Earnings call transcript: Charentin Holdings Q3 2024 sees steady revenue and innovation

Charentin Holdings (Hypothetical Ticker: CHRT) reported its financial results for Q3 2024, showcasing modest revenue growth and significant strides in product innovation. The company’s revenue reached €1,680 million, marking a 0.4% year-on-year increase, while EBITDA slightly declined by 0.9% to €407.3 million. The earnings call highlighted the launch of new low-carbon products and an ambitious carbon reduction strategy, positioning the company for future growth. According to InvestingPro data, CHRT has demonstrated strong market performance with a 14.83% return over the past year and maintains a "GREAT" Financial Health Score of 3.62, suggesting robust operational fundamentals.

Key Takeaways

• Revenue reached €1,680 million, a 0.4% increase year-on-year.
• EBITDA declined slightly by 0.9% to €407.3 million.
• Launched new low-carbon products and a carbon capture project in Denmark.
• Projected revenue growth of 6-7% CAGR.
• Targeted operational efficiencies through advanced manufacturing techniques.

Company Performance

Charentin Holdings demonstrated resilience in Q3 2024 with steady revenue growth despite a challenging economic environment. The company capitalized on its strong market position in the cement industry, particularly in the Nordics, Belgium, and Turkey. The introduction of innovative products like FutureCEM and D-CARB aligns with global sustainability trends, potentially enhancing its competitive edge. The stock’s current price of €147.52 sits at its 52-week high, reflecting investor confidence in the company’s strategic initiatives.

Financial Highlights

• Revenue: €1,680 million, up 0.4% year-on-year.
• Non-GAAP Revenue: Decreased by 2.7% from last year.
• EBITDA: €407.3 million, down 0.9% year-on-year.
• Non-GAAP EBITDA: €399.3 million, a decline of 5.4%.
• Net Cash: Improved by €72.8 million to €290.4 million.

Outlook & Guidance

Looking ahead, Charentin Holdings has set ambitious targets for 2025 and beyond. The company aims for a revenue of €1,750 million in 2025, reflecting a 6% increase, and an EBITDA of €415 million, up 3%. By 2027, Charentin expects to achieve €2,000 million in revenue and €465 million in EBITDA, with a net cash target of €700 million. The company’s YTD price return of 5.09% and six-month return of 6.71% suggest growing market confidence in these targets.

Executive Commentary

Marco Maria Bianconi, Head of M&A, stated, "We expect to reach revenue in 2025 of €1,750 million," underscoring the company’s growth ambitions. Another senior executive highlighted the environmental goals, saying, "We are targeting scope one emissions of 700 of four seventeen kilograms of CO2," reflecting Charentin’s commitment to sustainability.

Risks and Challenges

• Supply Chain Disruptions: Potential delays and increased costs could impact profitability.
• Market Saturation: Intense competition in core markets may pressure margins.
• Macroeconomic Pressures: Currency fluctuations in Turkey and Egypt could affect financial results.
• Regulatory Changes: Stricter environmental regulations could increase operational costs.
• Geopolitical Risks: Instability in regions like Syria may affect market expansion plans.

Q&A

During the earnings call, analysts inquired about potential cement export opportunities from Turkey, the economics of the CCS project, and the impact of currency fluctuations in Turkey and Egypt. Executives addressed these concerns, emphasizing strategic initiatives to mitigate risks and capitalize on emerging market opportunities. For deeper insights into Charentin Holdings’ financial health and growth prospects, investors can access comprehensive analysis and over 30 additional key metrics through InvestingPro’s detailed research reports, available for 1,400+ top stocks.

Full transcript - Clearbridge Energy MLP Closed Fund (CEM) Q4 2024:

Conference Operator, Chorus Call: Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Tremontium twenty twenty four Preliminary Results and twenty twenty five to twenty twenty seven Industrial Plan Update Conference Call. At this time, I would like to turn the conference over to Mr. Marco Maria Bianconi, Head of M and A and Investor Relations.

Please go ahead, sir.

Marco Maria Bianconi, Head of M&A and Investor Relations, Charentin Holdings: Thank you. Good evening, everybody, and welcome to Charentin Holdings preliminary results for the year 2024 and industrial plant update. I’m here with our Chairman and Chief Executive, Francesco Cartagirone. Good afternoon. Who is here to take your question at the end?

