Earnings call transcript: Chermanty Holding Q1 2025 sees stable revenue amid challenges

Chermanty Holding (CHM) reported its financial results for the first quarter of 2025, showing stable revenue figures despite a decline in cement volumes. The company posted a revenue of €368.1 million, with a non-GAAP revenue of €370.5 million, marking a 0.9% year-over-year increase. According to InvestingPro data, the stock is currently trading at €161.05, near its 52-week high of €163.17, suggesting strong investor confidence despite challenging market conditions. EBITDA was reported at €66.4 million, with non-GAAP EBITDA slightly higher at €69.7 million, up 0.5% YoY. The firm highlighted improvements in its net cash position, which rose by €66 million to €143.2 million.

Key Takeaways

• Revenue remained stable despite a 6.2% decline in cement volumes.
• Positive performance was noted in the Nordic, Baltic, Turkey, and Malaysia markets.
• Challenges included foreign exchange headwinds and regional market variations.
• The company confirmed its 2025 guidance, projecting €1.75 billion in revenue.
• Chermanty continues to focus on decarbonization and sustainable product innovations.

Company Performance

Chermanty Holding managed to maintain a stable revenue stream in Q1 2025, despite facing a decrease in cement volumes. The company attributed its performance to strong results in specific regions such as the Nordics and Malaysia, which helped offset challenges in other areas. InvestingPro analysis reveals the company maintains a GREAT financial health score of 3.62, with multiple positive indicators including strong profitability over the last twelve months. InvestingPro subscribers have access to 8 additional key insights about Chermanty’s financial position. The firm is also actively working on its decarbonization strategy, which is expected to enhance its operational efficiency and market competitiveness over the coming years.

Financial Highlights

• Revenue: €368.1 million, up 0.9% YoY
• Non-GAAP Revenue: €370.5 million
• EBITDA: €66.4 million
• Non-GAAP EBITDA: €69.7 million, up 0.5% YoY
• Net Cash: €143.2 million, improved by €66 million YoY

Outlook & Guidance

Chermanty reaffirmed its guidance for 2025, expecting revenue to reach approximately €1.75 billion and EBITDA to be around €415 million. The company’s stock has demonstrated solid momentum with a 5.98% total return over the past year and a 4.04% return year-to-date, as tracked by InvestingPro. For detailed analysis including Fair Value estimates and comprehensive financial metrics, investors can access the Pro Research Report, available exclusively to InvestingPro subscribers. The company also anticipates a net cash position of €410 million and capital expenditures of about €98 million. Management expressed optimism about potential tailwinds from lower energy costs and a mild recovery in consumption, particularly in the Scandinavian market.

Executive Commentary

Francesco Caltagironi, Chairman and CEO, remarked, "We have some headwinds in terms of low consumption in some scattered areas and tailwind from a lower cost of energy." He also noted, "Despite a decline of 6% in cement volume, the revenues are in line with the previous year." Caltagironi emphasized the ongoing commitment to the company’s decarbonization plan, stating, "The decarbonization process is continuous. It’s a four-year plan."

Risks and Challenges

• Foreign exchange fluctuations, particularly in Turkey and Egypt, could impact profitability.
• The residential sector remains weak, although infrastructure activity provides some balance.
• Labor costs are expected to rise due to contractual renewals.
• Export restrictions in Turkey and stagnant demand in China pose regional challenges.

Chermanty Holding continues to navigate a complex market environment, leveraging its diverse geographical presence and focus on sustainable innovations to drive future growth. Trading at a low P/E ratio relative to near-term earnings growth, the stock presents interesting value characteristics according to InvestingPro analysis, which provides comprehensive valuation metrics and peer comparison tools for informed investment decisions.

Full transcript - Credito Emiliano (CEM) Q1 2025:

Conference Operator, Chorus Call: Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Qimienteer First Quarter twenty twenty five Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions.

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, Chermanty Holding: Thank you. Good afternoon and good morning. Welcome to Chermanty Holding first quarter results conference call. I’m here with our Chairman and Chief Executive, Francesco Caltagironi. We’re happy to take your question at the end of my 10 page presentation.

So without further ado, I’ll go ahead and on page two, highlight the key takeaways for these results. The first quarter twenty twenty five results are in line with management expectations. Revenue was modestly up despite cement volumes decline, but revenues were up in a number of countries despite the Egyptian currency and the Turkish currency devaluation against the euro. There was a significant improvement in EBITDA in the Nordic And Baltic region and in Malaysia, offset by a reduction in all other regions and a €4,800,000 negative exchange rate effect. Net financial income was down from 2024 because comparable figures included extraordinary income related to the over 53% Egyptian pound devaluation against the euro in the first quarter of last year.

