REG - SigmaRoc PLC - Trading Update

SigmarocAnnouncement

25/01/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240125:nRSY8275Aa&default-theme=true

RNS Number : 8275A  SigmaRoc PLC  25 January 2024

 

(EPIC: SRC / Market: AIM / Sector: Construction Materials)

 

SIGMAROC PLC

 ('SigmaRoc', the 'Group' or the 'Company')

 

Year-end trading update

Excellent final quarter trading, with 2023 underlying earnings ahead of
expectations, alongside transformational investment to create a leading
European lime platform

 

SigmaRoc, the AIM quoted lime and limestone group, is pleased to update the
market on Group trading for the year ended 31 December 2023 ('FY23').

 

FY23 highlights

 

·      The Group is expecting to report underlying FY23 EBITDA and EPS
ahead of current consensus expectations*:

·      Revenues expected to be 8% higher year-on-year ('YoY') at c.
£580m (FY22: £538m);

·      Like-for-like ('LFL') revenue growth of 2%, despite a 4%
reduction in volumes, reflecting the Group's diversified geographical
end-market profile;

·      Underlying EBITDA is expected to exceed £116m, up c. 10% LFL;

·      Underlying EBITDA margins improved to 20%, increasing by 110bps
YoY;

·      Underlying EPS expected to be greater than 8p, ahead of prior
year despite significant increase in finance costs while absorbing the
dilution of the February 2023 cash raise which was deployed across 2023;

·      FY23 leverage is expected to close below 1.6x (1.7x at 30 June
2023), following strong cash generation in the last quarter of the year;

·      In November 2023, the Group announced the conditional acquisition
of a significant portfolio of lime and limestone assets from CRH, the first
phase of which completed on 4 January 2024;

·      Post period end - new debt facility successfully syndicated in
January 2024.

Operations and trading

 

The second half of FY23 saw continued good trading in most markets. SigmaRoc's
diversified model and end market exposure continued to provide resilience in
the latter part of the year, with industrial mineral markets and
infrastructure outperforming expectations and offsetting softer residential
construction markets.

 

LFL revenues grew by 2%, despite an overall 4% reduction in volumes. Group
revenues increased by 8% YoY to c. £580m, including an initial contribution
from 6 bolt-on acquisitions completed progressively across the year.

 

·      Industrial Minerals markets (43% of FY23 Group revenues) - showed
continued resilience in the latter part of the year, supported by long term
structural drivers in a number of instances. In particular, pulp, paper &
board recovered from destocking earlier in the year. Demand remained well
supported in further industrial sectors including metals, environmental and
agriculture.

 

·      Construction markets (57% of FY23 Group revenues) -
infrastructure applications, which represent over 60% of the Group's
construction market revenues, saw robust demand through the year in both the
UK and Continental Europe. As expected, residential markets remained soft
throughout the year and the Group was effective in re-focusing local market
resources to increase infrastructure weighting.

 

Ongoing productivity and efficiency initiatives are a key pillar of the
Group's long term growth strategy. The Group implemented multiple
restructuring and cost saving initiatives across the UK and the Nordics,
translating into annualised cost savings of c. £4m and newly acquired
businesses are all performing ahead of expectations at their respective
acquisition dates. The benefit of the Group's strategic initiatives more than
offset the ongoing impact of cost inflation, with the underlying EBITDA margin
expected to increase by 110bps to 20%, and underlying EBITDA growth of c.10%.

 

Acquisition - post period end

 

On 22 November 2023, the Group announced the transformational acquisition of a
number of lime and limestone assets in Germany, Czechia and Ireland (the
'Initial Assets'), from CRH plc, alongside a £200m equity fundraising.
Completion of the acquisition of the Initial Assets was effective on 4 January
2024, bringing to the Group 1 billion tonnes of reserves, over 850 employees,
and annualised revenues of over €350m. The addition of these assets
transforms the scale of the Group's industrial minerals business and is
expected to unlock significant financial, operational and strategic benefits.
Integration of the Initial Assets is underway, with the further acquisitions
of CRH's UK and Polish lime businesses expected later in 2024.