I will go through a presentation deck that’s been distributed, and I will start immediately with page four, where you have the preliminary results highlights, which show that the group during 2024 has reached a revenue of €1,680,000,000 0 point 4 percent year on year. Non GAAP revenues were just minus 2.7% from last year. Important to note that all volumes increased in absolute terms from last year. Cement was up 0.5%, railimics was up 7%, mainly driven by third tier, Denmark and Sweden. Aggregates were up 7.1%.

Revenues were lower mainly due to strong foreign currency headwinds, especially in Turkey and Egypt. EBITDA reached €407,300,000 0 point 9 percent down year on year. Non GAAP EBITDA was €399,300,000 minus 5.4%. The lower EBITDA was recorded in all regions with the exception of Turkey, Egypt and Sweden. It’s worth mentioning that 2024 EBITDA included non recurring expenses of €4,400,000 whereas the comparable figure of 2023 included net non recurring income of €11,600,000 If we adjust for the non recurring items, EBITDA non GAAP was €403,600,000 down 1.6% with an EBITDA margin of 24.5%.

EBIT reached €262,000,000 down 5.9% year on year. Non GAAP EBIT was 266,000,000, down 10.9%. Profit before taxes was million minus 2%. Non GAAP pretax was million minus 6.5%. Net cash reached €290,400,000 year end, an improvement of €72,800,000 year on year, including €43,500,000 of dividends by the parent company, plus €14,000,000 of extraordinary dividends to subsidiaries by subsidiary third parties as well as extraordinary investments for €48,000,000 If we turn to Page five, as usual, at this time of the year, we provide some guidance with regards to 2025 results.

We expect to reach revenue in 2025 of €1,750,000,000 which is up around 6% from 2024 and EBITDA of €415,000,000 which is up 3% year on year, and a net cash position of around EUR410 million, which is an increase of EUR120 million from 2024. The CapEx we target is around €98,000,000 Clearly, this guidance refers to like for like ongoing operations, non GAAP and excluding any extraordinary items. We now turn to Page seven. We have a few slides about the industrial plan. I will quickly go through Page seven, where our strategy, which is unchanged, is aimed at creating long term value for all stakeholders.

As you can see in this slide, we have five key pillars. One is sustainability, where we have more aggressively reduced our CO2 reduction target to 02/1930, as you will see shortly. I remind you that our net zero emissions are aligned to the 1.5 Celsius scenario by SBTI. We also achieved an A rating for climate change by CBP. We also announced recently one of the largest onshore CCS projects in Europe, which will be executed in Denmark by 02/1930.

I also remind you about FutureCEM and D CARB and our wide array of low carbon products. As far as the other areas, I mean, clearly, we continue to seek continuous operating efficiencies and digitize our processes from lean manufacturing to e procurement to smart maintenance, etcetera. We also strive to continue to innovate, focusing on low carbon cement. And also, as mentioned before, we’ve started a CCS project in Denmark. With regards to growth and positioning, we want to reinforce our vertical integration model in The Nordics, Belgium and Turkiye, and we want to keep our global wet cement leadership.

And at the same time, given our strength of balance sheet, we want to save any M and A opportunity which may arise in our core businesses. With regards to people, we pursue a zero accident program. We are developing our human capital and we very much nurture talent and a succession plant in the company. If you turn to Page eight, I was mentioning before the aggressive CO2 reduction target, which you can see on this slide are both below the taxonomy CO2 levels. So we are targeting scope one emissions of 700 of four seventeen kilograms of CO2 per cement equivalent from seven eighteen of the baseline.

This is a reduction of 42%. With white cement, we are targeting six fifty three kilograms of CO2 per ton of cement equivalent, which is 29% down from the nine fifteen of twenty twenty baseline. We can also see the pay cut ratio reduction, which is one of the levers we’re using to achieve our targets. If you turn to Page nine, just a few words about our CCS project. We have recently announced ACCION, which stands for ALBORG CCS using infrastructure onshore in North Jutland.

It is a consortium with Air Liquide (OTC:AIQUY). It is a project that will allow us to avoid 1,500,000 tons of CO2 per year. This project has been selected to receive two twenty million euros from the European Innovation Fund. The technology is cryogenic technology, CryoCAP, which is an LED technology, which enables high purity CO2 capture from cement and white gray and white cement emissions. Just to mention that these projects will allow the capture of CO2 and the transportation to a newly built pipeline, which will permanently store the gas in onshore storage facilities.

