Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vicat SA (SDCVF, Financial) achieved an organic growth of 4.8% in the first half of 2024, driven by strong market dynamics in the United States and emerging markets.
- The company's EBITDA increased by 12.3% in the first six months, with significant contributions from the United States, India, and Egypt.
- Vicat SA (SDCVF) reduced its carbon intensity by 3% year-on-year, aligning with its sustainability goals.
- The company has a strategic focus on low-carbon solutions, with products like DECA and CARAT contributing to 14% of cement sales in France.
- Vicat SA (SDCVF) is committed to deleveraging, aiming for a leverage ratio below 1.7 times by the end of 2024 and 1.3 times by 2025.
Negative Points
- The residential market in France is experiencing a downturn, impacting revenue and posing challenges for future growth.
- Despite progress, Vicat SA (SDCVF)'s EBITDA margin remains below 2021 levels, indicating room for improvement.
- The company faces persistent inflationary pressures, particularly in energy and fixed costs, affecting overall profitability.
- Free cash flow deteriorated to minus EUR23 million in the first half of 2024, compared to EUR61 million in the same period of 2023.
- Vicat SA (SDCVF) is experiencing competitive pressures in Brazil, leading to a decline in cement business volume and EBITDA.
Q & A Highlights
Q: Can you provide insights into your free cash flow generation and debt reduction targets for 2024 and 2025?
A: Hugues Chomel, Deputy CEO and CFO, explained that free cash flow generation is seasonal, with stronger EBITDA expected in the second half of the year. The company targets a net debt reduction of about EUR100 million in 2024, consistent with H2 trends. For 2025, with reduced CapEx following strategic investments, Vicat aims to generate sufficient operational cash flow to meet its debt reduction targets.
Q: What are your expectations for CapEx in 2025, and how does the political situation in France affect your outlook?
A: Chomel indicated that a CapEx reduction to around EUR250 million is reasonable for 2025. Regarding France, the residential market downturn is expected to stabilize, with potential recovery in 2025. However, political and economic factors could influence this outlook.
Q: How is the US market performing, and what are your expectations for the second half of the year?
A: The US market remains strong, particularly in the Southeast, despite some softness in California. Chomel noted that the market is not growing rapidly but remains robust, with no significant concerns for the second half of the year.
Q: How does the Ragland plant's performance compare to other US operations, and what are your future growth plans?
A: Chomel stated that Ragland has been successful in meeting market demand, aided by new railway terminals. Future growth plans post-2025 will focus on deleveraging and maintaining a flexible balance sheet to support decarbonization efforts and potential acquisitions.
Q: What is your strategy for achieving your CO2 reduction targets by 2030, and how does this impact CapEx?
A: Vicat has outlined an investment roadmap of EUR800 million over ten years to meet CO2 reduction targets. This includes typical maintenance CapEx and discretionary projects, with a baseline of EUR250 million being a reasonable estimate.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
