Ladies and gentlemen, thank you for standing by. I am Gay, your chorus call operator. Welcome, and thank you for joining the Titan Cement Group conference call and live webcast to present and discuss the nine months 2023 results. Please note, this call and presentation is intended for analysts and investors only. All participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Mr. Marcel Cobuz, Chairman of the Group Executive Committee, and Mr. Michael Colakides, Group CFO. Mr. Cobuz, you may now proceed.
Thank you, and thank you all for being with us today. So, so many and for your renewed interest in us and our performance. We have enjoyed our exchanges at the time of the Investor Days a couple of weeks ago, and very happy to share with you our quarterly results, quarter 3 of 2023, the nine months performance and outlook for the year, and also to share the most recent news that we are extending our share buyback program. On my side, before I hand over to Michael, tricky messages. Titan continues to grow at a new performance level, thanks to its well-positioned portfolio of attractive growing markets, well-invested assets, and our focus on performance, particularly price over cost, wherever we operate.
The second message I would like to leave with you is that the outlook is supported by our exposure of Titan sales in the United States, particularly in the Southeastern U.S., close to 60% of our sales, around 16% of our sales in Greece, and 17% of Southeastern Europe. So close to 92% of our sales represent exposure to healthy demand drivers in attractive markets, where we continue our growth investments. We have just completed our terminal in the U.S., in Tampa, in Florida. We have another one in construction, which will be finalized before the end of the year in Norfolk.
We have completed a number of important decarbonization projects, which are bringing us to a new level in terms of utilizing alternative fuels or low carbon fuels, a calciner, brand new calciner here, close to Athens, as well as alternative fuel feeders in Bulgaria, which bring these two plants at 70% substitution rate, and we will continue with our growth investments going further. The third message is that we have announced our strategic directions for Green Growth 2026, aiming at improving returns, credit rating, and the quality of our earnings. I can report that we are accelerating the execution of our strategic moves on all fronts.
We have completed this year three bolt-ons, mainly in new materials, cementitious material, pozzolanic materials, which would contribute actively to doubling our percentage of green sales, as well as in aggregates. We have announced this year initiation of our project of carbon capture and storage in the largest plant in Europe, in Kamari, and that will aim at addressing 20% of our absolute emissions by 2030. We have achieved, thanks to investment and also focus, a record level of alternative fuels this quarter, 20%, a record level of our green sales, 23%. So overall, a good progress on decarbonization. And on top of that, we have continued our progress on digitalization, but also in terms of green sourcing of electricity.
I think we are well positioned to continue accelerating the execution of our strategy, improving the quality of our earnings, and creating long-term value. We'll be happy to take your questions after the financial presentation. I hand over to Michael, please.
Hello, from me as well, and welcome to the call. Marcel is obviously too excited with the results, so he has covered a good part of what I will present in more detail to you. We have the results for the nine months of the year, with strong growth in all our main markets and record earnings. Year to date, group sales have increased by 14%, reaching EUR 1.9 billion, on the back of solid and resilient prices and increased volumes in all our markets. The nine-month EBITDA increased by 72%, climbing to EUR 397 million, with all regions posting double digits profitability growth, contributing to the restoration of the group's margin.
Improved profitability came from higher sales and operational efficiencies achieved across the businesses, following high alternative use, utilization and our investments in logistics, plant modernizations, as well as digital transformation in manufacturing. Net profit more than doubled year-to-date to EUR 198 million, and earnings per share for the nine months of the year stand at EUR 2.64, compared to just EUR 0.63 in the same period of last year. Net debt was down by EUR 147 million year-on-year, and the group's leverage ratio dropped to 1.5 times, a ratio which is compatible with investment-grade ratings. We got a new BB+ rating from Fitch, while S&P revised Titan's credit rating upwards to BB with positive outlook. CapEx for the nine months of this year was on par with last year at EUR 158 million.