The project should be operational from the beginning of 02/1930. On Page 10, some of the industrial plant targets. You can see here that from the actual EUR 1,650,000,000.00, we expect to achieve by 2027 a revenue of around EUR 2,000,000,000, which is between 67% compounded growth rate in top line. As far as EBITDA recurring from the 404% recurring EBITDA, we aim at achieving €465,000,000 which is a compounded growth of around 5%. As far as net cash, from the EUR290 million of cash at the end of twenty twenty four, we expect to achieve around EUR700 million of net cash by 2027, which is an increase of EUR410 million over the period.

As you can see from Page 11, some of the main points, 6% to 7% revenue compounded growth rates, driven by increased capacity in Egypt, a recovery in Denmark and Asia Pacific, as slightly offset by a moderate decline in Turkey. We expect volumes of cement to grow around 5% compounded RMC by 12% for aggregates. Prices should be generally stable or go in line with inflation on average and include the Danish CO2 emission tax. EBITDA growth should be across the board, also driven by output increase and optimization in Egypt with a second line and in Belgium. We expect an increase in electricity and fuel costs, and we should be on average short of around 200,000 tons of CO2 in the three years of the plan.

As far as EBITDA margin, you can see that we expect the mean reversion of the margin

Senior Executive, Charentin Holdings: to a more sustainable 23.3%.

Marco Maria Bianconi, Head of M&A and Investor Relations, Charentin Holdings: As far as yearly CapEx, including sustainability CapEx, that’s around EUR 104,000,000, which corresponds to a CapEx to sales ratio of between 45%. The cumulative sustainability CapEx is around million. You can see that on the net cash, the cumulative million of cash flow generation, we also expect to remunerate our shareholders with a progressive dividend payout in the 20% to 25% range. On Page 12, just a quick comparison between the old and the new plan. You can see that there is an acceleration in the expected revenue growth as well as EBITDA recurring growth.

We continue to generate significant amount of cash and we expect to continue a dependable growth trajectory. The last slide from my end on Page 13, just a breakdown of the CapEx by year. You can see on the graph to the right of the slide that is broken down between maintenance and sustainability CapEx for each year of the industrial plan. Of this $53,000,000 that we expect, the main CapEx initiatives are some facility upgrades for future sand production, switch to natural gas in Aalborg and Goran, CCS in Denmark, some water recycling, DDoS improvement and digitalization of main projects.

Conference Operator, Chorus Call: This is the Chorus Call conference operator. We will now begin the question and answer session. First question is from Matteo Bonizzoni, Kepler Cheuvreux. Please go ahead.

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: Thank you. Good afternoon. I have two questions. Basically, the first one is related to the phasing of your EBITDA growth across the three years. Basically, you’re guiding $465,000,000 for $2,027,000,000 dollars and $450,000,000 next year.

So next year, you expect $10,000,000 more EBITDA, $11,000,000 more EBITDA, but there is a significant acceleration for the 26,000,000 and 27,000,000, 20 5 million per year. So I was willing to know the reason for this also relation to the utilization of the additional capacity for white cement in Egypt? That’s the first question. Thanks.

Senior Executive, Charentin Holdings: Regarding, I mean, the next year compared to 2027, I mean, next year, this year, 2025, let’s say that our forecast is affected by our view in the foreign exchange, especially for certainty and hedging that together account for nearly $500,000,000 of revenues. We, in our industrial plan, we take just the forward at the end of every year exchange rate. As it happened also last year where the Turkish lira, for example, compared to a 45% of inflation, the lira evaluated only 22%, twenty three %. In fact, in the last quarter of last year, we have a significant upgrade in our results. So we have cautiously put a linear, let me say, devaluation.

But if a third, that is starting, let me say, to converge to a more, let me say, suitable monetary policy, it might happen that the lira devaluates the less that what we forecast. And even in nature, do we have or we saw the same problem? So let’s say that if we have a devaluation of the Lira that is close to what we have, let me say, that what we saw last year, we might have just a matter of recalculation of the EBITDA cost of $430,000,000 and $80,000,000 that is around $10,000,000 more. So this is just then also we are also consider that if Turkey continues in its, let me say, trajectory in terms of slowing down the inflation, they should be out of the year ’29 and in 2027. This means also that in our forecast, we don’t have, let me say, to apply year ’29 that anyway, as you know, it’s, let me say, usually lower the EBITDA and the profitability.

