Hey, and thank you for standing by. Welcome to the Imerys Q1 2025 Results Webcast and Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press Star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your questions, please press Star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Alessandro Dazza, CEO. Please go ahead.
Good evening to all of you, and thank you for joining us today to review Imerys Q1 2025 results. With me here tonight, Sébastien Rouge, our CFO. As usual, let me start by giving you some highlights of the first quarter of the year. Imerys continues on its growth path despite an uncertain environment and weak industrial markets, especially in Europe. First quarter revenue reached EUR 871 million, which is a 0.7% organic growth at constant scope and exchange rate versus the first quarter of last year. This is the fourth consecutive quarter of organic growth. The adjusted EBITDA for the period amounted to EUR 128 million, benefiting from an improved contribution from the Performance Minerals business and the Graphite and Carbon business.
It also reflects a scope change and a deterioration in the contribution from joint ventures compared, I remind you, to an exceptional performance in the first quarter of 2024. Net of the contribution of JVs and these scope effects, this performance is an improvement both in absolute and percentage terms compared to 2024. Finally, Imerys is reaffirming its commitment to sustainability through two significant actions: the issuing of its first biodiversity report and the signing of a new major power purchase agreement in the United States. On this slide, the focus is on Imerys' sales performance. In Q1, with EUR 871 million in revenue, Imerys posted a practically 1% organic growth versus last year. As said, this is the fourth consecutive quarter of growth.
Group volumes were just slightly down compared to last year, impacted especially by the weakness in the construction market and the significant slowdown in industrial and especially automotive in Europe. Only partly offset by steady consumer demand and the strong growth in sales of electric vehicles, where we have a very solid positioning. Prices were up 1.4% in the first quarter of the year compared to last year, in line with our expectations. On this slide, I want to illustrate the robustness of our business model.
On the left side of this slide is the analysis of the adjusted EBITDA change year on year, excluding the perimeter effect, mainly attributable to the divestiture of the assets serving the paper market in July of last year, and the deterioration, as said, in the contribution from joint ventures, which had an exceptional Q1 in 2024, and Sébastien will go in more detail later on. Adjusted EBITDA increased by about 4% year on year. On the right side, the balance pricing costs highlights, once again, Imerys' agility to rapidly react to inflationary or deflationary changes in the markets, but also its strength to maintain this balance, always positive. Consequently, even moderate cost increases have been passed on to our customers to safeguard our long-term profitability. Let's now briefly take a look at our main underlying markets and their trends.
First, it should be noted that end markets have not significantly, or they've not been significantly impacted by the different tariff policies we have heard a lot in the last weeks, at least not yet, as these were announced or enforced only after the end of the first quarter. However, and this is really valid for all our markets, so I will not repeat it each time, outlooks, the general all outlooks for the rest of the year and beyond have been revised downwards from the different institutions, sometimes quite significantly, as a consequence, direct or indirect, of such tariffs. If we look at the market now, construction, I would say probably a limited direct impact from tariffs, as it is a very local market. However, investments might be delayed following widespread uncertainty. In Europe, the recent ECB rate cuts should support demand, finally.
North America, difficult to predict, as tariffs might cause higher costs and the announced immigration policies might increase labor shortages. For China, I would say a generalized slowdown, as we have seen in the latest quarters. Consumer goods performed well in Q1 across all regions, and we believe we will continue on this trend, maybe with a small question mark on the U.S. if inflation starts rising again. On the next slide, the automotive market has definitely been bad, and the outlook, with very few exceptions, is probably today even worse, with production at risk of further suffering from tariffs. China is probably the only exception and should benefit from this new, let's say, trade-in for new policy. Energy will certainly be impacted by weakened industrial production in Europe and probably in North America. Electronics, strong 2024. Expectations for 2025 are a bit tempered by current uncertainties.
Regarding the electrical vehicle market, robust performance across all geographies in this first quarter. In the EU, rebound is expected to continue throughout the year. Some uncertainties in the U.S., but more important, we expect again a very strong development in China, sustained by the ongoing success of this trade-in subsidy program and growing EV adoption rates. On this last slide, industrial activity in general, as said, will be negatively impacted by what's going on, and certainly in Europe and in the U.S. Maybe a bit less in China, as exports for the time being hold. For the iron and steel production, which fundamentally is a consequence of the different users, so construction, automotive industry, we expect to see a further weak Europe, probably a better U.S., and some rising difficulties in China, as exports will be restricted by foreign policies.