The board yesterday approved a new share buyback program for EUR 20 million for nine months. That will start as soon as the current one ends later in this month. Regarding our green trajectory, in Q3, the group decreased further the clinker-to-cement ratio from 78.4% to 76.9% and increased to record high our alternative fuel utilization to 19.1%, leading to a reduction of more than 2% in the net specific CO2 emissions year-on-year. As we are committed to continuously improving our sustainability performance and further aligning our targets with in line with expectations of our stakeholders, I will add that MSCI again recognized Titan as a leader in ESG, granting for third consecutive year, the ESG rating of double A.
We maintain our positive outlook for the rest of the year, given the high demand levels across our strategic geographical footprint, along with the firm pricing and further cost performance improvements. Now, turning to the next slide, you can see on top the graphs of the nine-month results, the comments of which I have just provided, with a significant step up in profitability, which is an extension of our performance since the beginning of the year. Sales during the third quarter grew by 5.9% to EUR 663 million, compared to EUR 626 million last year. While with regards to profitability, we have registered a record quarterly EBITDA of EUR 155 million, posting a 64% increase year-on-year, while the EBITDA margin for the quarter was up to 23.4%.
Net profits almost doubled, reaching EUR 86.8 million for the quarter, compared to just EUR 44 million in the same period last year. Now, as you can see in the following slide, the group is now performing at an elevated level in both sales and profitability after two years of accelerated growth. Last twelve-month sales were 46% higher than the full year of 2021, while the same comparison for EBITDA shows an 80% improvement. This was a big step up. While both sales and profitability are expected to continue growing, following this big jump in 2022 and 2023, future rates should be anticipated to be quite milder.
Taking a look at our P&L, we see that despite some transitory softening in energy costs compared to all-time high levels experienced last year, cost headwinds persisted within the Q3 , with cost factors such as higher labor, raw materials, and other production costs, are still on the rise. However, thanks to the higher sales and better fuel mix and improved manufacturing logistics efficiencies, we managed to further increase profitability and restore margins. Turning to volumes. Looking at volumes for the nine months of the year, we see that volume trends across all main product lines demonstrate increased demand levels. With regard to domestic cement sales, volume growth has been achieved in all our main markets. Domestic cement sales grew by 2%, aggregates by 3%, and ready-mix by 4% year-over-year. Moving now to cash generation.
We are happy to report a 9-month operating free cash flow of EUR 160 million, compared to a net outflow of EUR 73 million in the same period of 2022. The solid cash flow generation is thanks to the strong EBITDA, and despite capital expenditures of EUR 158 million, as per the group's commitment to growth and efficiency-oriented investments. With such positive cash flow, net debt has also further reduced. Looking a bit closer at the group's capital expenditures for the 9 months of the year, an amount of EUR 158 million has been invested, which is the same as last year. This year's CapEx was focused on effective capacity expansion, production cost savings, decarbonization, digitalization, as well as extensive logistics projects.
Some of our major projects in the U.S. are now either operational, such as the Tampa Dome, or close to completion, such as the dome in Norfolk, in Virginia, which is expected to be operational within the next couple of months... While we keep directing roughly half of our total CapEx investment towards the U.S., by modernizing our ready-mix plants and fleet and upscaling our logistics infrastructure, among other investments, we have been increasingly allocate funds at, to projects in Greece, such as the operational by now calciner at the Kamari plant near Athens, and in Southeastern Europe, targeting mostly at energy mix efficiencies.
If we look at our debt picture, by the end of September, debt was EUR 147 million lower than a year earlier, reaching EUR 765 million, which coupled with high profitability levels, led to a ten-year record net debt ratio down to 1.5, which is an investment grade ratio. With regards to our maturing profile, maturity profile, the next bond maturity is in a year's time, in November 2024. While it is worth reminding that the group has low exposure to interest rate risk, as more than 80% of the debt is either in fixed rates or covered by long-term interest hedges. And with that, we will turn to the regional performance, starting with the US.