 

Debt syndication - post period end

 

In connection with the acquisition of the Initial Assets, SigmaRoc entered a
new €875m debt facility with Santander and BNPP. The syndication of these
facilities has now been completed, in an oversubscribed process, with a strong
consortium of lenders.

 

Outlook for FY24

 

The Board's current outlook for FY24 remains unchanged, despite heavy snowfall
at the start of the year in parts of Europe leading to usual winter weather
disturbance. 2023 was characterised by infrastructure construction and
industrial markets performing well in aggregate, with softness in residential
construction. Paper, pulp and board saw significant destocking in the early
parts of the year, a trend which reversed in the second half of 2023. Steel
and other industrial demand had a positive last quarter running into 2024.
These trends are likely to persist into 2024, with the potential for
improvement in residential construction in the second half as expected
interest rate cuts positively impact demand.

 

The Board remains confident in the Group's ability to deliver a successful
integration of the newly acquired companies, and to build from this
combination a leader in lime and limestone. The prevailing conditions
throughout Europe present both headwinds and tailwinds in the various markets
which the Board is actively managing and taking advantage of.

 

Max Vermorken, CEO of SigmaRoc, commented:

 

"2023 has been another transformational year for SigmaRoc. We completed a
number of bolt on acquisitions during the year, which have been integrated
well and enhanced performance in a number of our businesses. In November 2023,
we announced the acquisition of a significant portfolio of lime and limestone
assets from CRH, creating a leading Northern European industrial minerals
platform and a key supplier to a number of structural growth markets.

 

"We also welcome the Fels-Werke, Vitosov. and Clogrennane teams into the
SigmaRoc Group. Their expertise and dedication will undoubtedly contribute to
the continued success of the Group as they become an integral part of our
journey.

 

"We have had an encouraging start to 2024, and we are confident the enlarged
Group, with a strategic focus on lime and limestone, can deliver strongly in
the coming years to the benefit of all our stakeholders. Lime is an essential
product for life, used in multiple areas of the economy, from construction to
industry. It is essential for the green transition, being used in a number of
processes including flue gas cleaning, slaking rivers and lakes, and the
manufacture of lithium batteries.

 

"We look forward to the upcoming year, as a larger and more focussed Group,
with optimism."

 

 

FY23 annual report and financial statements and ESG report

The Group intends to publish its audited results for the year ended 31
December 2023 and its ESG report by the end of March 2024.

 

 

*Consensus expectations for SigmaRoc, being the average of forecasts for the
year ending 31 December 2023 provided by Analysts covering the Company, are
revenue of £596.9m and underlying EBITDA of £110.2m.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.

 

 

Information on the Company is available on its website, www.sigmaroc.com
(http://www.sigmaroc.com) .

 

For further information, please contact:

 

 SigmaRoc plc                               Tel: +44 (0) 20 7002 1080

 Max Vermorken (Chief Executive Officer)

 Garth Palmer (Chief Financial Officer)     ir@sigmaroc.com (mailto:ir@sigmaroc.com)

 Tom Jenkins (Head of Investor Relations)

 Liberum Capital (Co-Broker)                Tel: +44 (0) 20 3100 2000

 Dru Danford / Jamie Richards / Ben Cryer

 Peel Hunt (Co-Broker)                      Tel: +44 (0) 20 7418 8900

 Mike Bell / Ed Allsopp

 Walbrook PR Ltd (Public Relations)         Tel: +44 (0) 20 7933 8780 / sigmaroc@walbrookpr.com

 Tom Cooper / Nick Rome

                                            Mob: +44 (0) 7971 221972

 

About SigmaRoc plc

SigmaRoc is an AIM-quoted lime and limestone group targeting quarried
materials assets in the UK and Northern Europe.

 

Lime and limestone are key resources in the transition to a more sustainable
economy. New applications for lime and limestone products as part of a drive
for sustainability include the production and recycling of lithium batteries,
the decarbonisation of construction including through substitution of
cementitious material and new building materials, and environmental
applications including lake liming, air pollution and direct air capture.

 

SigmaRoc seeks to create value by purchasing assets in fragmented materials
markets and extracting efficiencies through active management and by forming
the assets into larger groups. It seeks to de-risk its investments through the
selection of projects with strong asset backing.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTBIGDBLGDDGSS