Vicat: First Half 2021 Results
L’ISLE D’ABEAU, France–(BUSINESS WIRE)–Regulatory News:
Vicat (Paris:VCT):
- Strong growth in results over the first half
- Dynamic markets and selling prices well oriented
- New low-carbon product line “DECA”
- Strong cash flow generation over the period
| (€ million) | 30 June 2021 | 30 June 2020 | Change (reported) | Change scope and exchange rates) |
| Consolidated sales | 1,560 | 1,304 | +19.6% | +26.2% |
| EBITDA | 300 | 213 | +41.0% | +48.3% |
| EBITDA margin (%) | 19.2% | 16.3% |
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| EBIT | 171 | 76 | +126.3% | +137.4% |
| EBIT margin (%) | 11.0% | 5.8% |
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| Consolidated net income | 102 | 29 | +247.0% | +260.9% |
| Net margin (%) | 6.5% | 2.3% |
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| Net income, Group share | 94 | 27 | +246.3% | +256.1% |
| Cash flow | 240 | 175 | +36.8% | +43.9% |
Commenting on these figures, Guy Sidos, the Group’s Chairman and CEO, said:
“Leveraging the dynamism of its markets, Vicat’s financial results continue their progression. The Group once again demonstrates its responsiveness and ability to adapt and confirms the relevance of its industrial and commercial strategy. Focused on its carbon footprint reduction targets, the Group has accelerated the commercialisation of its low-carbon product lines, adapted to the global climate challenge.”
Disclaimer:
- In this press release, and unless indicated otherwise, all changes are stated on a year-on-year basis (2021/2020), and at constant scope and exchange rates.
- The alternative performance measures (APMs), such as “at constant scope and exchange rates”, “operational sales”, “EBITDA”, “EBIT”, “net debt”, “gearing” and “leverage” are defined in the appendix to this press release.
- This press release may contain forward-looking statements. Such forward-looking statements do not constitute forecasts regarding results or any other performance indicator, but rather trends or targets. These statements are by their nature subject to risks and uncertainties as described in the Company’s annual report available on its website (www.vicat.fr). These statements do not reflect the future performance of the Company, which may differ significantly. The Company does not undertake to provide updates of these statements.
Further information about Vicat is available from its website (www.vicat.fr).
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The Group enjoyed strong sales growth in the first half of 2021 as buoyant markets combined with a favourable basis of comparison. The Group’s business was hit particularly hard in the second quarter of 2020, particularly in India and France, by the spread of Covid 19 and the governmental measures introduced to tackle it. Although the pandemic has continued into the early part of this year, and whilst certain markets remain disrupted, the measures introduced have allowed activity to continue in the construction sector.
As a result, the Group’s consolidated sales were €1,560 million, from €1,304 million in the first half of 2020, an increase of 19.6% on a reported basis and of 26.2% at constant scope and exchange rates.
Movements in consolidated sales on a reported basis resulted from:
- organic sales growth of +26.2%, driven by strong markets in all of the Group’s regions and a favourable basis of comparison;
- a negative currency effect of -6.8%, corresponding to a loss of reported sales of €89 million over the first half, due to the appreciation of the euro;
- and lastly, a positive scope effect of +0.3%, adding €3 million to sales, resulting primarily from small acquisitions in Concrete and Aggregates in France.
The Group’s operational sales amounted to €1,771 million, up +19.8% on a reported basis and +26.4% at constant scope and exchange rates. Each of the Group’s business areas contributed to this positive trend. The Cement business (€938 million) posted growth of +20.7% on a reported basis and +29.1% at constant scope and exchange rates. Operational sales in Concrete & Aggregates (€585 million) were up by +16.5% on a reported basis and +22.1% at constant scope and exchange rates. Finally, the Other Products & Services business area (€249 million) saw growth of +24.7% on a reported basis and +26.6% at constant scope and exchange rates.
Consolidated EBITDA was €300 million for the first half of 2021, up +41.0% on a reported basis and +48.3% at constant scope and exchange rates. As a result, the EBITDA margin was 290 basis points higher at 19.2%. The reported change in EBITDA reflects a negative currency effect of €16 million together with organic growth of €103 million.
