizzoni, Kepler Cheuvreux.

I have two question. The first one is related to Turkey. So Turkey seems more than just weather related, now, because we have clearly said that there is this end of the year earthquake, construction effect, which I think is going to last. So my question is what is your budget assumption for volumes for Turkey this year? And the second question is, if to maybe help bridging the gap in meeting the bottom end list of the guidance, which would be basically flat EBITDA this year. Are you also implementing sort of cost actions. We know that for a cement company, I mean, a part -- the key costs are energy cost maybe maintenance, logistics and so on. But maybe are you implementing or not some targeted cost actions on other costs to maybe to fill the gap?

Starting from the second question, the first one will be answered by Marco. I can say that we are put in place all the action that we can recover. As I said, today, let's say, we reported, as you know, EUR 41 million against, let's say, around EUR 400 million for the full year. So this is the 10% of, let me say, our full year results. So what I'm saying is that having the other 90% of the results that has to be deployed, I think, as I also said before, that we have more than reasons to believe that we can recover the gap. And also if the war end, let me say, few times also declared by the U.S.A. shortly that the recovery might be also even larger. But today, it's difficult to forecast. We are doing whatever we can, and we see the possibility, as I say that we can close this gap.

On your first question, I mean, internally, our projection for volume growth in Turkey is negative 13%, 1-3. So we were already budgeting for a double-digit decline in volumes for the reasons you just explained, which is the phasing out of a number of structural projects and say, the tailwinds of earthquake reconstruction. So that was already in our internal numbers. But if I can add one thing, the government just a few weeks ago, asked to all the company in Turkey to carve the export because they see because of Syria and other potential, let me say, reconstruction that there is a potential big outflow of cement from Turkey, and this could create some, let me say, difficulty in finding the cement in some part of Turkey. So this seems bullish because the same thing has been asked more than two years ago, and they carved the export, and they are trying to do the same now. So their expectation is that probably what is not, let me say, absorbing now the internal market can be more than, let me say, balanced with the export in the surrounding region.

The next question is from Egor Sonin, AlphaValue. .

Sorry for [indiscernible] once again with Turkey, but I have -- you said that your ready-mix concrete volumes were down 34% and aggregates minus 30%, while cement was only down 18%. Probably it's a question from an immature, but it seems to me that that's an unusually wide gap between cement and downstream products. Could you probably give some colors through what's driving this divergence, what the difference between them? Is it a project mix, regional concentration, competitive dynamics or something else? -- why they do not fall equally, for example?

Mainly we don't serve by 100% our ready-mix. So sometimes in some parts even because it's more convenient to buy for logistics from other parts. So you see a wider gap in ready-mix and the lower gap in cement because mainly some part of the cement has been bought in the past from several of our ready-mix plant from other competitors. So we say we lost, let me say, from a market point of view, part of this ready-mix supply directly of our cement, but some it is suffered by other competitors.

The next question is from Alessandro Tortora, Mediobanca.

And 3 questions okay if I may. The first one is a clarification on the comment you made on the extra cost linked to fuel and logistic cost. So the amount you mentioned, the EUR 38 million, is it something you already accounted? Is it something you forecasted? So just to understand which kind of, let's say, assumption you made on this, also considering now that you implemented the announced price increase. So just to understand the assumption behind this, if I understood well, you mentioned the [indiscernible] price close to $100 sorry. So just to understand the assumption behind this and if this is basically an additional delta compared to your margin? This is the first question.

When I think everybody made the forecast for 2026, it was impossible to forecast the war. Now what we have forecasted is just that -- and at the beginning of this, let me say, problems, there is a lot of volatility. So now the things are more, let me say, stable even, let me say, with the oil around $90, $100. So electricity, oil and especially the diesel for inland distribution is hitting a lot, I think, everybody. So our forecast is just saying that if the actual situation going forward by the end of the year, we will have -- we will sum up extra EUR 38 million of cost. Now with the extra, let me say, price hike in the various regions, we will recover most of this with a bit of a lag. But usually, you have a lag in the beginning, but you then when the situation -- you should come down, you, let me say, don't adjust, let me say, with the same speed the list price. For sure, within the big project, there is the list price for normal, let me say, customers and then there is the supply for the big project. For sure, the big project has been treated in a way where we say, okay, we don't know where the energy price will go up and down. We will charge you every week or every two weeks, the extra cost. So as soon as they go up, we will charge you every, let me say, 1% increase. But as soon as they will go down, we will realign with 14 days of delay. So this is for the big project. For the other, the list price that is adjusted in a monthly basis.

Okay. Okay. And as you said before, this is basically pure logistics, while electricity, is it something that you mostly hedged, if I recall what you said...

Yes, I think. Yes, most of the electricity and gas supply is hedged, mainly the diesel and oil for distribution that is, let me say, most of this cost -- the origin of this cost.

Okay. Okay. Then the second question is on Denmark. First, I read in the press release that there was an update on the Denmark Energy division, something like this, regarding the grant or something like that you are going to get production. So if you can comment which kind of next step we are going to have into the project, because if I recover this step was pretty important for you on the OpEx side. And still linked okay to Denmark. Also if you can help me understand which kind of volume, let's say, expectation we may have this year considering now the negative start in Q1?

