L’ISLE D’ABEAU, France--(BUSINESS WIRE )--Regulatory News:
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Commenting on these figures, Guy Sidos, the Group’s Chairman and CEO said: “Vicat’s first-quarter sales performance reflects the dynamism of its markets despite a high basis of comparison. Recent geopolitical trends did not have any direct impact on the Group’s business levels during the first quarter, and we recorded solid growth compared with the same period of 2021. All the regions where we operate posted growth in their sales at constant scope and exchange rates. In a global environment providing little visibility in the short term, especially as regards energy costs, we are executing our strategy to improve our production performance, make greater use of secondary fuels and implement a pricing policy tailored to this new environment in pursuit of our operational, environmental and societal targets.”
Further information about Vicat is available from its website (www.vicat.fr).
A solid recovery took place in the construction sector back in the first quarter of 2021, providing a high basis of comparison. In parallel, as fighting broke out in Ukraine during the first quarter of the year, the Group carefully monitored trends in demand across all the regions in which it operates to make sure it responds as rapidly and effectively as possible to this change in the environment. The Group does not have any assets in Ukraine or Russia, and no Group employees are directly involved in the current conflict. Given the impact of the war on energy prices, the Group is naturally adjusting its hedging policy and has taken major steps to expand the use of alternative fuels in order to adapt to the new environment.
In the first quarter of 2022, the Vicat Group’s consolidated sales totalled €789 million, up +11.6% on a reported basis and up +12.4% at constant scope and exchange rates compared with the same period of 2021. This increase on a reported basis reflects:
1. Consolidated sales in the three months ended 31 March 2022 by geographical region
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During the first quarter of 2022, the Group’s performance in France moved higher, supported by a small improvement in demand compared with 2021 despite an unfavourable basis of comparison.
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Business trends in Europe (excluding France) were positive in the first quarter of 2022, supported by favourable conditions. The decline in sales on a reported basis reflects a scope effect resulting from the sale of the Créabéton precast business in Switzerland, which was finalised on 30 June 2021.
In Switzerland, the Group’s consolidated sales climbed +7.7% at constant scope and exchange rates.
In Italy, consolidated sales grew by +35.6%. Business trends and selling prices moved significantly higher throughout the period.
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In the United States and in Brazil, construction sector trends remain dynamic, supported by higher selling prices.
In the United States, the macroeconomic and sector environment remained favourable during the first quarter. Consolidated sales rose +12.9% at constant scope and exchange rates.
The construction of the new kiln line at the Ragland plant (Alabama) made progress and is due to enter service in the next few weeks. The new installation will help meet the strong market demand by increasing the plant’s capacity, significantly reduce its production costs and help to lower the Group’s carbon emissions.
In Brazil, consolidated sales totalled €52 million, up +31.6% at constant scope and exchange rates. Against a backdrop of rapid inflation despite higher interest rates, demand remains strong in the Group’s markets, in line with the trends seen in recent quarters.
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Business in India grew throughout the period, supported by solid demand, especially in the government sector. In a high-inflation environment, prices rose significantly, especially at the end of the quarter. Overall, the Group posted consolidated sales of €100 million in the first quarter of 2022, up +8.1% at constant scope and exchange rates.
Consolidated sales in Kazakhstan came to €12 million, up +7.9% at constant scope and exchange rates. This performance was achieved through a significant increase in selling prices, which largely offset a temporary decline in volumes delivered over the winter period.
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In the Mediterranean region, sales moved sharply higher in both countries as a result of contrasting situations.
In Turkey, although the macroeconomic and sector environment remains upbeat, the winter conditions significantly affected demand during the first quarter without that representing a change in trends. Overall, first-quarter 2022 consolidated sales totalled €27 million (versus €28 million in the first quarter of 2021), up +67.9% at constant scope and exchange rates.
In Egypt, consolidated sales totalled €26 million, up +68.3% at constant scope and exchange rates. Following the market regulation agreement that entered force in July 2021 between the Egyptian government and all producers, selling prices in the domestic market continued to improve during the first quarter, supported by a solid increase in demand.
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In Africa, the Group continues to reap the benefit of a dynamic sector environment despite the political crisis in Mali.
2. Changes in Vicat’s consolidated financial position at 31 March 2022
At 31 March 2022, the Group’s shareholders’ equity was €2,675 million, up from €2,458 million at 31 March 2021. The Group’s net debt was €1,546 million, versus €1,270 million at 31 March 2021 given the significant increase in the working capital requirement with the growth in sales and the impact of inflation on inventories.