So for this reason, you see a bigger gap compared, let me say, to the first year to the last year of our industrial plan because also we are still seeing very that Turkey should exit at the end of twenty twenty six, the year 2029. Regarding Egypt, the new line had nearly 500,000 of capacity. And this year, we think that we are going to use nearly 50%, sixty % of this. And in the next two or three years, we should go at full capacity.

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: Okay. Thank you. Second and last question is, compared to the previous plan, there is an improvement on the margin assumption. So let’s say that you were expecting 21.3% margin in 26% in the old plan, And now it’s 23.3% in 27%. So same revenues, but $40,000,000 more EBITDA compared to the previous plan one year after clearly.

That’s come from what a different assumption on pricing, on cost. I don’t think it’s much volume, it’s maybe more pricing assumption or something else?

Senior Executive, Charentin Holdings: I think that even last year, if you take, let me say, our industrial plan, you saw that we end up in 2023 with nearly 24% of profitability and we forecast to lower around 200 basis points. I mean, these 200 basis points, I would say, are mainly the conversion of the exchange rate. Here, we are just reconsidering that Turkey now because it’s one year more. It should be just two years away from the exit from year ’20 ’9. And this, let me say, brings us a better profitability.

But the real profitability of the company doesn’t change. It’s just a matter of how it is, let me say, by because the free cash flow of the company, industrial free cash flow before the year, that is around $200,000,000 is the same as with or without the year $29,000,000 So here, it’s just a matter of what we expect at exchange rate for the final year. Then more or less, let’s say that we think that the mild recovery that started to materialize in the last quarter of last year should continue. The rates from the Central Bank are going, let me say, south. So we expect that some recovery to begin, especially in the noughties.

Where we still see some, let me say, quickness is still in China. That is the only country that the three industrial plan is more or less flat. All the other, let me say, country in our perimeter are, let me say, we will see some growth, especially in grade cement linked to infrastructure and a milder, let me say, growth for

Conference Operator, Chorus Call: Next (LON:NXT) question is from Emmanuel Galazzi, Equita.

Emmanuel Galazzi, Analyst, Equita: I have a couple of questions. The first one is on the Turkish market. If you can just provide a little bit more details about your expectation for 2025 for the Turkish market and more, let’s say, for the medium term, considering the implementation of the Carbon Border Adjustment mechanism from 2026, can you just discuss a little bit more on your view on the Turkish market evolution in the coming years. The second one is on the capital allocation. You ended 2024 with about million net cash and you are expecting to end 2027 with give or take say million of net cash and you basically reiterated to be ready for potential M and A opportunities.

So just a clarification about your strategy on M and A and your view on this topic. Thanks.

Senior Executive, Charentin Holdings: So in Turkey, I mean, this year, we see a slight downturn in terms of revenues and EBITDA. But as I said, it’s affected also by the exchange rate. On the other hand, you have to consider that what is happening in Syria and what might happen also in Ukraine can be very bullish for the Turkish cement environment because you have a very and also in Gaza Strip. So you have two huge accounts, I mean, Syria and Ukraine that the cement can only arrive from Turkey for the reconstruction and also the Gaza Strip can arrive from Turkey. So if this materialize or started to materialize because Syrian market started to open again for imports from Turkey after a very long time.

This can cause, let’s say, a shortage of cement inside Turkey that should more than compensate the enablement of the border tax adjustment. So today, it’s quite early to, let me say, forecast any outcome. But we think I mean, what we think what we learned from the Turkish Cement Association is that just the reconstruction in Turkey in Syria, sorry, can absorb from 8,000,000 to 10,000,000 of cement per year for ten years. So a huge quantity that, let me say, should affect the internal market and this is a very, let me say, bullish, let me say, shed But let’s say it’s one of the scenario. But for next year, we are cautious.

And then, I mean, for the ’twenty six and ’twenty seven, we see a mild also recovering for ’thirty. Not including at all any kind of reconstruction for Syria and for Ukraine and for Gaza. Regarding the cash filing, As I said, next year, we report the tax adjustment and also with another cut in the free allowance. So you probably have already seen that this year that the price of the CO2 went from nearly EUR 62, EUR 60 3 to more than the ADU. This is because, as already said, that year after year, 3% per year, the linear gap of every allowance sum up.

