Good afternoon, ladies and gentlemen, and welcome to the SigmaRoc presentation on the 2023 results, the transformational acquisition of the Lime and Limestone assets from CRH, and prospects. Before we begin, we would like to submit the following poll, which you'll see on your screens. Throughout this presentation, investors will be in listen-only mode, however, questions are encouraged and can be submitted at any time via the Q&A tab situated on the right-hand corner of your screen, or if anyone has dialed in via sigmaroc@walbrookpr.com. The company may not be in a position to answer every question it receives today, however, the company will review all questions submitted and publish responses where appropriate. These will be available via your Investor Meet Company dashboard. Finally, we would like to remind you that this presentation is being recorded.
I would now like to hand you over to Chairman David Barrett, Chief Executive Max Vermorken, and Chief Financial Officer Garth Palmer.
Thank you very much. Welcome, everyone, to this Investor Meet Company presentation of our 2023 results. The agenda for today's on the screen will give you a brief overview of some of the very exciting progress we've made across 2023, inclusive an operational review. At that point, I'll hand you over to Garth to my right, who will take you through the financials for the business. I will return with some views on strategy, capital allocation, and the outlook for the group before we turn to Q&A. It should all take about 30 minutes in terms of slides, and then we'll have plenty of time for questions. In terms of overview, 2023 was probably the busiest year we've had in our history since founding the business in 2016. It's an enormous evolution on three fronts: financial, strategic, but also ESG and sustainability in the group.
When we look at the financial evolution, a number of points to make on the slides here. Revenue, EBITDA, and EPS all moved ahead, quite considerably and ahead of consensus. We did this, in a market backdrop which was, in some markets, challenging, with 4% like-for-like volume drops, which was actually quite good given, some of the industries we were exposed to. Our EBITDA has grown, in terms of margin to 20%, which is quite, quite, pleasing. It's our long-term target. It's also, what we, aspire to be ahead of in the future. Our cash flow was robust with underlying free cash flow, nicely in line with our expectations, helping us to degear to 1.65x-1.7x, so below 1.6x. That was helped by some non-core asset investments to the tune of about GBP 8 million.
When we turn to the strategic side of things, we have done the largest deal we've ever done with the CRH transaction. And that, in many ways, allows us to say that we have now written Chapter One of the story of this company and are starting to write chapter two, which is the chapter where we are a leading lime and limestone operator across a very compact footprint around the North Sea and the Baltic Sea, with fantastic assets in most of these countries, as the second-largest operator in lime and limestone in Europe. We also did a number of bolt-on transactions at the start of the year.
At the start of the year, the general climate was fairly gloomy, but we decided to get on the front foot strategically and add a number of businesses into our setup, which turned out to be very good acquisitions, as you can see later on in the slide deck. We continue to innovate. We have our first CO2 capture system with Aqualung set up in Sweden. It captures CO2, 10,000 tons a year, so the largest of such facilities operating, I believe, across Europe. We've obviously substituted some biofuels. We've invested in our green concrete solution with Greenbloc and Mevo. When we turn to a few of those sorts of points from a financial and ESG perspective, in more financially and numbers, we can see the following: GBP 580 million in turnover, GBP 170 million in EBITDA, GBP 0.0812 in EPS.
Very satisfying desired numbers to see 20% EBITDA margin, leverage at 1.57, return on invested capital near enough 11%. That's good. It's on our trajectory towards 15. Looking at the next set of numbers, these are ESG-focused, and here we've managed to make a lot of progress again. Emissions intensity 29% down, energy intensity 12% down year on year, alternative sources of electric power 71% across the group. Alternative fuel use, our first one of our kilns ran 100% on biofuels across a full week. That kiln was not designed for biofuels, and yet it still did it with our modifications. This is very good because it shows that we can progress along this line. When it comes to safety, now 31% reduction year on year in serious harm injury frequency rate. And that was achieved by 172 site audits.