Cement volumes were down 6.2% year on year mainly due to a one off Turkish government ban on exports to Israel active from the second quarter of twenty twenty four. Dynamic volumes were up over 2% and aggregates were broadly in line with last year. 2025 guidance is confirmed despite a very uncertain commercial and geopolitical backdrop. Going through a more granular detail on page three about our results, revenue reached €368,100,000 and non GAAP revenue was actually up 0.9% to 3 and €70,500,000 A higher revenue was recorded in Nordic and Baltic, Turkey and Malaysia with FX headwinds in Turkey and Egypt. Ready mix volumes were up 2.1% driven by positive performance in Nordic and Baltic and Belgium, while declined in Turkey.

Aggregate volumes broadly in line with previous year. Cement volumes were down 6.2%, mainly due to the Turkish government ban and a general decline in all main regions with the exception of Malaysia, Egypt and China. EBITDA reached €66,400,000 Non GAAP EBITDA was up 0.5% year on year to €69,700,000 There was a higher EBITDA in Nordic and Baltic and Malaysia, offset by a reduction in other regions and a negative headwind of €4,800,000 Non GAAP EBITDA margin was broadly unchanged. EBIT reached €31,100,000 and non GAAP EBIT reached €37,200,000 minus 5.9% year on year. Financial results was €2,500,000 down from the €24,600,000 of last year, mainly due to lower FX income as previously commented.

Profit before tax was €30,300,000 Non GAAP profit before tax, 39,700,000.0. Net cash reached €143,200,000 an improvement of over €66,000,000 year on year, including €43,500,000 of dividends by the parent company, 4,300,000.0 dividends to minorities and extraordinary investments of €48,000,000 Going through the single and each region on Page four, starting with the most important one accounting for around 47% of our quarterly share of group EBITDA. Nordic and Baltic in Denmark, the largest contributor. Grid cement volumes were in line with last year with a slight reduction in wet cement. The residential sector is still weak, partly balanced by buoyant infrastructure activity.

Exports increased by 3% due to higher deliveries to Norway and Iceland. Ready mixed volumes were up 3%, whereas aggregate volumes increased by 12% with demand remaining strong. Increasing demand for sustainable products, EBITDA improved by 20.2% year on year, mainly due to the positive contribution of cement, some savings in purchasing cost, fuel and electricity consumption. In Norway, ready mix sales volumes were up 13% due to more favorable weather conditions and the startup of some major projects. There are signs of a slight market recovery, although marked by some price competition.

EBITDA improved due to higher volumes and savings and cost and the Norwegian kroner depreciated slightly by 2% versus the euro. In Sweden, ready mix sales volumes were up 7%, thanks to the contribution of a major project, whereas aggregate volumes were down 14%. EBITDA was up from last year and the Swedish krona was broadly in line with the euro average. Turning to Page five to Belgium and France, accounting for around 28% of group EBITDA in the first quarter. Belgium and France here domestic cement volumes declined by around 8% due to weak demand.

Exports declined more sharply due to the slowdown in construction activity in Northern France. Red and mixed volumes on the contrary were up 8% with more marked growth in Belgium, thanks to the continuation on some major projects launched at the end of last year and despite very harsh weather conditions in January. Aggregate volumes were in line with last year. EBITDA was down mainly due to cement penalized by lower sales volumes and prices. Turning page number six, Turkey here accounting for 11% of group EBITDA.

From April 2022, Turkey had considered hyperinflationary as you know. Domestic Cement volumes were down 5% mainly due to slowdown in the Egypt region, while in other region volumes continue to grow also supported by post earthquake reconstruction. Cement and clinker exports were down 54% penalized by the said Turkish government ban on exports to Israel, active from the second quarter of twenty twenty four. Ready mix volumes were down 3%, mainly because of weakness in the Egypt region, whereas aggregate volumes were up 8%. Revenues in Europe were down were increased by 5.7, thanks to higher selling prices in all business segments despite a 14% Turkish lira devaluation versus the euro.

EBITDA was down by 14.3% year on year following volume reduction and higher cost. Turning over to page seven, North America accounting for 6% of our EBITDA. United States, white cement volumes were down 7% with a more significant decline in the state of Texas, which suffered from snowfall and frost especially in January and February. In the York Region and in Florida, there was a moderate reduction due to bad weather whereas in California sales were up. EBITDA was down 19% because of lower volumes and higher costs.