And then we will start, even this year, let’s say, that price also might reach close to 100, we think, at the end of the year because we have less CO2 around. So for this reason, as I said, some of the plants that today are producing cement around Europe will start, let me say, to feel the pain of the pipe because all you, let me say, have the possibility to capture the CO2 with the CCR project, but you will need from three to five years or you need to buy CO2 products. And this, as you can imagine, will affect the balance sheet. So we don’t want to buy any assets now because we think that, as you already said, that in two or three years, some of, let me say, the plants in Europe will have a completely different, let me say, price. This doesn’t mean that we want to buy and then upgrade the plant for free.

But if somebody wants to sell or to close and sell the market, have to consider that you need a certain cost that we you are aware of because our project in Aalborg for 1,500,000.0 of capture will cost more than €500,000,000. And so this has to be deducted from the future price of an asset. So for this reason, we will continue to pile up our cash waiting for, let me say, better market condition to expand the company.

Conference Operator, Chorus Call: Next question is from Alessandro Tortora Mediobanca (OTC:MDIBY). Please go ahead.

Alessandro Tortora, Analyst, Mediobanca: Yes. Hi. Good evening to everybody. I have two questions, okay, if I may. The first one is on the Action (WA:ACT) project.

Can you tell us basically which are the next steps to reach the final investment decision? And also in terms of funding, can you remind us your share of the total investment? I read that for instance the possibility to apply for some Capstone Capture Storage Fund in Denmark. So just understand, let’s say, additional details on this project. This is the first question.

Thanks.

Senior Executive, Charentin Holdings: On actual project, we think that we should end all the bureaucracy around, let me say, the first half of the year. Then we should start the implementation for I mean, design and engineering and order. And should start, let me say, to build to revamp, let me say, revamp starting at the end of twenty twenty seven, and then we will take from around thirty months to build all the facility. The total cost before the grant is around $550,000,000 The grant is $220,000,000 Of the remaining $330,000,000 we are going to, let me say, finance directly nearly $90,000,000 that, let me say, should, let me say, fall from 2027 to 2029. And the remaining part will be, let me say, provided by our industrial partner that is early hit that will recover the cost on, let me say, on FE on paired tone captions.

This is very simply the scheme of the project.

Alessandro Tortora, Analyst, Mediobanca: This investment, maybe you can provide, let’s say, some update on the overall economics because I guess there is also CapEx, let’s say, as you mentioned before, but also some items on the business side that we need probably to care about, right?

Senior Executive, Charentin Holdings: For sure. I mean, this is just the CapEx then you have the OpEx that is linked to the energy consumption. I mean, 80% is saving energy consumption. And consider that, let’s say, that today, if you need one, let me say, unit of electric energy to produce cement, then you will need two more units of energy to capture and store the CO2. So this is at the end, that means in terms of energy consumption, will be one plus two.

I mean, three will be the cost of electricity that is the main, let me say, cost because the other is 10% is maintenance and then other 5% are minus, let me say, things. But most the running cost will be linked to the energy cost.

Alessandro Tortora, Analyst, Mediobanca: Okay, okay, okay. Then the second question is on the Denture’s year CET2 emission tax. Can you comment also a little bit on this because now this is starting from, let’s say, January this year. So which kind basically of price increase, I guess, you already announced in order to cover these extra costs, but also are you confident that you are able to basically cover with this price increase, this extra cost? Thanks.

Senior Executive, Charentin Holdings: The price that we have estimated on our, let me say, sales, domestic sales in that market is around million. That will be a transparent mechanism like VAT. I think that we recovered in full. The market is aware since the last two or three years that these stocks will arrive. And this also is used by, let me say, the Danish government to finance the project because I mean, besides the facility, in our plant, you need the pipeline, the storage and all the other things.

That should be also that in Denmark, it will be the first country that from this year we tax every cow for the emission. So they want to be also always ahead of the curve, but we are in this kind of country that, let me say, We have the opportunity and but on this tax, let’s say, that is affecting mainly cement and building materials, we’ll have this $30,000,000 that, let me say, we will fully recover because it’s a tax that will apply in the invoice.

Conference Operator, Chorus Call: Next question is from Tobias Werner, Stifel, Europe.

Tobias Werner, Analyst, Stifel, Europe: A couple of questions from my side and thanks for the opportunity. Number one, when I look at your Turkish business, you have capacity of 5,400,000 in terms of gray cement. In my model, I don’t have full capacity utilization. So in that context, you’d be able to export. But maybe give us a little bit of color which plants you can actually export from?