In the US, our performance continued to be solid, and our sales were resilient despite the slowdown in the residential sector, with infrastructure projects and non-residential construction offsetting the impact. As a result, year-to-date sales in the US reached $1.2 billion, growing by 9.2% year-over-year, Q3 over Q3 of 2022. Over the nine-month period, growing by 18% in dollar terms to more than €1.1 billion or $1.2 billion. The impact of price appreciations, coupled with our continuous operational improvements in digitalization, logistics, and energy efficiency, have absorbed the impact of rising variable production costs, enabling the restoration of our margins. As of the end of September, EBITDA reached $237 million, growing by 78% in dollar terms, or by 72% in euro terms.
Our good results come on the back of the strong fundamentals we observed in our regions in the U.S., particularly in the Southeast. These are markets where housing shortages, supported by migration influxes and wage growth. All these are factors that support demand. Commercial, industrial, warehouses, and non-commercial in general, are also experiencing growth. The funding flowing from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, coupled with healthy Department of Transportation budgets, are driving increased demand for infrastructure projects, which continue to record sustainable growth. Moving now to Greece, where the regional performance enjoyed another very strong quarter, favoured by the further rise in construction activity. As the economy remains on a positive trajectory, construction activity in Greece continued unabated. Residential and private commercial projects, as well as the tourism sector, are experiencing growth.
Market growth, however, is mainly driven by new large construction projects, which are already on the way, as well as by small, smaller peripheral projects. There has been some slowdown in sales at our Western Europe terminals, but on the other hand, the margins for Greece were supported by higher export prices across our markets. As a result, sales in Greece and Western Europe have increased by 24% year-on-year, reaching EUR 299 million year-to-date, with a double-digit growth in domestic sales volumes, including vertically integrated activity, activities and price increases, leading to double EBITDA at EUR 52 million. The Southeast region has been experiencing further with recording rising demand in most of our markets.
Domestic cement sales volumes were driven primarily by private residential, as well as by a different mix of projects in each country, ranging from residential projects and commercial construction to infrastructure works. As a direct outcome, our sales grew by 13% to EUR 315 million year-to-date, while EBITDA was up by 64%, reaching EUR 108 million, driven by the higher sales and cost savings through operational efficiencies in energy use, rising share of alternative fuels, and lower electricity prices, as last year's spike has been partly reversed. Now, East Med, where sales have decreased by 5.9% year-over-year in euro terms to EUR 174 million, impacted by the severe local currency devaluations. To be noted that in local currency, sales grew by 55%.
In Egypt, the slowdown in market demand continued in Q3 across all sectors, while prices weakened in euro terms. In Turkey, domestic cement volumes recorded growth, driven primarily by private investments in residential and tourist sectors, while the rising prices offset the Turkish lira devaluation and the inflated input costs. EBITDA increased by 54% in euro terms, still at low returns, reaching EUR 18.1 million, thanks mostly to the performance in Turkey. And a couple of comments on Brazil, which as a reminder, we consolidated on an equity basis. Cement consumption in the country declined by 2%, dampened by high interest rates and the restriction on credit.
In the nine months of the year, our Apodi's sales, our subsidiary sales volumes remained strong, increased by 4% year-over-year, driven mainly by bulk cement sales, and increased by 16% in value to EUR 96.6 billion, while EBITDA was up by 26% to EUR 15.4 billion. Finally, comments on our outlook. Despite the signs of resilience in 2023, the impact of policy tightening is expected to temporarily cool economic activity around the world. Recent geopolitical developments have further disrupted economic market trends, and visibility, again, remains limited. However, we maintain a positive outlook given the demand levels across our main markets and our strategic geographical footprint, along with firm pricing and further cost improvements expected. In the U.S., the Fed's monetary policy will probably lead to a slowdown in economic growth, most likely through the first part of 2024.
