SigmaRoc confident despite challenging market conditions

9th Sep 2024 11:57

(Sharecast News) - Lime and minerals group SigmaRoc reported a resilient set of first-half results on Monday, despite challenging market conditions.

The AIM-traded firm said its underlying revenue declined 8% to £531.6m for the six months ended 30 June, with the drop attributed to both lower input cost pass-through and reduced volumes.

Despite the revenue dip, underlying EBITDA saw only a 3% decrease to £117.8m, supported by effective cost management and pricing strategies.

Notably, the group's EBITDA margin improved by 110 basis points, indicating stronger operational efficiency.

The full-year underlying EBITDA remained in line with consensus expectations, and underlying earnings per share rose over 6% to 4.27p.

SigmaRoc also reported robust cash generation during the period, boosted by the shift of European Union Emissions Trading Scheme (ETS) returns to the second half of the year.

The company's leverage stood at 2.57x, with pro-forma leverage at 2.29x, on track to meet the target of closing the year below 2.3x.

Return on invested capital (ROIC) improved year-on-year, aided by recent acquisitions, with a medium-term target of 15% in sight.

Operationally, SigmaRoc said its presence across end markets helped offset challenges in specific sectors.

Strong demand in infrastructure, agriculture, and food, along with a recovery in the paper and pulp industries, helped balance weaker activity in residential construction and environmental markets.

Volumes fell 4% on a like-for-like basis, largely due to the weaker sectors, but operational margins continued to improve through cost control measures.

The integration of the European lime businesses acquired from CRH was meanwhile progressing ahead of schedule.

SigmaRoc completed the acquisition of German, Czech, and Irish businesses in January, followed by a UK lime acquisition in March.

The group finalised its Polish acquisition in September after receiving anti-trust clearance.

It said the acquisitions were performing in line with expectations, with synergies from the deals expected to generate between €35m and €60m by 2027.

Looking ahead, SigmaRoc said it anticipated continued strength in food, agriculture, mining, and infrastructure markets, though certain sectors, such as German power and automotive, were showing mixed demand.

The expected easing of interest rates was said to be likely to support a recovery in residential construction.

SigmaRoc's full-year outlook remained unchanged, with the board's expectations in line with market consensus.

"I am delighted to be sharing these results for the first half of 2024 which have come in ahead of our expectations despite continued mixed markets," said chief executive officer Max Vermorken.

"The results show the resilience of SigmaRoc's diversified business and operations and are testament to the hard work of all our staff.

"The integration of the core of the CRH acquisitions has gone well, with Poland completing post period end."

Vermorken said the company expected to report good progress on the integration of the "last piece" of the CRH acquisitions later in the year.

"The second half has started well, with many areas of the business showing good demand, despite some areas of weakness.

"The progress on the synergy program continues with guidance on the minimum target level increased to €35m by 2027, even before allowing for synergies that will arise post completion of the Polish acquisition.

"With the recent acquisitions now completed, SigmaRoc has transformed into a business with several lifetimes supply of a key natural resource that is essential to all the processes around modern life."

At 1112 BST, shares in SigmaRoc were down 2.37% at 65.8p.

Reporting by Josh White for Sharecast.com.