Regarding our carbon capture project, you are right. Yesterday, the Danish government wrote that we are fully eligible. This means that we can ask for the funds together with another, let me say, electric player. This means that when we will sign and we are wait to sign, let me say, the contract because as probably you are aware, the project is divided in three parts. One is the capture inside the plant, then there is the pipeline, and then there is [indiscernible] size. So we need to have more visibility on the other two steps because as you can imagine, we need to end up aligned. So -- but this means, as I said, that there will be when the project will go, let me say, live 2030, 2031, depending also on the other two part of the project that we might recover, I don't know, a few, let me say, let's say, from EUR 50 million to EUR 80 million per year of OpEx.

Okay. And sorry, just, let's say, the question also on Denmark related to, let's say, the expectation for the full year on the volume side because in the past, probably you comment on, let's say, lower contribution from the public works. So if you can, let's say, give us an idea of your year-end expectation for Denmark?

Sorry, just to complete the previous answer, this amount is per year for 15 years. So it's quite an important amount if you, let me say, multiply from 2030 to 2045. Regarding your last question, Marco, please.

Yes. Our expectation for the year is that Nordic and Baltic cement should grow in low single digits. That currency should be the same roughly and the aggregates again, between 0% and 5%. These are the central budget expectations. Now clearly, Q1 has been very harsh. But we, as the Chairman said, expect to recover. There are signals in March and April that there is a rebound. So this is the central budget in our numbers.

Yes, Nordic and Baltic recovering volume to 6%, so.

Okay. Okay. And the last question, sorry, is on Egypt. I recorded last year, let's say, huge volatility also due to the second production line. In the end, in absolute terms, the EBITDA in Q1 was basically similar to the one you had last year. The reason why, let's say, we didn't have let's say, progress on the EBITDA side. Is it due to a matter of energy cost, as you mentioned in the press release? Because I recall it that in full year, you mentioned the expectation of having EUR 17 million, EUR 18 million EBITDA for Egypt. So just to understand which kind of progress we should expect now in Egypt.

As you are saying our forecast is this is as for everybody is the maintenance month. And so, let me say, this charge, as you say, the result is similar to last year because, let's say, having two lines, we have, let's say, the double of maintenance. But during the remaining part of the year, you will see that we will recover and the volume and the revenues are already picking up taking consideration that during February, March, the Egyptian pound devaluated 12%, the average is 7.7% in the quarter, but just in the last months, devaluated 12%. So this will be recovered for sure, but let's say, it is difficult to show the full potential of, let me say, the second line in action just in the first quarter. But let's say, we are completely aligned with, let me say, the forecast that we have for Egypt for the full year.

[Operator Instructions] The next question is from Bruno Permutti, Intesa Sanpaolo. .

I wanted to ask about Belgium and France. I was a little bit surprised of the positive dynamic for volumes, for domestic volumes in the first quarter. So I'd like to understand if it is a challenging -- sorry, an easy year-on-year comparison that -- or also you mentioned new customers. So if you can elaborate a little bit above all for understanding if this can impact in your budgeted volumes expectations for Belgium and France for the rest of the year or if it was already factored in your budget? And a second question concerns the pricing environment. I would like to understand if you are -- what was on average the price environment on the -- in the first quarter of the year? And if you plan pricing only as an instrument to offset eventual increase of costs or if you have in mind any way that there could be room or further price increases in some areas independently of that and perhaps also in relation to CBAM in Europe. So how do you see the price environment going forward?

For sure, the price environment at the beginning of the year was, let me say, slightly up in most of our region. Then let me say, it arrived, with headwinds of energies and now we are readjusting. As you can imagine, to recover EUR 38 million of cost or revenues of EBITDA over 400 is likely nearly 10% on average. So in some areas, it's a huge increase. So frankly speaking, I don't see the space to increase further because then there is also the issue about market absorption of this because what we are seeing in, let me say, various region is that most of the customer like probably most of us are expecting a faster solution to this, let me say, war. And so they -- what they are acting is that they postpone a few weeks, a few months, the start of the project because they say, okay, but in 3 months, probably the cement or the cost of everything because cement is just part of the cost of infrastructure or real estate will come down. And so this is having a little bit of headwind in the consumption in some areas. So we don't want to exacerbate the relationship with the customers and with the reality. So frankly speaking, I don't see space to increase further probably -- I mean, the best thing that we can hope is that we will have, let me say, a slower unwinding of some of the price hike in some areas that can, let me say, let us to recover more than what we suffered, but this is our best guess. The other question...

Belgium and France volume.

Yes. Belgium and France, as you know, last year were quite depressed because of the end of the Olympics in 2024. So we were forecasting that there should have been a bounce and new customer just, let me say, because we are repositioning ourselves, especially in Northern France, because we served or supplied some of the big projects in the Paris area during Olympics and for sure, we need a bit of time to, let me say, recover the -- our portfolio of clients or different clients because some projects, as you can imagine, are one-off linked to the Olympics. So we see that if there are no other, let me say, issue this trend should continue for France and Belgium. .

[Operator Instructions] Gentlemen, there are no more questions registered at this time.

Excellent. So thank you very much for your participation, your interest in Cementir Holding, and we wish you a pleasant rest of your evening and day. Thank you.

Thank you. Good evening. Bye-bye.

Bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.