3.1 Situation caused by the conflict in Ukraine:
The Vicat group does not have any industrial or commercial operations in Ukraine or Russia. As a result, no Group assets and no employees have been directly impacted by the current conflict. As things stand, there has been no impact on the Group’s business. That said, the conflict is likely to affect growth in Europe and worldwide, and thus the Group’s operations in potentially exposed countries.
In Egypt, the fierce competition seen for several years has improved since an industry-wide agreement was reached between the authorities and cement sector players. As a result of this agreement, which has temporarily curbed utilisation rates, prices have recovered sharply, bringing EBITDA back to breakeven point in the second half of 2021 and early 2022.
In addition, the freeze put on Sinai Cement’s capital increase since 2018 prompted the Group to launch an arbitration procedure against the Egyptian government. Negotiations led to the signature on 21 March of an agreement, enabling the capital increase to go ahead and confirming Vicat’s rights to hold and to consolidate on its majority ownership. The Group has thus consolidated its shareholding through a simplified public tender offer, raising its equity interest from 56.2% at 31 December 2021 to 67.2% at 30 April 2022.
Energy costs totalled around €400 million in 2021, 57% of which relate to the use of fuel. Of these fuel sources, coal accounted for around 46%, alternative fuels for 26%, petcoke 24% and gas around 3%.
The Group’s hedging policy provides a degree of visibility on its energy costs over the short term (around six to nine months).
Given this policy, the Group estimates that at current energy prices it would need to raise its prices by +15% in the Cement activity over the full year to fully cover the increase in its energy costs. As things stand at 31 March 2022, further price hikes are thus needed in France, Switzerland, Senegal and Brazil to meet this objective, all other factors remaining equal. Accordingly, the Group remains focused and confident of its ability in the current environment to introduce the requisite increases in selling prices to cover the inflation in its energy costs, situation permitting.
Naturally, this estimate is likely to be reviewed based on:
In 2022, the Group anticipates a strong increase in its sales underpinned by an increase in its activity levels and a sharp progression in selling prices. EBITDA generated by the Group in 2022 is likely to grow, but not by as much as in 2021. In light of these elements, the Group expects erosion in its EBITDA margin in 2022.
In 2022, the Group will keep up its investment drive, focusing chiefly on:
Accordingly, capital expenditure is expected to be higher than in 2021 at around €400 million, including 130 million in "maintenance" investments and 270 million in "strategic" investments. The Group reserves the right to adjust its investment plans, by reducing, if necessary, the proportion of its “growth” capex, to match the shifting trends in its markets and its cash-flow generation.
The Group is issuing the following elements of appreciation about the performance expected in the various countries in which it operates. It wishes to make clear that these trends are highly dependent on the latest developments in the pandemic and on the conflict in Ukraine and on their impact on each of them:
To accompany the publication of its first-quarter 2022 sales, the Vicat Group is organising a conference call in English that will take place on 5 May 2022 at 3pm Paris time (2pm London time and 9am New York time).
To take part in the conference call live, dial in on one of the following numbers:
An audio feed of the conference call, together with the presentation, can be livestreamed from the Vicat website or accessed by clicking here. The replay of the conference call will be immediately available for streaming via the Vicat website and by clicking here.
First-half 2022 results on 27 July 2022 after the close.
The Vicat Group has close to 9,500 employees working in three core divisions, Cement, Concrete & Aggregates and Other Products & Services, which generated consolidated sales of €3.123 billion in 2021. The Group operates in twelve countries: France, Switzerland, Italy, the United States, Turkey, Egypt, Senegal, Mali, Mauritania, Kazakhstan, India and Brazil. Vicat, a family-owned group, is the heir to an industrial tradition dating back to 1817, when Louis Vicat invented artificial cement. Founded in 1853, the Vicat Group now operates three core lines of business: Cement, Ready-Mixed Concrete and Aggregates, as well as related activities.
Vicat group – Financial data – Appendix
Definition of alternative performance measures (APMs):
Breakdown of first-quarter 2022 sales by business
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Concrete volume (thousands of m3)
Aggregates volume (thousands of tonnes)
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Investor relations contact: Stéphane Bisseuil : Tél. + 33 (0)1 58 86 86 05 stephane.bisseuil@vicat.fr
Press contacts: Karine Boistelle-Adnet Tél. +33 (0)4 74 27 58 04 karine.boistelleadnet@vicat.fr
Investor relations contact: Stéphane Bisseuil : Tél. + 33 (0)1 58 86 86 05 stephane.bisseuil@vicat.fr
Press contacts: Karine Boistelle-Adnet Tél. +33 (0)4 74 27 58 04 karine.boistelleadnet@vicat.fr