There was also a 3% U. S. Dollar revaluation versus the euro average in the period. Turning over to page eight, Asia Pacific, we have China and Malaysia. This region accounts for 4% of group EBITDA in the quarter.

In China, revenue was down 5% due to lower selling prices and a stagnant demand, high inventory and delayed effect from government stimulus measures. Volumes were in line with previous year, but EBITDA was impacted by lower sales prices. There was also a 1.9% renminbi evaluation versus the euro. In Malaysia, on the contrary, revenue was up 17% driven by higher export volumes. Total volumes were up 36% mainly due to timing differences in clinker shipments to Australia.

Domestic volumes were down 11% also due to some orders being brought forward to December 24. Export grew by 8% supported by higher deliveries to The Philippines and Cambodia. EBITDA increased thanks to higher volumes and some cost savings, partially offset by lower average selling prices resulting from sales mix. The Malaysian rigged revalued by 8.7 versus the euro average in the period. Turning over to the last geography on Page nine, Egypt accounting for 3% of group EBITDA.

Here, revenue declined by 7.5%, mainly due to the 38% depreciation of the Egyptian pound despite a 27.7 increase in local currency revenue. White Cement volumes were up 3%, thanks to exports, which more than offset the decline in domestic volumes. Export volumes were driven by higher shipments to The United States, Israel, Greece, while sales to Europe were down. EBITDA decreased by 27.6% due to different sales volume mix and higher operating cost, only partially offset by higher selling prices. To note, a 38% Egyptian pound devaluation versus the euro average in the period.

This brings me to the last slide, number 10, with the guidance the 2025 guidance, which is confirmed with a revenue around €1,750,000,000 and EBITDA around €415,000,000 a net cash position of around €410,000,000 and a CapEx of around €98,000,000 This guidance refers, as usual, to like for like ongoing operation, non GAAP and excluding any extraordinary items. This ends my short presentation. I would now like to leave the floor to a Q and A session for our Chairman and Chief Executive. Thank you very much.

Conference Operator, Chorus Call: This is the Chorus Call conference operator. We will now begin the question and answer session. The first question is from Emmanuel Legolasi from Equita. Please go ahead, sir.

Emmanuel Legolasi, Analyst, Equita: Good afternoon, everybody. Hope you can hear me. I have three questions, one on volumes and the other two on the input cost. Starting from the volume, I saw that in the press release, you mentioned volumes recovery in the remaining part of the year, which I think is something also embedded in your guidance. Can you just comment on the March or April dynamics just to understand the exit speed?

And specifically on The U. S. Market, basically everyone is flagging a bad weather in the first quarter. But have you seen any, let’s say, any kind of improvement in demand in April? And moving to the input cost, the first one is on the variable cost.

So we have seen, let’s say, some volatility in electricity and in fuel cost, but they are generally down. If I remember correctly, your guidance was based on higher variable cost for 2025. Can you comment on the current situation on the variable cost if they are more or less in line with your expectation? And the last one is on fixed cost, just because I saw that you reported a mid single digit increase in labor cost related to contractual renewal. So is this something that we can assume also for the whole year?

So for 2025, assuming a mid single digit increase in fixed cost, labor cost. Thank you.

Francesco Caltagironi, Chairman and Chief Executive, Chermanty Holding: Okay. I can sum up this first quarter in a few words. As many things that Trump administration for sure slowed a bit the pace of the recovery. So far, what we have seen is that we have some headwinds in terms of low consumption in some scattered areas and tailwind from a lower cost of energy. I think that these two, let me say, forces are, let me say, balanced our risk in terms of what we see for the next nine months.

So let’s see that beside the fixed cost of personnel that are indexed and especially in the high inflation countries, Turkey and Egypt, that brings up the local cost partly recovering on Europe because Turkish lira this year is I mean, the last six, nine months have been, let’s say, stronger than the inflation. So it seems that the personnel costs are higher. So if the Turkish lira evaluation align with the pace of inflation, this cost should be trimmed a little bit. But more or less, what we see is that and is also in our figures, this kind of increase should last for the whole year. About the weather in Special Demand, this is usually a small quarter and part of our perimeter, especially U.

S. A, Eastern Turkey and Scandinavia is impacted by weather conditions. So it is difficult now to say what we expect. But let’s say, also in April, as you know, we had Easter holiday. And so it has been a month that, let’s say, doesn’t give the full broad picture.

