Imerys (IMYSF) H1 2024 Earnings Call Highlights: Strong EBITDA Growth Amid Market Challenges

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Wed, Oct 9, 2024, 1:22 PM 4 min read

Revenue: EUR1.9 billion in H1 2024.
Adjusted EBITDA: EUR384 million in H1 2024, up 11% year-over-year, with a 20% margin.
Operational Cash Flow: EUR120 million before strategic CapEx.
Net Debt: Approximately EUR1.2 billion, with a net financial debt to adjusted EBITDA ratio of 1.7 times.
Performance Minerals Revenue: EUR1.2 billion in H1 2024.
Americas Revenue: EUR543 million in H1 2024, up 3% at constant scope and exchange rate.
Europe, Middle East, Africa, and Asia Pacific Revenue: Decreased by 1.7% at constant scope and exchange rates in H1 2024.
Solutions for Refractory, Abrasives, and Construction Revenue: EUR620 million in H1 2024.
Graphite and Carbon Business Revenue: Decreased by 13% in H1 2024.
Net Income Group Share: EUR142 million, same level as last year.
Free Operating Cash Flow: EUR88 million in H1 2024.
Capital Expenditures: EUR171 million, including EUR32 million strategic CapEx.

Warning! GuruFocus has detected 4 Warning Signs with IMYSF.

Release Date: July 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Imerys (IMYSF) reported a strong performance in H1 2024, with an adjusted EBITDA of EUR384 million, up 11% from the previous year, maintaining a solid 20% margin.
The company experienced a positive volume effect in Q2 2024, driven by improvements in European end markets and market share gains in the US.
Imerys (IMYSF) successfully completed the disposal of assets serving the vapor market, aligning with its strategic roadmap.
The company disclosed its climate transition plan and renewed its partnership with the National Museum of Natural History, demonstrating a commitment to sustainability and biodiversity protection.
Operational cash flow before strategic CapEx was EUR120 million, with net debt remaining stable at approximately EUR1.2 billion, reflecting a strong financial structure.

Negative Points

H1 2024 prices were slightly down by approximately 1.2%, with a continued decline in Q2, impacting revenue growth.
The automotive sector remains soft, particularly in Europe, with a negative outlook for the rest of the year.
The Graphite and carbon business posted a 13% revenue decrease in H1 2024, impacted by declining volumes and price concessions.
Imerys (IMYSF) anticipates a significantly lower contribution from joint ventures in H2 2024, particularly from the high-purity quartz business due to high inventories.
The company faces challenges in the photovoltaic sector, with overproduction leading to high inventory levels and a temporary slowdown in demand.

Q & A Highlights

Q: Can you provide more details on the expected slowdown in high-purity quartz (TQC) for H2, and is it driven by volume or pricing? A: The slowdown is primarily volume-driven due to high inventories, particularly in the photovoltaic sector. Demand remains strong, but overproduction has led to inventory build-up. We expect this to be temporary, with a return to growth once inventories normalize. Pricing remains relatively stable for high-purity quartz, which is less affected by price drops seen in lower-quality silica.

Q: Regarding the Chapter 11 process, can you update us on the timeline and any recent developments? A: A settlement agreement with Johnson & Johnson has been signed, adding USD 505 million to the Imerys Trust. The court hearing for approval is scheduled for August 15. Once approved, this will be included in the reorganization plan, and we anticipate the voting process to be launched by September.

Q: Could you elaborate on the guidance for H2, considering the underlying business recovery and the impact of TQC? A: We expect a solid H2 for traditional businesses, with continued recovery in construction and industrial production. Graphite and carbon are also recovering. However, we are cautious about TQC due to inventory levels, and our guidance reflects this prudence. We anticipate a full-year adjusted EBITDA of EUR 670-690 million.

Q: Can you discuss the performance of the Performance Minerals segment and the outlook for consumer goods? A: Performance Minerals showed strong growth, driven by both volume increases and market share gains, particularly in the US. We expect consumer goods to remain solid, especially in the US, despite some challenges reported by other companies. Destocking has ended, and we see confidence in the market.

Q: What are the expectations for cost developments in H2, particularly regarding transportation and logistics? A: We are confident about cost developments, with stable logistics costs due to favorable contracting. Energy costs have decreased significantly, especially in Europe, and we have hedged effectively. We aim to maintain a positive price-cost balance in H2.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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Imerys (IMYSF) H1 2024 Earnings Call Highlights: Strong EBITDA Growth Amid Market Challenges

In This Article:

Positive Points

Negative Points

Q & A Highlights

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