At constant scope and exchange rates, EBITDA growth came from:
- strong business levels across all markets;
- a widespread upward movement in selling prices, which offset cost inflation;
- a favourable basis of comparison, given the health situation in the first half of 2020.
EBIT came to €171 million, from €76 million in the first half of 2020, an increase of +126.3% on a reported basis and of +137.4% at constant scope and exchange rates, after inclusion of a €6.8 million net reversal of provisions relating to the end of the Article 39 pension scheme. As a result, the EBIT margin on consolidated sales rose 520 basis points to 11.0%. This performance reflected a very strong improvement in operating profitability in France, and the Americas, Asia and Africa zones. The Europe (excluding France) and Mediterranean zones were more or less stable over the period at constant scope and exchange rates.
Operating income reaches €161 million, up +161.4% on a reported basis and +174.3% at constant scope and exchange rates. This performance was primarily the result of improvements in operating margins at both the EBITDA and EBIT levels, together with additional impairment of €11 million on receivables relating to investment in Egypt.
The €2 million increase in net financial expense (which rose from €16 million in the first half of 2020 to €18 million) was the net result of a reduction of nearly €2 million in the cost of net financial debt, following the refinancing of part of the debt in 2020 and, on the other hand, a fall in other financial income and expense caused by the recognition of a non-recurring income item in Brazil in 2020.
Tax expense increased by €25 million, the result of growth in pre-tax income. The apparent tax rate fell from 42.8% at 30 June 2020 to 30.7% in 2021. This reduction in the tax rate came mainly from reductions in the tax rates in France and Switzerland, a favourable country mix and the reversal of deferred taxation relating to the final signature of the amendment to the mining agreement in Senegal.
Consolidated net income was €102 million in the first half of 2021, an increase of €73 million on the €29 million reported for the same period of 2020, giving growth of +260.9% at constant scope and exchange rates and +247.0% on a reported basis.
Net income, Group share was €94 million, an increase of +256.1% at constant scope and exchange rates and +246.3% on a reported basis.
Cash flow came to €240 million, up +36.8% on a reported basis and +43.9% at constant scope and exchange rates, as a result of the strong growth in EBITDA over the semester.
1. Income statement broken down by geographical region
1.1. Income statement, France
| (€ million) | 30 June 2021 | 30 June 2020 | Change (reported) | Change scope and exchange rates) |
| Consolidated sales | 562 | 444 | +26.5% | +25.7% |
| EBITDA | 104 | 56 | +83.9% | +83.7% |
| EBIT | 66 | 14 | +379.8% | +380.5% |
Over the first six months of the year, in line with the trend seen in the second half of 2020, and given a highly favourable basis of comparison, the Group’s performance in France improved strongly. Although the effects of the health crisis weighed over this first part of the year, government measures, along with steps taken by the Group, allowed it to seize growth opportunities and report a strong performance across all business areas.
Under these circumstances, EBITDA grew strongly throughout the period, despite a slight increase in energy costs and an unfavourable basis of comparison relating to the non-recurrent effects of the cost-cutting plan introduced at the end of the first quarter of 2020 to address the impact of lockdown measures.
- In the Cement business, operational sales rose +23.0% at constant scope over the period as a whole as a result of the favourable base of comparison of the first half of 2020 and a supportive industry environment in the Group’s markets. These factors helped to more than offset the impact of the less favourable weather conditions, with the sector seeing significant growth throughout the period. Against this positive background, selling prices increased. EBITDA rose by +63.8%, and the EBITDA margin on operational sales in this business area rose by 600 basis points.
- The Concrete & Aggregates business increased its operational sales by +29.6% at constant scope. This growth was the result of increased business levels in both concrete and aggregates. Selling prices moved higher in aggregates and were stable in concrete. As a result, EBITDA in this business area grew by +106.1% at constant scope over the period, producing a 450 basis-point increase in EBITDA margin on operational sales.
In the Other Products & Services business, operational sales rose +30.9% at constant scope over the period. EBITDA in this business grew by +154.5% over the period, with the EBITDA margin on operational sales gaining 320 basis points.