These are full-day audits where a safety team goes in, reviews documentation, reviews operational reality. Very good results all round. When we put a bit more context to this from an operational perspective, very nice picture there of our German site. The group, as it currently looks, is three regions that will expand to five as the full spectrum of the CRH deal comes through. Garth will give you a few details on that later on. On the left, you'll see our product mix by revenue and our end markets, as a bit of context. When we look at the operating regions we currently have or we had in the group in 2023, three in total, the Northwest first. That is the British Isles, three platforms, the Precast Products Group, England and Wales quarries, and integrated businesses there, and then the Channel Islands.
This is one of the three regions which has a considerable construction exposure and also residential. The concerns were voiced by Shore Capital as early in 2022. How will you fare when residential construction comes under pressure? Well, this is the slide that gives you the answer to that. We will fare rather well, actually. We have an increase of EBITDA of 5% year-on-year to GBP 31 million, nearly GBP 32 million. The reason these platforms did so well is a laser focus on how these businesses are run, exposing them more to infrastructure, preparing the products for more infrastructure use, making sure that our teams are competent to sell into that, have sales teams in the right place.
That's particularly the case for the Precast products, the PPG business, which is a fantastic collection of precast concrete assets right across the UK. When it comes to the quarry businesses in England and in South Wales, again, very pleasing results. Positive year because of larger infrastructure contracts we were able to supply into. Obviously, some difficulty when it comes to residential construction because that was a market which was slightly less buoyant or a lot less buoyant. But we recovered that with a better exposure to infrastructure and also industrial builds. We've started the construction of a new asphalt plant in South Wales. There's some nice images in the annual report where you can see the progress of that plant, which will come on stream in a few weeks' time.
All in all, very good performance in spite of some headwinds here. Second platform is the west, which is basically the Benelux. Two setups there, the Dimension Stone business and then the Benelux business in aggregates and concrete operation. The Dimension Stone business did very well. We improved its operating logic. We sold the product further afield into Italy, more into Germany, more into other markets, and into the United States. For example, we are using more of the material we extract. We have a new product there called Puccini Blue, which was effectively a waste product because it had fault lines in it. And we've been able to recycle that into a very high-value material. The Benelux platform, concrete and aggregates, delivered well.
Again, headwinds here when it comes to real estate, construction, but we exposed it more to infrastructure, specifically in northeast Belgium where we have the concrete businesses, along the canals, along the River Meuse, to the River Scheldt, where large infrastructure projects have been built. Good progress from EBITDA perspective, good progress on margins, as you can see on the right-hand side. When we go to the northeast, and this is the Nordkalk setup, a much more diverse end market. If you look at the pie chart on the right-hand side, and that's helped that business through some of the challenging times when it comes to residential construction. Pulp had the destocking effect across the first half of the year. Metals and mining did well. Food, chemistry, environment did well also.
As a result of that increase of EBITDA year-over-year, 16% to over GBP 80 million, margin recovery to over well over 20% EBITDA, further savings that were generated by a more regionalized management structure with very high-level, high-quality managers in situ now. Very pleased with the results here. So that completes a very brief review of the operations. I'll hand you to Garth for finances.
Thank you, Max. Good afternoon, everyone. Very pleased to report another strong year financially for the group while we also manage to continue to invest in growth and also transition into a leading European lime and limestone producer. We're reporting revenue of GBP 580 million for the year. That's an improvement of 2% like-for-like. And that's in spite of a 4% like-for-like volume decline. EBITDA of GBP 117 million. It's an improvement of 10% like-for-like and 15% year-on-year. That's a function of acquisitions through the year and operational improvement initiatives and some margin improvement. And then earnings per share of GBP 0.0812, an improvement of 1% year-on-year. And that's in spite of finance costs increasing by nearly 60% and also the dilutive impact of the fundraiser in February where we didn't fully deploy the capital from that until Q4 with the acquisition of B-Mix.
We also then managed to leverage, reduce leverage down to 1.57 from 1.93 at the start of the year, 90% reduction. We also had very strong free cash conversion of free cash flow, GBP 47 million underlying, cash conversion ratio of 40%. That is less than what we generated last year, which is a function of the higher interest costs and some working capital absorption as part of the growth in the group. Moving on to revenue evolution year-on-year. So we increased 8% from GBP 538 million to GBP 580 million. 1% of that was from organic growth, primarily out of the northeast, and then 5% from M&A, which is a combination of Ronez that was acquired in the northwest, Goijens and B-Mix in the west, Björka, Juuan Dolomiittikalkki, and S.C. Investica in the Northeast.
