(News Bulletin 247) – The drop in energy costs and the price increases decided by the cement manufacturer allow it to report an increase in its profitability greater than expected. The market welcomes Vicat’s excellent annual publication.

The solidity of the annual results revealed by the Isère cement manufacturer Vicat is impressive. The company revealed increasing sales and above all a clear recovery in its profits for the year 2023.

For the 2023 financial year, Vicat’s turnover thus reached 3.937 billion euros, up +8.1% on a reported basis. On an organic basis (at constant scope and exchange rates), the increase is more marked and amounts to +19.6%. Organic growth over the year was positive in all geographic areas, explains Vicat.

The good operational performance is reflected in the gross operating surplus (Ebitda) which rebounded by 41% at constant scope and exchange rates (+29.8% in published data), to 740 million euros (i.e. a margin of Ebitda of 18.8%, up 3.1 points year-on-year). This level of Ebitda is 4% above the consensus of 710 million euros, specifies Oddo BHF in its note of the day.

Ramp-up of its factory in the United States

This clear improvement in profitability results, according to the group, from both the ramp-up of its factory based in Ragland in the United States, the commissioning of which in June 2022 had weighed on last year’s results.

The Isère cement manufacturer also highlights the improvement in its industrial performance in all countries but also the price increases in almost all of the group’s markets, which made it possible to offset the cumulative increase in production costs linked to inflation.

“For our part, we believe that price increases and the drop in fuel prices at the end of the year are the main explaining factors (after a disastrous 2022). Compared to our estimates, Ebitda by region is higher meets our expectations in the Europe, Americas and Mediterranean zones, but lower in France, Asia and Africa”, says the financial intermediary.

Vicat, however, wishes to point out that these price increases have still not allowed it to return to its historical margin rates. The Ebitda margin remains 100 basis points lower (i.e. 1 percentage point) than in 2021 (19.8%).

The family group (still 60% controlled by the Vicat-Merceron family) founded in 1853 by Joseph Vicat, son of Louis who had discovered 30 years earlier the principle of hydraulicity of binders, i.e. the capacity of a lime or ‘a natural cement to set in the presence of water, however, reports having achieved in 2023 “its best operational results since its creation”.

Debt that is reducing

In terms of net income, this shows a clear increase, by 84.8% at constant scope and exchange rates and 65.6% on a published basis, to reach 258 million euros.

Furthermore, Vicat has significantly improved its financial structure. As of December 31, 2023, the group shows net debt down by 145 million euros over one year, and “significant equity”. Which mechanically improves the debt/Ebitda ratio, which was reduced to 1.92x where it peaked at 2.75x at the end of December 2022.

“If the group has a good year in 2023, it is above all because 2022 was not good given exceptional elements,” Oddo BHF wishes to temper.

Taking into account the results and the company’s ability to “continue its profitable development”, the board of directors will propose at the next general meeting the distribution of a dividend of 2 euros per share, an increase compared to the dividend of 1.65 euros paid for 2022. Here too Vicat creates a surprise, since the amount announced for the year 2023 is “above market expectations”, placed at 1.69 euros.

“Rather optimistic” outlook

Regarding the outlook, Vicat expects continued growth in its turnover in 2024, without providing figures. The group is content only to explain that the growth of its activity will be supported by growth in the United States, the resilience of emerging markets, in a context of weakness in the residential sector in Europe.

Thus, the Ebitda generated by the group in 2024 should be higher than the 740 million euros generated in 2023. Vicat specifies that this objective takes into account the progression of operational gains at its American factory in Ragland and the decline in inflation energy costs over the period with a favorable base effect in the first half.

Oddo BHF provides more elements to these prospects which it considers “rather optimistic” and for its part expects a growth in turnover of 4.7% and an Ebitda up 5.9% to reach 783 million euros.

“The progression of Ebtida, the control of the working capital requirement as well as the discipline in terms of investments will allow a further reduction in the group’s net debt,” explains Vicat. Thus, the cement manufacturer sets itself the objective of reducing the debt/Ebitda ratio to a level below 1.3x at the end of 2025, after 1.92x at the end of 2023.

In 2024, Vicat’s industrial investments should amount to around 325 million euros taking into account a delay in disbursements relating to the construction of the new oven in Senegal over 2024. The cumulative investment envelope for 2023 and 2024 will remain for its part unchanged.

On the Paris Stock Exchange, Vicat signed by far the best performance of the SRD with a gain of 7.6% to 36.10 euros, around 10:15 a.m.