I’ve got the map in front of me. I see the Edena plant and the Izmir plant. It looks like the Elazic plant might be a bit more difficult or the Kaas plant. But just give us a sense of where you could actually ramp up your capacity utilization if Syria was rebuilding? And on that front, Syria rebuilding, you mentioned an annual tonnage of 8,000,000 to 10,000,000 tonnes needed to rebuild the country.

And that would be laudable obviously, but at the same time do you have an understanding of where the funding could potentially come from

Senior Executive, Charentin Holdings: for

Tobias Werner, Analyst, Stifel, Europe: that effort? And equally around Turkey, a more short term trading related question, number three, pricing seems to have gone up in terms of what I can see from the data I follow by €6 a tonne in the last quarter. Is that something you’ve observed in your businesses as well or is this on the national level or maybe just a statistical mistake? Thank you.

Senior Executive, Charentin Holdings: Regarding the opportunity from to export from Turkey, we mainly we have, let me say, little bit more than 5,000,000 tons of capacity, and we can export up to 1,000,000 tons. So mainly is 700,000 tons from Izmir and then we have 150,000 tons from our plant that is at the border with Bulgaria and Greece and another 150,000 tons mainly from Lazy because, let me say, it’s 200 kilometers from the border with Syria that you have to consider that there are only few plants on the border that can, let me say, supply cement. And today, in Syria, everything is totally strong. So for the first two or three years, for sure, the cement should arrive from land border partly, I think, a very small quantity by sea, but mainly from Turkey because then Egypt doesn’t have a lot of, let me say, third capacity on the sea to export gray cement. And the other countries, Libya, Algeria, are limited.

So mainly in Syria, you can arrive from Turkey, especially from the inland aboard. Aboard.

Tobias Werner, Analyst, Stifel, Europe: The funding of that rebuilding program in Syria, whether you have any sort of indications where that could be coming from?

Senior Executive, Charentin Holdings: I mean that, well, some for sure today and also, I mean, behind the last, let me say, political and also military moves are for sure Turkey behind it. And Turkey is, let me say, very incentivized to invest and to rebuild Cherokee, especially the part that you know the Kurdish, let me say, population is split between Iraq, Ethiopia and Syria. So they want, let me say, to stabilize that part. And then I think also it will arrive from mainly

Alessandro Tortora, Analyst, Mediobanca: the

Senior Executive, Charentin Holdings: Emir from Emirates states from the other Arab countries. And so we think that but in the first stage, we have to rebuild mainly the roads, the deposits. And then today, it’s even difficult to after 10 kilometers that you enter from Syria. From Turkey, you have mine and it’s very difficult. So it will be slow in the beginning, but then, let’s say, this is what we are doing in the Turkish Cemental Association.

And then, let’s Yes. In Turkey, let me say, the price are mainly increasing because they are following the inflation. So with last year, 44%, that is nearly 4% per month, every couple of weeks, you have to update the lease price. And sometimes, I mean, as I said, you have more inflation and less devaluation in euro terms, you have an increase. So this is real increase, exactly.

But this doesn’t let me say, it might materialize even this year or not. We don’t know because if there is a decoupling another time between inflation and devaluation, we might see let me say that in euro terms, the price will grow, let me say, in a faster pace compared to the European countries, for example.

Conference Operator, Chorus Call: Next question is from Bruno Permotti in Desa Sao Paulo. Please go ahead.

Bruno Permotti, Analyst, Desa Sao Paulo: Yes. Good afternoon, everyone. I have a few questions. The first one, concern, the cash you have. You were very clear in telling us that, it’s not the right moment to invest, perhaps.

But what is, the the long term strategy? So do you believe that, there will come a moment in which, it would be, possible, to to invest this in the business or or you you you I mean, is there the idea could be could be to

Matteo Bonizzoni, Analyst, Kepler Cheuvreux: to

Bruno Permotti, Analyst, Desa Sao Paulo: pursue, better capital allocation perhaps by distributing, the cash or I don’t know, waiting for some new investment opportunities to come or you believe that it’s safer to buy the cash for the long term? And a second question concerns the environmental theme. We are assisting to, perhaps, some weakening of the, I would say, of all the green themes. Is this something that could affect the cement industry in your view, or, you believe that, the the the the the that there will not be, diminishing attention to decarbonization, by by by by 02/1930. I I I understood that you are very focused on that in your long in your 02/1930 strategy, but I would like to have a comment on, from you from, not, not for your position exactly, but for the position for the of, of, of the industry.