And then looking at EBITDA on the same basis, we went from GBP 102 million to GBP 117 million, 15% year-on-year increase. 8% of that is organic growth, primarily, as we sort of touched on before, pricing power, gross margin expansion, and primarily operational improvements, particularly in the northeast with management restructure, translating into GBP 3 million of recurring savings there. And then also 6.6% from M&A, through the acquisition pipeline and also full-year contributions of businesses we acquired in 2022. So overall, really strong improvement year on year across the group, with a focus on operational control and integrating the acquisitions. The full income statement, we sort of touched on. This includes D&A and cost of sales, underlying profit from operations of GBP 84 million versus GBP 70 million the year prior. Net finance costs increased by GBP 5 million up to GBP 14 million.
And that's a function of full year of the base rate hikes from 2022, and translating into a cost of debt of a bit over 6%. Other gains includes share of earnings from associates and some hedging benefits. And then tax expense of GBP 12 million is up GBP 3 million year on year, represents about a 17% of profit before tax ratio, which is up from 14% the year prior. And it was expected, as we've used up the carry-forward losses from some of the acquired businesses in the UK. GBP 3 million of profit was attributed to non-controlling interest, giving us a profit attributed to owners of GBP 56 million. That's up GBP 5 million from the year prior, translating into an earnings per share of 8.12 pence. And then on the right here, we just have a breakdown of cost of sales as a percentage of revenue.
So we see the evolution year on year. It's fairly consistent, slight shift from energy into materials and production. That cost base is very much dynamic. It scales with production. So if we don't produce, we don't incur approximately 70% of our cost base, giving us a lot of resilience through difficult trading environments. Moving on, it's shifting from EBITDA through to free cash flow evolution, GBP 170 million underlying EBITDA, translating into underlying free cash flow of GBP 47 million at 40% conversion ratio. We had a GBP 23 million underlying drawdown in working capital. That's after we adjusted, added back GBP 20 million of payables outstanding at year end in relation to M&A, primarily the CRH Lime acquisitions. There was also GBP 3 million of working capital impact, which was a function of purchase price adjustments that worked their way through payables, so taxes from pre-acquisition periods, etc.
Income tax paid was consistent year on year at GBP 11 million, and net CapEx of GBP 22 million translates into about a 72% of D&A ratio, includes GBP 6 million of non-core divestments, and then adds back about GBP 9 million of growth investments, 6 of which is biofuel conversions, carbon capture, the asphalt plant, wash plant, and 5 of which life of mine extensions, which we'll detail on the next slide. Finance costs of GBP 13 million paid, cost of debt of, as I said, of over 6%, translating into that free cash flow of GBP 47 million. From there, we then take from our net debt evolution for the year, starting at GBP 194 million, GBP 47 million of underlying free cash flows we just detailed. We raised GBP 30 million in February, GBP 29.2 million net of costs.
We then deployed that across the year, spending a net amount on M&A of GBP 32 million. That includes GBP 2 million in of divestments from one of the acquired businesses and also includes GBP 3 million for the bolt-on asset acquisitions, which actually goes through our cash flow as plant and equipment acquisitions and intangibles. Organic investments of GBP 11 million, as previously detailed, and non-underlying cash costs of GBP 12.5-12.6 million. Primarily, that's M&A related. Obviously, there's six acquisitions through the year plus the CRH deal, which we completed on the 4th of January. So a lot of those costs were accrued, and some were cash paid. Then there's a portion of that is also restructuring.
And then lastly, GBP 9 million of other includes dividends to non-controlling interests, some minority investments, the investment in Mevo, for example, some derivative adjustments, and predominantly forex on the borrowings, translation of debt, which is mostly euro. And that gives us GBP 182 million of net debt at a leverage ratio of 1.57. On the next slide, we have an overview over the last five years of how we've performed on some of the key metrics, revenue and earnings, which we've managed to increase every year, while maintaining prudent leverage. And we've done that through some fairly challenging operating conditions with COVID and the inflationary period in 2022. Taking that a step further, we have sort of evolution of the group.