1.2 Income statement for Europe excluding France
| (€ million) | 30 June 2021 | 30 June 2020 | Change (reported) | Change scope and exchange rates) |
| Consolidated sales | 203 | 198 | +2.5% | +5.3% |
| EBITDA | 39 | 40 | -1.9% | +0.8% |
| EBIT | 19 | 20 | -0.9% | +1.8% |
Activity in Europe (excluding France) covers Switzerland and Italy. The Swiss market, which was only slightly affected by the pandemic during the first half of 2020, saw modest growth in the first half of the current year. Meanwhile, Italy benefited from a very favourable basis of comparison given the particularly difficult health and macroeconomic situations in the first half of 2020. EBITDA, for the region as a whole, was stable (+0.8%) at constant scope and exchange rates and -1.9% lower on a reported basis.
In Switzerland, the Group’s consolidated sales rose by +3.9% at constant scope and exchange rates (+1.0% on a reported basis). Business in this country continued as normal with no significant impact on sector conditions from the epidemic. The EBITDA margin on consolidated sales was down -80 basis points at 19.5%.
- In the Cement business, operational sales grew by +6.3% at constant scope and exchange rates, bolstered by strong markets and waste processing activities. Selling prices were down over the first half, due to an unfavourable client mix. As a result of these factors and given a non-recurring element in the first half, EBITDA in this business fell -19.9% at constant scope and exchange rates, with the EBITDA margin on operational sales coming in at 25.3% versus 33.6% in the first half of 2020.
- In the Concrete & Aggregates business, operational sales were down -6.7% at constant scope and exchange rates due to less favourable weather conditions, particularly in the first quarter, and a slight decline in selling prices. In contrast, the recycling business saw a solid increase in prices. As a result of these factors, EBITDA generated by this business rose +3.5% at constant scope and exchange rates, with EBITDA margin on operational sales gaining 180 basis points over the first half.
- In Other Products & Services, operational sales were up +11.9% at constant scope and exchange rates. EBITDA from this business was once again significantly positive over the first half, at nearly €4 million, whereas it was around break-even in the same period of 2020. The EBITDA margin on operational sales was 5.7%. Meanwhile, the Group completed the disposal of Creabeton Matériaux (lightweight precast products) on 30 June 2021.
In Italy, given the shutdown of the business for 30 days in the first half of 2020, consolidated sales rose +36.7% over the period. Business levels and selling prices were both significantly higher over the first half. As a result, EBITDA grew by +44.5% over the period. EBITDA margin on consolidated sales thus improved by 60 basis points compared to the first half of 2020.
1.3 Income statement for the Americas
| (€ million) | 30 June 2021 | 30 June 2020 | Change (reported) | Change scope and exchange rates) |
| Consolidated sales | 319 | 298 | +7.1% | +20.1% |
| EBITDA | 70 | 56 | +24.9% | +41.2% |
| EBIT | 43 | 26 | +63.3% | +86.0% |
Despite a concerning pandemic situation, especially in Brazil, activity levels remained strong in both the United States and Brazil. The acceleration in the pace of growth seen in Brazil since the third quarter of 2020 continued strongly through the first half of this year. As a result, there was strong growth in both sales and EBITDA in the Americas region.
In the United States, the macroeconomic and sector environment remained favourable in the first half. It should be noted that in California the second quarter was affected by an unfavourable basis of comparison, given the record level of delivery volumes in this period in 2020, particularly in May and June. Even so, consolidated sales in the United-States grew by +11.1% at constant scope and exchange rates, taking them to €238 million. EBITDA was €46 million, an increase of +21.5% at constant scope and exchange rates.
The construction of a 5,000 tonnes per day kiln line at Ragland, Alabama, begun in 2019, continued. This new facility will come into service in the first quarter of 2022. It will increase the plant’s capacity, thus helping to meet strong market demand, significantly reduce production costs and make an active contribution to the Group’s targets in terms of reducing CO2 emissions.
- In the Cement business, operational sales rose +4.9% at constant scope and exchange rates in the first half of 2021, on the back of solid trends in the Group’s markets and increases in selling prices over the period. EBITDA generated in this business rose by +16.7% at constant scope and exchange rates. As a result, the EBITDA margin on consolidated sales improved by 290 basis points.
- In the Concrete business, operational sales rose +14.9% at constant scope and exchange rates again thanks to solid market trends, especially in the South-East region, and increases in average selling prices. EBITDA saw strong growth over the period, with an increase of +37.9% at constant scope and exchange rates. As a result, the EBITDA margin on operational sales rose by 130 basis points.