The effect of higher rates are already evident in residential construction. However, the demographic fundamentals in the US high-growth metropolitan areas, especially in the Southeast, coupled with a lack of housing inventory, are expected to make this slowdown rather transitory against the long-term trends. Infrastructure and non-residential investments are set to continue, thanks to the flow of funds from the two acts I mentioned before, the IIJA and the IRA, and the refocusing of the economy, the US economy, towards industrial onshoring. The group is well-positioned in both the key geographies and the segments set to benefit from these trends, as it is reflected in the group's performance to date. Greece is poised to continue for continued strong performance, with EUR 8 billion worth of public investments in ongoing infrastructure projects across the country, measured against the backdrop of a healthy macroeconomic environment.
The benefits of the recent investments in alternative fuels should become more evident by the beginning of 2024, improving further the profitability of the region. The market in Southeastern Europe should maintain the improved performance recorded this year, as the investment sentiment remains fair and optimistic. The region, however, is closely interrelated to the broader economic conditions, meaning that investments are affected by the European macroeconomic backdrop, remittances, and foreign direct investments. The markets in both Turkey and Egypt will, in the short term, be conditioned by the tight macroeconomic environment and weak currencies. Set against this, the fundamental drivers of population growth and attendant infrastructure development are being muted by the macroeconomic weaknesses. The group will meet domestic demand in Turkey, which is in a steady condition, while also utilizing the export outlet on the Black Sea to flexibly manage capacity.
In Egypt, the group is accelerating efficiency and decarbonization investments to increase the use of alternative fuels, aiming to improve its cost base as well. With this, we will close our presentation and open up for Q&A.
Ladies and gentlemen, at this time, we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your headset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Sven Edelfelt with ODDO BHF. Please go ahead.
Yes, good afternoon, gentlemen. Thank you very much for taking my question. Congratulations for the results, obviously. I will have two questions. The first one is on the 2023 EBITDA. If we assume trend to continue in Q4, this mean you are well on track to achieve an EBITDA for the year higher by EUR 500 million. Is that a fair assessment? On the second question, on your outlook, you mentioned still positive outlook, but as you said, it includes some comments about temporarily cooling economy on the back of higher interest rate. I know it's a bit early stage, but would you be kind to give us a sneak preview about how you see your main market volume-wise for next year? An order of magnitude would be good. Thank you.
Thank you. Thank you, Sven, for your question. So I think for the Q4, we are now mid-November almost, and we have seen a very good month of October with expanded margins and again robust demand across most of our markets. So we see also the backlog of the projects, particularly in Europe and Southeastern Europe. I mean, in Greece and Southeastern Europe, also quite strong. In U.S., we are again well-positioned to seize the increasing impact of the various infrastructure projects.
As a reminder, we are the leading player in fast-growing mega regions on the U.S. East Coast, Florida economic mega region and Mid-Atlantic. So there we see also that our capability to reposition on the infrastructure segment versus individual family housing is offsetting partly the slowdown in the market. At the same time, Florida market remains a very vibrant market, thanks to immigration flow as well as already projects, ongoing projects. So we don't see any headwinds for the volumes going forward. So we remain optimistic on the outlook for the last quarter, as well as for next year.
We have guided at the time of the investors day that we want to grow above the market thanks to our well-positioned assets but also an active pricing over cost. So we see increased sales for next year. Do you want to comment to add anything, Michael?
No, I just want to confirm that as Sven's outlook for 2024 is by no means unrealistic. We're already very close to what you're referring to. Regarding 2024, I'm afraid we won't be able to give you any specific volume expectations, other than our overall expectation for 2024 is that we will see further growth in our sales, including the U.S., as far as we can see.
Thank you. Very clear.
Thank you very much.
The next question is from the line of Nikos Athanasoulas with Eurobank Equities. Please go ahead.
Hello, gentlemen. Thank you very much for taking my question.
We can't hear you.
Athanasoulas, I apologize, this is the operator. We cannot hear you. Can you speak a little closer?
Hello? Hello, can you hear me now?
Yes, we can hear you.
Better.
Okay.
Thank you.