What we've acquired in the dark blue bars, EBITDA acquired at the respective acquisitions at various stages in the group's evolution versus their incremental, well, and then the blue bar is their incremental performance based on FY23. So in the first group, we have just Ronez, which we acquired, at the start of 2017 at a 9x multiple. And with 60% of EBITDA uplift, that's now an effective multiple of 5.6. We then take Ronez all the way through to B-Mix, which is the last business we acquired before we acquired Nordkalk in 2021, which are the middle two chart bars. So those businesses collectively are a 6.9x acquisition multiple, 57% uplift in EBITDA performance in 2023, giving a 4.4 effective.
And then the entire group, including everything we acquired in 2023, immediately preceding the CRH Lime acquisitions, 6.7x acquired multiple and trading at 5.3x based on a 29% EBITDA uplift. Taking that a step further, this slide is anonymized data across all of the 18 acquisitions where we've invested a total of GBP 680 million, of which GBP 400 million was new equity. Again, this includes acquisitions in 2023, those that are shaded in the light blue, an average EBIT return on the investment of 14%, which is very encouraging, targeting over 15%. And we think that's, that's very much achievable. And we'll continue to, you know, once we've degeared, continue our investment strategy, you know, identifying businesses with product, reserve, geography, market, and customer fit.
and then lastly, just rounding out on the back of these results, a sort of investment case, we've improved on every key metric that we focused on. Operational improvements have led to EBITDA increase up to GBP 117 million, 10% like-for-like, and EBITDA margins over 20%. We've also increased EPS despite high finance costs and also the dilution from the fundraise in February. We've improved ROIC from 10% to 11% even while deploying capital through the year. And we also then managed to reduce leverage, despite those investments down to 1.57 times. So then to conclude, just a slight forward look structurally, obviously, off the back of the acquisition of the CRH Lime, the deal one in the first week of January, the group will be structured around five regions, three core end markets, and three products.
From an end market perspective, we'll be just under 50% construction exposed across the enlarged footprint, 37% industry, and the balance 15% environment. In terms of products, we'll be over 55% lime, 30% stone, and then the balance 15% value-added products. And then that will cut across five regions. We'll maintain the Northwest and the West. Northeast will be separated into two. And then we'll add in the new central region, which is Germany and Czech. We feel that this, this structure will enable us to manage the enlarged footprint effectively, but will also retain our agile structure, keep us nimble. So that concludes the financial review. I'll hand you back to Max for strategy and outlook.
Thank you. Thank you very much. So a few slides on strategy, capital allocation outlook. First and foremost, the year was busy. We did a large number of different things, including a transformational transaction with CRH, 6 bolt-on acquisitions. We spent about GBP 32 million on those, adding another GBP 10 million in EBITDA. Organic initiatives, some of which Garth has already mentioned, to extend mine life, quarry life in some of the key operations. Then we divested a few assets already in 2023, and there's more to come on that in 2024, 2025. The main event, obviously, within that, that list of, of, of initiatives is the CRH transaction, which creates with our group, the number two operator from a size perspective in lime, and industrial limestone and construction limestone right across northern Europe. It's a fantastic transaction.
It strengthens our position, and it really makes transforms our business in a focused number one and number two operator in some really attractive markets. On top of that, there's potential synergies we've talked about, EUR 30 million or so at the very least, and potentially more up to EUR 60 million in EBITDA synergies, to deliver to be delivered by 2027 once they've been fully integrated. The markets we're operating in are quite attractive markets. They will help us get to a ROIC, return on invested capital, of 15%. We're already at 11%. But even without that passing of time, we are already double-digit enhancing with this transaction once fully integrated and a full year of ownership. That is quite satisfying and always a condition for us when we invest.
Post all of this, it's a great platform for compounding growth as the business continues as a lime and limestone operator. What's important to know and why we're so excited about lime and limestone is effectively this slide. Our group is from a story perspective, from an equity story perspective, a very simple business. We have one core mineral, calcium carbonate, which is the base of limestone. It creates two core products, quicklime and limestone, in various forms. That will be sold into three core segments, industrial, construction, and environment. In these three segments, you'll find countless applications. To give you an illustration of that, these are some of the materials that we sell lime or limestone into, and that need limestone to be produced. They're essential for modern life. They need lime. They need limestone.