In Brazil, consolidated sales were €81 million, an increase of +53.1% at constant scope and exchange rates. Growth in this area was strong, despite continued concerns over the health situation. EBITDA grew solidly over the first half, reaching €24 million, from €15 million in the same period in 2020. The EBITDA margin improved by 660 basis points.
- In the Cement business, operational sales were €67 million, from €52 million in the first half of 2020, an increase of +55.1% at constant scope and exchange rates. This performance was driven by the strength of the markets in which the Group is active and positive price trends that allowed higher costs, particularly for energy, to be passed on in full. EBITDA amounted to €22 million in the first half of 2021, from €13 million in the same period in 2020; EBITDA margin on operational sales was 32.6%.
- In the Concrete & Aggregates business, operational sales were €23 million, an increase of +80.9% at constant scope and exchange rates, in line with the growth recorded in the Cement business. The improvement in market conditions was accompanied by a rise in prices, both in concrete and in aggregates. EBITDA was +54.6% higher at constant scope and exchange rates.
1.4 Asia (India and Kazakhstan)
| (€ million) | 30 June 2021 | 30 June 2020 | Change (reported) | Change scope and exchange rates) |
| Consolidated sales | 206 | 149 | +38.5% | +51.2% |
| EBITDA | 58 | 38 | +51.3% | +65.4% |
| EBIT | 40 | 19 | +114.4% | +134.5% |
The Asia region, particularly India, continues to be severely affected by the pandemic crisis, which is affecting the macroeconomic and sector environment to a lesser extent than in the first half of 2020. The measures taken by the Indian government to counter the situation have enabled the Group to continue operating, unlike in the first half of 2020, when both the Group’s plants had to shut down completely for a month.
In the light of these factors, and given the favourable basis of comparison from the first half of 2020, activity in India saw strong growth in the first half, on the back of strong demand and the effects of the government’s recovery programmes. The shortage of labour in major urban areas, triggered by the latest restrictions introduced by some states in response to the pandemic, have had an impact particularly for major infrastructure works over this period, but now seem to be easing gradually. Under these conditions, prices have remained strong over the period. Thus, the Group posted consolidated sales of €177 million in the first half of 2021, an increase of +60.5% at constant scope and exchange rates.
Given these trends, EBITDA was €49 million, an increase of +87.6% at constant scope and exchange rates. EBITDA margin on consolidated sales rose 400 basis points to 27.6%.
In Kazakhstan the Group posted consolidated sales of €30 million in the first half of 2021, an increase of +13.9% at constant scope and exchange rates. This reflected further growth for the Group in the Kazakh domestic market, which offset the fall in exports. Given this favourable geographical mix and the dynamic trends in the domestic market, prices recorded a significant increase.
EBITDA was +2.7% higher at constant scope and exchange rates, at €9 million.
1.5 Income statement for the Mediterranean region (Egypt and Turkey)
| (€ million) | 30 June 2021 | 30 June 2020 | Change (reported) | Change scope and exchange rates) |
| Consolidated sales | 103 | 75 | +37.4% | +71.5% |
| EBITDA | -6 | -9 | +35.5% | +35.4% |
| EBIT | -16 | -18 | +11.3% | -0.5% |
The Mediterranean region remains affected by the deterioration in the macroeconomic and sector situation, although this is gradually improving, most notably in Turkey. In Egypt, the security situation and the competitive environment remained a challenge in the first half. This being the case, the Group once again reported negative EBITDA in this region in the six months to 30 June 2021.
In Turkey, while the ongoing depreciation of the Turkish lira since August 2018 and the pandemic crisis continued to affect the macroeconomic and sector environment, the recovery in the construction market remains on track. Consolidated sales were €69 million, an increase of +71.0% at constant scope and exchange rates. EBITDA improved significantly over the first half, reaching €2 million, having posted a very small loss in the first half of 2020.
- In the Cement business, the firmer trends observed since the end of 2020 carried through into the first half of 2021, with favourable weather conditions at the beginning of the year providing a boost. Business levels and selling prices were both significantly higher than in the first half of 2020. Operational sales were €50 million, an increase of +72.6% at constant scope and exchange rates. Given these factors, EBITDA at constant scope and exchange rates increased by a factor of seven over the period. However, price increases only partially offset the sharp inflation in costs resulting from the depreciation of the currency.