A word on sustainability on our efforts, and let me introduce our first biodiversity report. It is a comprehensive voluntary document where Imerys presents its strategy, its targets, its progress to preserve natural heritage. It is an innovative approach in the industrial minerals sector and illustrates really our dedication to combine mineral extraction with the preservation of biodiversity. Our final target is no net loss of biodiversity. I think for a company like ours, this is very important. We have around 150 sites and quarries around the world in 35 countries. This robust framework is the support of environmental scientific experts and the use of recognized tools and methodology that will accompany in the future. Good progress in 2024, and our commitment is to continuous improvement as we move forward. I now hand over to Sébastien for more details about our financial results.
Thank you, Alessandro. Good evening, everyone. We'll go through the key aspects of our financial performance, and we start with revenue. The group reports sales at EUR 871 million for the first quarter. It represents a plus 0.7% rise at constant exchange rate and perimeter as compared to prior year. It is the fourth quarter in a row Imerys delivered organic growth. We have a perimeter effect of minus EUR 68 million, and that is mainly due to the disposal of the paper dedicated activities that were disposed of last July. We have EUR 6 million of positive FX effect, mostly related to the US dollar. To be noted, sequentially reported sales continue in an upward trend. Q1 sales are higher than Q3 and Q4 last year, which are the last two comparable quarters after paper assets disposal.
If we look now into more detail at our three business segments, and we start with Performance Minerals, this business generated EUR 522 million since the beginning of 2025, representing 60% of Imerys Group. Overall, an organic growth of +1.2% as compared to last year. Revenue in the Americas were the most dynamic, up 2.3% at constant scope and exchange rate. Sales were supported by volume and price increases, as well as market share gains. The performance across end market was mixed. Consumer goods sector demonstrated resilience and growth, whereas construction-related markets continued at softer levels. Revenues in Europe, Middle East, Africa, and Asia-Pacific were stable like for like. Volume decreased slightly as sales into polymer application were impacted by a weak automotive market in Europe. This decline was partially offset by resilient consumer goods sales, especially in filtration and agriculture sectors.
Prices show the positive trend as compared to the prior year. If we look now at our Solutions for Refractory, Abrasive, and Construction business, this segment recorded sales of EUR 289 million in Q1 2025. Volume decreased in the quarter, particularly due to lower sales of the refractory products, which was, and the market was severely impacted by low industrial activity in Europe and higher competition from China. Prices were positive in Q1 2025 as compared to Q1 2024. If we now complete the segment review with the Solutions for Energy Transition, good news on the graphite and carbon business, which generated revenue of EUR 61 million, confirming the strong sales recovery that began in Q3 2024. Like for like, it represents an increase of 22.5% as compared to a prior year.
Sales growth is driven by robust end markets, mainly electric vehicles and conductive polymers, and also by market share gains and new products. The Quartz Corporation, our JV, 50% owned, dedicated to high-purity quartz. As you may remember, we disclose figures for this JV only on a half-year basis. We can do a few qualitative comments. Still, low production levels are affecting the global solar value chain, largely due to persistent high inventory. We remain confident in the solar market. We remain confident it will continue to grow consistently and that it is a good market to be in, but definitely we suffer short term. If we look now at the group profitability globally, for the first quarter of 2025, adjusted EBITDA reached EUR 128 million. Compared to Q1 2024, the profitability of the group was impacted by the deterioration of the contribution from our joint ventures.
As a remember, its contribution was exceptional and announced so in Q1 2024. The adjusted EBITDA was also impacted by the perimeter effect of minus EUR 16 million, resulting from the disposal of the assets serving the paper market last July. Restated from this perimeter and JV impact, adjusted EBITDA from our fully owned business is growing by EUR 3 million net of change impacts, which proves again the resilience of Imerys' business model. The adjusted EBITDA margin reached 14.7%, benefiting from a strong performance of the graphite and carbon business, as well as Performance Minerals, partially offsetting the lower contribution from our joint venture. If we look now at the other elements of our income statement for Q1 2025, current operating income reached EUR 56 million, following the evolution of the EBITDA and a slight increase of depreciation expenses.