This list will get longer as we transit from a fuel-heavy economy to a more sustainable economy. What it looks like from an operating perspective, the map in blue on the right, which assumes, obviously, the Polish and UK assets having come in completely within the group, they, the assets, the dots are the main operating plants across that region. We're number one and number two supplier in each of these markets. Industry segments are highlighted with three product types, lime, stone, and then value-added products for more than GBP 1 billion in turnover overall. These markets have quite a good outlook, the three main segments and then the submarkets in there. Steel generally robust and has been a good market for us over the past year-to-year.
Paper and pulp had a recovery in 2023, the second part of 2023, after some overstocking in the first half, started well in the first few months of 2024. Chemicals slightly softer start in some areas, but generally speaking, an okay outlook and mining remains stable. That's 31% of our revenue in 2023 and a larger proportion of 2024. Construction and engineering splits down into infrastructure and then residential work. Infrastructure has seen a good pipeline in relation to projects that were launched during COVID, projects that were launched subsequently in the inflationary period to deal with the energy infrastructure. But also residential needs to be looked at because that has had a tough time. As long as the interest rates, we believe, don't come down, we will see tougher trading in the residential market. That said, we feel we're now close to the bottom of this.
And any turnaround will lead to additional volumes for us, which is fantastic because that will be coming in and help our trading. The last segment is food and environment. Here, this is cleaning of water, cleaning of flue gas, the supply into the food industry to make sugar, feed for animals, feed for chickens, and so on. This is a segment which has a little bit of its own dynamic, for various reasons. For example, if there's a lot of wind power, a lot of wind in the system, you burn less gas and coal, and therefore, you treat less flue gas as a result. Good markets, generally speaking, because a lot more needed of this product, and therefore, the outlook remains good as well. Medium-term, robust outlook with a lot of diverse end markets.
To give you a further illustration, however, on that challenging backdrop in construction, residential construction: a graph here. These are our markets, the markets we operate in and sell into: residential construction, non-residential construction, and then civil engineering, which is primarily infrastructure jobs. And the middle bar there, with the dotted line around it, is the evolution in 2023 for the three sectors. And you see that the negative movement in residential building is quite dramatic. We'll see an uptick in that, we hope, in 2024, but still quite a negative outlook there. And in 2025 and 2026, that turns around. And so midterm, good out better or good outlook for residential construction. And quite an explanation here in terms of how trading has been this year.
When we turn to the last page before an outlook, a subject that a lot of people are quite interested in is synergies and the delivery of synergies. So to give you a bit of guidance on that, this slide, on the left, you see a bar chart which tells you GBP 30 million-GBP 60 million in total synergies. That was the outside-in look when we bought the CRH assets, which is a look that we, based on our due diligence and our analysis, thought we could generate. We've now held three of the five businesses for a bit less than two and a half months. Out of that, during that period, we have progressed very well with the identification of the potential synergies that we can build in.
We're confident, just on the footprint we're currently on, that we are able to identify and subsequently build into our P&L EUR 33 million worth of synergies. So that's ahead of our total estimate for the entire perimeter. We don't own two of the four of the five countries as of yet. We've started to build in these synergies already, and we are at this point in time tracking with EUR 2 million already built being built in for the year 2024. That number should grow as we progress across the year. Deal two and deal three, the UK and Poland, will then bring in further EBITDA and therefore further potential to look at synergies. And we hope that as those come through, we will get to that 60 number rather than just the 30, as we identify synergies and build those in across time.
Generally speaking, a very positive outlook and a very good place to be so short into the new journey. When we summarize all this in 2 slides, one driving share of value and another one outlook and summary for the year. Well, driving share of value boils down to these 8 points. We're number one or number two European lime supplier, limestone supplier, which is a market which is excellent to be exposed to with both growth out of recovery for building and hopefully also structural growth for new applications in those markets. The asset backing of the group is very strong, 2.7 billion tons of mineral right across our spectrum.