And, a last question concern, Egypt. Are you seeing the, depreciation, the sudden depreciation of the pound as a one off? Or, you believe that, so you believe that, now there would be a stabilization period, or, you expect further depreciation there?

Senior Executive, Charentin Holdings: Regarding, I mean, what we can do with the cash, as I said, our strategy is to continue to grow in this market. Today, the reality is that if you want to buy assets, there are assets available, especially in Europe. As I said, the issue is that the price that the seller expect is not fully incorporated the cost of revamping or renovating the plant for the, let me say, future environmental limits. So today, there is still a gap. But as I said, I think that in twenty four months or roundabout this, we might see that some portfolio, especially in the big companies, starting from, let’s say, I think, a whole team that, as you know, is splitting in two business, The U.

S. A. And the rest of the world. But then we have other players, Pedro, that we are aware that in some, let me say, situation, they closed the plant because they don’t want to send to a third party and want to keep the market. But on there are other place where, let me say, probably they are going to sell because they cannot keep the market and they close.

And so here, it’s a matter of when we think we will meet, let me say, our valuation with their valuation. And then we have the single family plant. That is a matter of cost. The more the CO2 increase, the lower the profitability they will have because the free allowance will finish. And also, as you probably saw in our balance sheet, we are, let me say, short of an average of 200,000 tonnes for the next three years.

But in our balance sheet, 200,000 tonnes of cement are, let me say, fully foundable. In other balance sheet, if you continue and then by 02/1930 when you will have, let me say, another 50% cap, let me say, for the next decade, then it will become nearly impossible to survive. Or you think that the price will go around the and so you can continue to keep buying steel wool, the or you have to sell, let me say, a close down. So this is I don’t think that today in our strategy is to return to, let me say, share all the sum of the cash, but never say never. Today, say for the possible future, we think that especially from our view in Europe and not in other parts of the world because we have these regulations that we, let me say, enforced.

And we think, going to the other questions, that Europe will continue, especially for the big industries, cement, steel, aluminum and glass and electricity will continue in its path. Consider also that you know that even the Trump administration in less than four years will end up and they don’t have the possibility to be pre elected. And when you make this kind of investment, usually you need the path of 10 up to twenty years. So any or every four years to year depending on which is the, let me say, the wing that govern the every state, you cannot, let me say, change the policy. So I think that even probably you have seen in the car, the industry, they might, though they increase some, let me say, terms in terms of data, but I don’t think that softening of the scenario.

And probably the sharp increase that we have seen in the CO2 price in the last couple of months goes in that direction because everybody expected that probably this legislation should have been sweetened as there, but it doesn’t, it seems. And also for the border tax adjustment, it seems that probably they will carve out the small interest rate, but they accounted just for the 5% of the emission just because it will be very difficult to track heavy goods that will arrive in the port or in the railway terminal. It would be very complicated, but for the, let me say, piggy industries, as they just said a few days ago that we’ll continue with this scheme because this will affect the 95% of the emission on that. Thank you. Sorry, the address I mean, regarding the devaluation, it’s not a matter of when if but it’s a matter of when.

When you have inflation that is few dense every year, Usually, this country try to resist, but then you see a strong devaluation of nearly 20%, thirty %, even 60%. So here, it depends if we will see in the next, let me say, months or couple of years that the inflation will come down sharply. Probably, we will have a biased evaluation. Otherwise, if you have like last year in Egypt was the inflation probably 80%, eighty five %. You can, let me say, keep the exchange rate at this point probably for one year, yes.

But then you might expect to have this. But for us that we export nearly 80% of our what we produce, especially now that we have restarted the second line. And in Egypt, we have, let me say, half currency reserve. The devaluation is, let me say, it’s a cost we cut our cost and increase our profitability. So it’s not negative.

Let me say that from time to time, the Egyptian pound will be damaged because for us but it’s only for us because we are the very few that export from Egypt.

Conference Operator, Chorus Call: Mr. Bianconi, there are no more questions registered at this time.

Marco Maria Bianconi, Head of M&A and Investor Relations, Charentin Holdings: Okay. So thank you very much for your interest in Chairman Tier, and we wish you a pleasant rest of your day and evening. Bye bye.

Senior Executive, Charentin Holdings: Thank you. Have a nice evening. Bye.

Conference Operator, Chorus Call: Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.