With current financial expenses close to last year and lower tax expenses, the current net income group share landed at EUR 31 million, suffering from the lower contribution of our JV and the negative perimeter impact. Net income group share after non-recurring expenses of EUR 8 million reached EUR 23 million. I now hand over to Alessandro for the conclusion of this presentation.
Thank you, Sébastien. Let me now wrap up with a bit of an outlook for the coming months. First, a comment on tariffs. We do not expect any significant direct impact from the recent tariffs on Imerys. We have a widespread industrial network and very minimal flows between regions across the world, so we can say that we are largely local for the local markets. Still, we find ourselves in uncharted territory with a lot of moving parts, continuous changes. We do create uncertainty for the global economy.
That is why the indirect impact of such potential future tariffs is impossible to predict as of today. We delivered a solid Q1 in 2025, with March being by far the best month in the quarter, so the trajectory is going in the right direction. We will build on this performance and on our local production capabilities to continue on our growth path. Thank you for your attention, and we can now open to questions.
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to your first question. Your first question comes from the line of Ebrahim Homani from CIC. Please go ahead.
Hello, Alessandro. Hello, Sébastien. Thank you for taking my question. Absolutely, if I may, the first one is about the EBITDA. Given the EBITDA expectation Q1, do we confirm that maintaining the margin at a level at 60% as it was in 2024 would be maybe difficult? My second question is about your organic growth. Could you please give us more details on volume and prices? Did you outperform your comps in terms of volume and gain market shares? My last question is about TQC and its contribution. It was in Q1, it is the same contribution, sorry, than it was in Q3, and far below than in Q4. Is there any Trump impact and what to expect in the next quarters? Thank you.
Thank you, Ibrahim. In terms of projection going forward, as you well know, we give our guidance rather around the middle of the year. Given the current uncertainty around the world, I think it becomes even more complicated. What I would like, however, to comment is that our, let's say, traditional businesses are performing quite well. Partly to answer your second question, we had flattish volumes, minus 0.5% in Q1 compared to last year, and 1.4% price increases. This light volume decrease is mainly in Europe, and it can really be reconducted to two main markets: iron and steel and automotive, which in Europe are suffering heavily from the current situation. If I look in the quarter, definitely January was, we came from a difficult Q4, so January remained a difficult month. February was better. March was a very solid month.
The average is the 14.7 that you see. March was significantly better than this number. If volumes hold, as we believe they will, pending general recession, which, as I said, at this moment, we do not see, I think we can do a better second quarter than a first quarter and continue our growth. Yes, we are gaining market share. Some of our peers have started to communicate results on Q1, and I'm sure you know the three, four, five names selling minerals in similar markets. I think as of today, none has posted organic growth, nor volume growth, and seen mid-single digit drops, and we are growing. The explanation is clearly not only new capacities in good and growing markets, not only innovation and new products, but is also, I would say, commercial actions that help us to gain market share. Everywhere and always?
No, but strongly, yes. Last on TQC, I do not know how to compare quarter three, Q1. What I can compare is Q1 last year, which was the best quarter in the history of the company. If you remember when we commented, there was a significant shift from Q4 2023 into Q1 for weather reasons. We had an incredible Q1. There were some spot sales. The Q1 of last year was definitely not a reference. We are trying to find a reference for the future. The markets, the underlying market, photovoltaic, continues on a growing path, I would say high single digit or double digit growth. As we kept saying in the last two quarters, there is overstocking in the supply chain. It will take a few months or a few quarters to destock. Limited visibility. We do see some activity coming back.
We do see very different performance month by month. Looking more generalized on the quarters, as you can see, we are still not on a steady recovery trend. More to come. It will come back. We know the product is unique. It's a fantastic product needed for performance in the downstream markets. We will patiently wait the outcome. Maybe a comment because it might come. You know that the main competitor in this market is an American company. Theoretically, if tariffs are confirmed as they are announced lately, we could benefit from, in that case, a positive impact because we produce in countries that are not subject to tariffs today. As I said, everything is a moving target at the moment, and therefore too early to really estimate the impact. Thank you.