We have gathered that set of assets, through a whole series of very attractive M&A work and organic work, 18 deals with a low multiple, low average multiple, and that has allowed us to increase our EPS eightfold over the time that we have been running since the founding in 2016. Our EBITDA increase therefore currently stands at 29% improvement for all those assets we bought, with some assets having done a lot more than that even in our history. We target a zero-harm business. We have an enormous incredible focus on that. It's a story and a focus which will never end because every day, we need to focus on safety. We have a good team which we're increasing in terms of capabilities to deal with that. We invest in innovation.
We invest in ESG, and hope to even at our smaller scale, relatively, comparing to some of the biggest groups in the world, we think we've punched far above our weight. That translates into the guidance metrics you see on the right of that slide, which give you some targets when it comes to topline growth, EBITDA growth, cash conversion, and so on. Looking therefore now as a summary and an outlook for the business, the year started well. We had quite heavy snowfall in various parts of our operations, which meant that the start out of Christmas was in some cases delayed because there was so much snow we couldn't even get going. That said, we recovered the lost time right across the back end of January and into February. We're tracking nicely in line with our own expectations.
The backdrop in 2023 will be fairly similar to the backdrop sorry, 2024 will be similar to the backdrop in 2023. Subdued demand in residential construction, decent pipeline of infrastructure work, better demand in industrial and environmental application. And therefore, overall, we hope a good year ahead again. The integration of the businesses we've bought is going well. EBITDA synergies have been identified to the tune of EUR 33 million already, and that number should be keep going up. We exercised the UK call option, so that business will come into the group fairly soon. And then we'll start work on the last piece of the CRH puzzle, which is the Polish assets. A positive start of 2023 sorry, 2024. Integration well on the way. Acquisition progressing well. So all in all, a great year 2023 and plenty to look forward to in 2024.
Super. Great.
Well, thank you, David, Max, Garth. If we could turn to the questions, maybe start with you, Max. But Robert asks, how successful has Greenbloc been to date?
Greenbloc has been a fantastic success. To give you the illustration for that, the PPG group, which is a collection of precast operators that we bought and built into one really fantastic business in the UK, that business was the inventor and the pioneer behind Greenbloc. Its transition from selling mostly residential work to doing mostly infrastructure and larger-scale buildings is in a large part thanks to our pioneering view on greener concrete and therefore Greenbloc. If you look at the infrastructure work we supply, a lot of that is out of Greenbloc mixes.
If you look at the residential work we supply, nearly half of that is currently a variety of Greenbloc mix. So that so that, that product has been fantastically successful from that perspective. When you look at margins, you have seen on the slides that the margins of the PPG out of the PPG, the, the Northwest setup, are actually very solid. That's also in relation to what the PPG business is allowed to, do for us. And that, again, is Greenbloc and its innovative aspects. So very successful.
Great. Thank you. One for you, Garth. A jump from 1.95 pence statutory earnings per share to 8.12 pence underlying earnings per share seems big. Do you have any further comments or clarification for the adjustments made?
Yep. These are detailed in the financial statements. So there's a full reconciliation there.
But fundamentally, we have about GBP 42 million of non-underlying costs in the year. Now, a big portion of that is due to the CRH Lime acquisitions. Just given the timing of it, we had line of sight that that first deal completed, obviously, post-year-end. So therefore, we had to accrue those costs at 31 December. Our total M&A portion of that is about GBP 26 million. And approximately GBP 20 million of that relates to, to the CRH Lime business. So, that obviously has a big impact. It's a EUR 1 billion deal. You know, as a percentage of that, you know, those costs aren't outrageous. There's a further GBP 3.5-4 million of restructuring costs, which, you know, are one-offs, absolutely non-recurring, and translate into future earnings growth. And then the balance is, non-cash, so, share option adjustments and the like, amortization of finance costs.
So that this, it'll be a bit larger number in 2024, not larger than that, but it'll be a reasonable number in 2024. Then that will drop off significantly in 2025 once we've fully integrated the business and completed the other two deals.
Great. Okay. Just on the topic of the deal costs, etc., Mark asks, will there be material CRH-related acquisition expenses in 2024, or have they all been accrued in 2023?