- In the Concrete & Aggregates business, operational sales rose +64.5% at constant scope and exchange rates to €31 million. This business benefited over the first half from continued improvements in market conditions and favourable weather conditions which resulted in price rises. EBITDA from this business was slightly positive in the first half, compared to a small loss in the same period of 2020.
In Egypt, consolidated sales came to €34 million, up +72.7% at constant scope and exchange rates. Given the difficult conditions that have existed for a number of years, which have affected the whole sector, it should be noted that the first half of 2021 brought the conclusion of a market regulation agreement between the Egyptian government and all producers. This agreement, which came into force in July 2021, was approved by the Competition Authority and aims to create a more rational framework for the various market participants by limiting (to around 65% of their capacity) sales from all factories into the domestic market for a period of one year. As a result, market prices for cement saw, in the first half of 2021, their first increase since the third quarter of 2018, even though their average over the first half of this year was still slightly lower than for the first half of 2020.
Although this marks the first signs of a long-awaited change, EBITDA in Egypt remained negative, at €-8 million over the first half of 2021 (from €-9 million in the first half of 2020).
1.6 Income statement for Africa (Senegal, Mali, Mauritania)
| (€ million) | 30 June 2021 | 30 June 2020 | Change (reported) | Change scope and exchange rates) |
| Consolidated sales | 167 | 140 | +19.4% | +19.7% |
| EBITDA | 35 | 32 | +11.4% | +11.8% |
| EBIT | 18 | 15 | +20.8% | +21.5% |
In Africa, the Group continues to benefit from a favourable sector environment despite the pandemic crisis, helped by improvements in performance at the Rufisque plant and by the ramp-up of the new mill in Mali.
- In the Cement business, operational sales in the Africa region grew +20.1% at constant scope and exchange rates, with a boost provided by the dynamic trends in the West African market, especially in Senegal, and the ramp-up of the new mill in Mali. Selling prices in Senegal were lower than in the first half of 2020 given the introduction of the new tax on cement in May 2020. It should be noted that this unfavourable comparison effect has now come to an end and that prices in May and June were slightly higher than in the same period of 2020. Pricing conditions in Mali and Mauritania are positive. As a result of these factors, EBITDA generated by this business rose +10.4% at constant scope and exchange rates, with EBITDA margin on operational sales 170 basis points lower over the first half, at 19.0%.
- In Senegal, the Aggregates business posted consolidated sales of €15 million in the first half of 2021, an increase of +16.8% at constant scope and exchange rates, driven by the gradual resumption of major government projects against the background of favourable pricing trends. As a result of these factors, EBITDA generated by this business rose +21.0%, and EBITDA margin on operational sales was up 110 basis points.
2. Financial position at 30 June 2021
At 30 June 2021, the Group had a solid financial structure, with substantial equity and well-controlled borrowing. At this date, shareholders’ equity was €2,459 million, from €2,411 million at 31 December 2020.
Meanwhile, debt was €1,320 million at 30 June 2021, from €1,202 million at 31 December 2020.
On this basis the Group’s leverage ratio was 2.05x (from 2.16x at 31 December 2020 and 2.49x on 30 June 2020) and its gearing was 53.7% (from 49.9% at 31 December 2020 and 52.9% at 30 June 2020).
Given the levels of the Group’s net debt and liquidity, the covenants included in medium- or long-term financing contracts do not pose a threat to the Group’s financial position. At 30 June 2021, the Group complied with all financial ratios required by covenants in its borrowing agreements.
In the first-half of 2021, net capital expenditure stood at 170 million euros and was for a large part related to the continued construction of the new kiln in Ragland in the United-States.
Finally, free-cash flow this first-half stood at -52 million euros.
3. Recent events
Completion of disposal of Creabeton Matériaux in Switzerland:
On 30 June 2021, the Vicat Group’s Swiss subsidiary, Vigier Holding SA, finalised the disposal of Creabeton Matériaux SA to Müller Steinag Holding, based in Switzerland.
Contacts
Investor relations contact:
Stéphane Bisseuil:
Tel.: +33 1 58 86 86 05
[email protected]
Press contacts:
Marie-Raphaelle Robinne
Tel.: +33 (0) 4 74 27 58 04
[email protected]