Thank you very much. Thank you very much for the answers.
Thank you. Your next question comes from the line of Sven Edelfelt from ODDO. Please go ahead.
Yes. Thank you. Good afternoon. Congratulations for the result. I had three questions, if I may. The first one is on talc. Can you comment on what's going on with Imerys Italy, which has been included within the agreement? My second question regarding the talc litigation would be about the agenda. It seems there is a new hearing that is scheduled on the 26th of June. I just wanted to better understand what this hearing is about. Does that mean that the confirmation hearing is now over? That is the first question. Sorry, it's a bit of a long question. The second question would be, do you want to answer this one, or shall I continue to ask?
Continue, Sven. Continue. It's easier.
Okay. Okay. The second question, I don't really understand the volume trend, actually. I appreciate you mentioned your competitor being down at 5%, and you're basically gaining market share. What I don't understand is when looking at the base of comparison, I mean, last year, Q1 was the worst quarter of the year. It was down volume-wise 3.4%, with the rest of the quarter being up 2-4% in volume. What's the part that I'm missing here? Does that mean that Q1 2025, there is a cliff and something went wrong on the European market? That is the second question. The third one would be about the full year. I know you don't provide guidance, but I mean, are you still on track to make the EUR 650 million of EBITDA for the year?
The consensus is targeting, maybe you can give a little bit of flavor on that. That is the three questions, with the one being a little long.
Thank you, Sven. No problem at all. Let's address the talc issue. The hearing, the confirmation hearing is ongoing. It started as planned without delay on the 22nd of April. The judge has reserved basically two weeks to give herself time to address properly all the topics. It's ongoing. Of course, we have an update every day with our American lawyers, but there is really, it's a very complex, long, and sometimes boring hearing. We cannot comment at all. We are right in the middle of hearing the different witnesses. Today, I have really no comment in any form on how it is going. What I can guarantee to you, I'm not aware of any other hearing planned, especially not on the 26th of June. Normally, this is the only one existing. Hopefully, it will end as planned by latest May 2nd.
The judge will emit its verdict or her verdict within days or weeks, depending on the time that he will be required to write the verdict. Not aware of anything else. We do count that it will remain like this. The sooner we have a verdict, the better for clarity and for the future. On the small topic, Imerys Talc Italy, it's nothing unexpected. The Italian subsidiaries of our talc business, which is a very small business, we are talking about, I think, 15-20 million in sales. This company has sold products in the past in the U.S. and therefore, from day one, it was included in the overall procedure of the Chapter 11. For technical reasons, being a foreign entity and so on, it is simply managed or handled in a different way.
That is why it was never put in Chapter 11 until when you go for the confirmation hearing. Normally, if the hearing is confirmed and the plan is confirmed, this company will just have a transitory period under Chapter 11 to be then returned to Imerys afterwards. It is a very technical matter. Therefore, everything is scheduled, everything is planned, everything is written in the agreement with the court. I would say no topic at all. On volumes, it is a good question, yours, Sven. We also are targeting, we are targeting to grow volume in Q1, as we have done in Q2, Q3, and Q4 of last year. We came short. We came just below zero. It is really mainly, I would say one market strongly is automotive Europe.
All our sales into especially polymers for automotive and partly paint for automotive Europe are the ones that really suffered. They suffered in November, in December, in January, and in February. I would say this one alone has caused this negative volume. Iron and steel is not performing particularly well. The refractory side is also Europe affected. Performance in America is growing. Filtration, consumer goods, life science is growing. Ceramics business is growing. We see signs of growth finally in construction, being Europe or the U.S. China is holding quite well. It is really a specific market that at the moment is really tough. Fortunately, it is only part of our business. March was the best month of the quarter. I hope the slowdown we saw in December and January fundamentally is behind us, and we count on continuing our growth.