Hello, thank you for taking my questions. Congratulations on the great set of results. I have three short questions, if I may. The first one is regarding the Southeastern Europe. Can you please repeat your outlook that you mentioned at the end? Because I think that I lost it. The second question is, when will we start to see the focus on aggregates and ready-mix that you mentioned on your investor day? Will we see increased volumes from next year on that end? And the third one is, given that you have reduced your leverage so much, are you planning to reward the investors more next year, or will you target this to accelerate investments, maybe? And are investments a matter of time or a matter of fund?
Thank you.
Let me take the first two, and maybe on rewarding the investor, you can comment. So Southeastern Europe is, for us, a consistently strong market on the back of still very nicely growing residential, but also large infrastructure projects. The foreign direct investments and remittances are good drivers, good catalysts for cement consumption, and therefore the housing, the new build. But on the back of European Union prospects, connecting Europe in Western Balkans, but also the developing tourism, we see a lot of commercial projects as well as infrastructure projects picking up.
So, the outlook remains positive for this region, which is an important region of Titan. On the focus on ready-mix and aggregates, as mentioned, we are doubling our efforts in securing access to cementitious materials in increasing the value-added products in ready-mix, particularly in Greece, as well as in Bulgaria, in this part of the world. W hile in US, we see an increased sales of value-adding products, including blended cements, across all of our markets. And currently, we are using aggregates from our cement quarries, and thanks to our expanded logistics network, we see also growth in aggregate.
So, I think, we should expect next year, thanks to the infrastructure projects in U.S., that our aggregates volumes and aggregate sales will continue to show robust results. We are pioneering this year two new business models. One is to use demolition waste, construction and demolition waste, and we have portable crushers, again, in some of our U.S. markets. So that brings not only the business model of circularity, providing a service and bringing new products in the market, but also growth, as well as portable ready-mix plants, which allows us to accompany projects, infrastructure projects or warehousing projects, including data center across our markets.
It's a combination of fixed assets and mobile assets, which will increase the profitability and the cash flow generation in ready-mix and aggregates business.
Now, turning to the use of cash or the leverage. Well, I will basically refer you to the investor day that we had less than a month ago, where we gave a very broad description of where we want to go over the next three years, the areas where we would like to invest. It's a long-term plan. It is not a quarter-on-quarter plan. The intention for next year is to try and accelerate some of the initiatives. Although it's still a bit early, if you ask me, what would I expect our CapEx level to be for next year?
I would say a ballpark of EUR 250 million, which is higher than what we may have indicated a couple of years ago, but it is in line with the opportunities that we are identifying and that our business units are bringing for approval. And, in terms of shareholder rewards, if you wish, it is obvious that shareholders will expect a higher dividend this year, but don't expect any special dividend because we have a very good result. It will be more in line with what we have announced, again, at the Investor Day, that we expect dividend to grow by no less than 10% per annum. But that is a decision that will be taken after the end of the year by the board.
Great. Thank you very much.
The next question is from the line of Mehmet Dere with Deutsche Bank. Please go ahead.
Hello, guys. Thanks for taking my questions. A quick one on the debt capital structure. As you've mentioned, the bond is about to be maturing. Are there any... What's the timeline here? When are you looking for refinancing this bond? And in light of potentially higher investments, is that going to be a pure refinancing, or are you going to increase the size there as well? And the next question is on leverage and on the rating. So, the leverage came down quite nicely. Do you have any targets here to decrease this even further and in order to target a IG rating at S&P, maybe?
Okay. Now, the refinancing, we are, let's say, in the process of exploring the market, and we have been sort of following the market the last few months, and obviously, the market is not good as we speak. We are in no hurry to accelerate the refinancing. Most probably sometime in Q2, I would say, for the more sizable transaction, it can be done in two steps. We are looking at other options as well. We do not intend to increase the amount. We may even decrease it, as we will not need so much then in the near future, in 2024, probably not even in 2025. On the other hand, we are not actively pursuing an investment-grade rating because that would effectively put too much restriction on our growth ambitions.