Mostly accrued, but not everything was incurred and therefore accrued. So there are costs associated with deals two and three, as I sort of touched on.
Yeah. Super. Okay. And Michael asks, do you see further small divestments as you complete CRH acquisitions which would help to deleverage your position?
Want me to say that? Yep. Yes is the answer.
We're looking, we have a good portfolio of assets across Europe. There's assets in there that make sense to own, and there's assets that are perhaps better owned by someone else. But we shouldn't forget, we've built, as you can see some of the slides across the that we presented, the group we've built is a group of assets that we really wanted to own when we bought them. So if we sell anything, we have to sell it, we will sell it only if the price is right, because none of these assets are either underperforming or non-performing or assets that we wouldn't own anyway because of the cash flow and the potential that they build that they bring for further earnings growth. So yes is the answer to your question, and with the caveat that the price needs to be the right price. Super.
Thank you. Kevin said, asked—you said you'd be number two supplier of lime in Europe, which are numbers one and three. But I think you said one and two in a number of those markets. So this is a competition question, really. Yep. So, the largest, so we're the number two when it comes to total volume. In some markets, we're the number one. In some other markets, we're number two. The overall largest supplier in Europe and also in the world is a business called Lhoist, spelled L-H-O-I-S-T. It's a Belgian business. It's a privately held business. It's got a fantastic history of 150 years. Was founded in Belgium, and has grown from there, right across the world.
The second business, also Belgian independent, and that's in from a volume perspective, number 3 now in Europe, but again, the number 2 worldwide is a business called Carmeuse. Like Lhoist, a fantastic business, family-owned, founded in Belgium, has grown over the last century, right across the world by expanding its lime and lime footprint. We are sitting in between those two in Europe, as the number 2 when it comes to volume. So, we're in good company when it comes to lime operators. Fantastic businesses with enormous skill.
Super. Thank you. Mazin asks, what is the operating leverage potential in the business?
Wasn't talking, debt leverage, or are we talking operational?
I suspect it's your question in terms of operational gearing.
Yeah. Well, our gross profit's about 30% this year, upticked.
Haven't looked into it exactly, but it, it would have to be 35 heading towards 40, I'd have thought, in terms of drop-through. That's the question.
Yeah. Super. All right. Thank you. We, we haven't got anything else in the queue. I wonder, Max, whether you'd just like to summarize very quickly. I know we had a question earlier on in terms of, cyclicality of, of lime and limestone, which, which you had a very interesting answer on. I wonder whether you might just like to summarize before we close.
Yep. I can summarize that. So, actually, the, the slide you see on the screen, the Q&A and the various boxes of the various applications we've got, there's a good slide to illustrate this. As soon as you deal with anything industrial, you have cycles, boom, because that's just what it is.
Some materials are highly sought after at some point in the cycle. Others are highly sought after later in the cycle. The fun thing about limestone and about quicklime is that it's exposed and required in so many different applications and products that we have so many cycles going on at the same time that out of that, we have a lot of steadiness. And you can see that in the history of the operations that we already own and that we've now currently bought. Sometimes we've shown you graphs all the way back to 2008. It's very steady evolutions. So lots of different cycles. Construction can be up one day. Steel can be down one day. But it usually doesn't happen all at the same time. That gives a real steadiness to this business.
That is a real attraction, the predictability, the steadiness, the reliability of the earnings of a lime and limestone position business. And then secondly, it's a fantastic industry to be involved in. It's quite nice to know that hundreds of different applications that make our life both modern in cities but also rural when it comes to agriculture possible is because we extract limestone, transform that, and the product can be used. And so anything that you touch on a daily basis, whether you're sitting in an office or working in the garden or wherever you are, will have limestone in it somewhere. And to be part of such an industry is just quite rewarding .
Super. That's an excellent summary. Thank you, David, Max Vermorken.
Could I ask investors not to close this session as you will be automatically directed for the opportunity to provide feedback? If anyone has further questions or would like additional information on SigmaRoc, please do get in contact via sigmaroc@walbrookpr.com. Many thanks for attending today's presentation.
Thank you very much.