What reassures me is really the main competitors that published the last really three, four days are definitely in terms of volume and organic growth behind us. That reassures me that we are doing the right thing. We have invested in the right products, in the right markets. I hope that going forward, we also not only show organic growth, but also volume growth. The last one is a simple one. We have no guidance at this time of the year. Frankly, today, looking at the world, I think it's extremely unpredictable. It can change very rapidly. We will continue to do our job the way we have done always. Today, really, we don't assume a major recession. Maybe yes, a slowdown compared to previous forecasts, which were of solid growth. We still plan a year of growth in 2025.
Okay. $650 is still possible, then. Thank you very much.
Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone keypad. That is star one and one if you would like to ask a question. We will now go to our next question. Your next question comes from the line of Aron Ceccarelli from Berenberg. Please go ahead.
Hello. Good evening. Thanks for taking my question and congratulations on the good result. I have a question on carbon black and synthetic graphite and very strong rebound continuing. Maybe can you provide some color around the split of the growth here between volumes and pricing? Also, I would like to understand, I know that your product is better than competitors' one here. I'd like to understand, how do you think about the potential profitability going forward once the volume continues to come? We saw around 24% before the destocking. I would like to understand how you think about normalizing margins here. The second question is around current trading. I would like to understand if you can provide any color around business environment in April. I understand you said March was the best month. I would like to understand about April, if that's possible.
Any comment would be useful. Thank you.
Thank you, Aaron. Graphite and carbon, as you rightly noticed, we had a very strong quarter. You might remember that in February when we commented Q4, we already said that finally this market, which went through, let's say, this strong destocking at the end of 2023 and at the beginning of 2024, has been growing steadily on the back of growth in lithium-ion batteries in general and specifically for EVs. Finally, we see Europe picking up in production and sales of EVs, even the U.S. unexpectedly, but still picking up. The biggest market in the world, which is China, continues on a steady growth, which should even accelerate thanks to all the incentives being put in place. You have a leading position. We have invested heavily. We have capacity to follow growth, I would say, for at least the next two to three years.
I expect this trend to continue really in a solid way. This is to say that most of the growth is really in volumes. Prices are in average stable. It's an international market, so we sell a lot in dollars. We are a bit penalized from the current exchange rates. The Chinese renminbi was devalued. Some Asian competition, sometimes we have to adjust to competition. I would say rather stable or likely positive pricing and a strong volume growth. To finish on trends and markets, April, as we see today, is on the good trend. As I said, today, we don't see, and to give you a few numbers, the group sells to the United States around $160 million per year or last year, 2024. On sales of EUR 3.5 billion, it means our exposure to sales to the U.S. are less than 4%.
No matter what the tariff impact will be, it's very, very limited. On top, many of the minerals we sell to the United States are exempt from duties as they are considered critical. We do not expect a significant impact from tariffs. On the contrary, we might see here and there, since 30% of our sales are in the United States, Canada, Mexico, we do expect even some potential advantages against imports. As of today, we have no reason to fear a dramatic downturn. Therefore, April seems to be okay. No major disappointment. Simply today, it's really a matter of it changes every day. It changes every day. The uncertainty does not help the overall economy, which brings slowdown in investments, in capital expenditures, in decisions, which slows down the economy in general. To be seen what the impact is.
Under normal circumstances, I think we'll be okay. On margins, Sébastien, do you want to comment?
We will not comment on the future. If you remember, the EBITDA margin of this business was almost 24% in 2023. It went down lower than 20% last year. Obviously, our goal is to restore historical margin or better.
Absolutely. We are well on the way. If I may look at the overall company, today, we have, I would say, a very strong, solid contribution margin in the area of 52%-53%. As volumes come back, you will immediately see the profitability kick in in general terms. $100 million of sales is $53 million of EBITDA or profitability coming in. The leverage is very strong and remains very solid. As the economy picks up, we should see the benefit thereof. Thank you. All the best.
Thank you, Aaron.
Thanks.
Thank you. That was our final question for today. I will now pass the call back for closing remarks.
Thank you very much for dedicating time tonight. We do look forward to some good news in Q2, especially in an economy that finds some stability and predictability. Thank you very much. Good evening.
Thank you.
Thank you. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.