Our intention is to be just below Investment grade. But in any case, as you may have observed in the past as well, we do enjoy Investment-grade pricing in our bonds. In a way, we feel we have the best of both worlds.
Thanks. Just, just for clarification, because you mentioned two steps process, can you, can you give us some color there? What do you mean by that?
We may do any other type of transaction, maybe within the banking system. I don't want to go into too much detail, but the key refinancing transaction will be sometime in Q2. We expect the yield curve to become more inverse than it currently is, and also our view is that we should have better credit spreads as well by then.
Okay, thank you. Very clear.
For our audio participants, as a reminder, if you would like to ask a question, please press star and one on your telephone. Once again, for our audio participants, if you would like to ask a question, please press star and one on your telephone. No more audio questions from now. We will now move on to any webcast questions from our webcast participants. The next question is from the line of Andrea Gabalon with KBC, and I quote: "How are you positioned from a competitive perspective in the US in infrastructure? I assume volumes will continue to see plus trend, but on price possibility to see negative pricing effect in 2024 and beyond.
I heard the first part about our positioning in the U.S. For infrastructure projects, can you repeat the second part?
Yes, I can repeat the whole thing.
Just the second part.
Just the second part. Okay, thank you. It says, "I assume volumes will continue to see plus trend, but on price possibility to see negative pricing effect in 2024 and beyond.
Okay. I think on the infrastructure, as mentioned at the Investor Day, we are very well positioned to seize the positive impact of the various infrastructure funding and federal funding for projects in U.S. The total amount of additional federal funds in our three regions, Florida, Mid-Atlantic, and New York, New Jersey, totals $120 billion. And if we translate that in volumes, that's close to 4.5 million tons of cement over the midterm period, with a high percentage, you know, in roads, bridges, water infrastructure and airports, which have high cement intensity. So once again, we have number one positions in attractive regions.
We see all these projects in infrastructure and onshoring spending, and we are well-positioned with our logistics coverage and our presence in ready-mix and aggregates, in addition to cement and terminals for imported cement, as needed to cover these needs. This is one of the main reasons why our critical investments, expanding our import terminals in Tampa, Florida, as well as a multi-product hub in Norfolk. These are more than $70 million investment. We wanted to finish them to cope with the mega infrastructure projects going forward. We believe we are very well positioned going forward. As for the pricing question, I think we are in the market now to prepare the pricing for next year.
We believe the conditions are met to have a positive pricing over cost in 2024.
Thank you. The next question is from Derrick August, with KECH, and I quote: "Good afternoon to all. First of all, congratulations on the excellent Q3. Given the relatively low volumes of your stock, what is the rationale behind the share buyback rather than a higher dividend or exceptional dividend? Thanks.
Well, that's two questions. The rationale for the buyback, I would think, is obvious, at least in our view. We consider that the intrinsic value of the stock is worth much more than what the market has yet attributed to it. So we believe longer term, it's good value for the shareholders to buy back the stock. In terms of the dividend, we will have, obviously, a higher dividend, but an ad hoc exceptional dividend, I would say, shows rather lack of optimism for the future of the company, rather than just making a Christmas present for the shareholders. We do believe that we have good use for the funds, for the benefits of the shareholders longer term, in order to materialize the plans that we have shown on the Investor Day.
Thank you. As a final reminder for our audio participants, if you wish to register for a question, please press star and one on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Cobuz for any closing comments. Thank you.
Thank you. Thank you for attending our investor and analyst call. The key takeaways from the management team is that we continue to grow at a new performance level. We are excited on harnessing growth from the very attractive portfolio of assets we have, and we continue our performance journey with a strong focus on price over cost everywhere we operate. The second message is that you can be sure that we will continue accelerating the execution of our strategic directions, 2026, on all fronts, expanding our cement logistics capacities, getting additional exposure on ready-mix aggregates and cement issues, and pursuing an active decarbonization and digitalization.
Thank you again, and see you in mid-March next year for the results of 2023, and for further updates on our business performance. Thank you.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
Thank you, and bye.