But what we see so far is that it’s completely in line with our forecast. And as you know, we just increased about 2% or 3% our view compared to last year in terms of EBITDA. So far, we see the as I said, a bit of lower consumption in some areas but better into price. And so far, the results are balanced.

Emmanuel Legolasi, Analyst, Equita: Very clear. Thank you.

Conference Operator, Chorus Call: The next question is from Emmanuel Enegri of Mediobanca. Please go ahead sir.

Emmanuel Enegri, Analyst, Mediobanca: Yes. Good afternoon, Ebrahim. Thanks for the presentation and for taking my question. I have a couple. The first one, if you can give us any update on the decarbonization plan in Alborg.

And the second one is kind of a follow-up from the previous question. So do you confirm to expect kind of a tailwind to materialize in the coming quarters from lower energy costs? Is it correct? Thanks.

Francesco Caltagironi, Chairman and Chief Executive, Chermanty Holding: The decarbonization process is continuous. It’s a four year plan And for quarter by quarter, there hasn’t been, let me say, much update. I mean we are in line with our forecast, the time schedule. So we expect by this year, let me say, the end of all I mean, the planning of, let me say, where we have to drill the pile of the well the capture. And so the program is going forward.

And as you know, it is brought forward by our industrial partner, Erilean. So I’d say nothing, let me say, to flag so far. In terms of the cost, let me say, deflation, so far we have seen and probably especially in the oil market a sharp drop in the cost of oil. Our mix, as you know, is mainly natural gas and pet coke. So and we are partly mostly hedged.

So I can confirm that we see this, let me say, drag of price the price during the next month. But as I said, the savings that we should book, let me say, are more or less with, let me say, the lost volume that we expect or that are already materialized because, let me say, we expect, especially from May, some, let me say, mild pickup of the consumption, especially in the Scandinavian market.

Emmanuel Enegri, Analyst, Mediobanca: Thank you very much. Thank you.

Conference Operator, Chorus Call: The next question is from Bruno Peramuti from Intesa Sanpaolo. Please go ahead, sir.

Bruno Peramuti, Analyst, Intesa Sanpaolo: Thank you for taking my question and good afternoon, everyone. I wanted to ask you something about the price So it seems that you have a quite mixed picture. Do you see some the changes of the first quarter as structural? Or you believe that so how do you see the pricing environment in the remaining part of the year?

And a second question concerns the different dynamics between ready mixed and cement sales. Is there any specific region for this divergence? And you believe that it will continue in the next month?

Francesco Caltagironi, Chairman and Chief Executive, Chermanty Holding: Okay. So for the pricevolume, we see mostly everywhere a slight increase of price. And this is also confirmed by the figures because despite a decline of 6% in cement volume, the revenues are in line with the previous year. So this is the first. The second question is about the difference of the gap in some area between cement and ready mix.

As also specified in our presentation, most of this cement gap is because of the ban of the export from Turkey to Israel. So looking at mainly local situation from Scandinavia to even Northern France, Belgium. We have some ready mix projects that are a bit ahead because of the because mainly they are infrastructure and the residential market is still lagging a little bit behind. But more or less, let me say, if we carve out the export to Israel from Turkey. At the end, we are talking just about minus 1.5% on cement versus 2% plus in the ready mix.

So there are very small difference considering also that in the first quarter, the absolute quantities are very, let me say, limited.

Bruno Peramuti, Analyst, Intesa Sanpaolo: Okay. Thank you. And if I may, a follow-up also on The Nordics. In the first quarter, perhaps we started to see sequential improvement. Do you believe that this trend will enhance in the next quarter?

Francesco Caltagironi, Chairman and Chief Executive, Chermanty Holding: What we also flagged in the last quarter of last year that we started to see a rebound in The Nordics. Now this rebound that started mainly in Denmark is also being up in Sweden and in Norway. So we if, let’s say, we don’t think that any metal shock will arrive, I think that this recovery and because compared to last year same period, have now booked two or three decrease of the rates from the Central Bank that usually are supportive. So now also we have in place a new government in Germany. And so what we expect for that part of Europe is that especially in the second half if nothing were will come out from the United States administration with the tariff spread, We don’t think that this increase should let me say stop.

Bruno Peramuti, Analyst, Intesa Sanpaolo: Thank you.

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

Marco Maria Bianconi, Head of M&A and Investor Relations, Chermanty Holding: Okay. So then thank you very much for your interest in Chamandy Holding and I wish you a pleasant rest of your day and evening. Thank you.

Francesco Caltagironi, Chairman and Chief Executive, Chermanty Holding: Thank you. Have a nice evening. Bye. Bye bye.

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

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