Hello, and welcome to the Vicat Q3 Sales 2023 Conference Call. My name is Jess, and I'll be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you'll be connected to an operator. I will now hand over to your host, Hugues Chomel, Deputy CEO and CFO of Vicat Group, to begin today's call. Thank you.
Good afternoon, ladies and gentlemen. I am Hugues Chomel, Deputy CEO and Chief Financial Officer of the Vicat Group. With me today is Pierre Pedrosa, our new Director of Financial Communication and Investor Relations. I will now be presenting to you our 2023 nine month sales figures. Before starting the presentation, please have a look at slide two, where you can read our disclaimer regarding the forward-looking statements that this presentation may contain. On slide three, our presentation will be divided into the following five topics. Let's begin with our highlights on slide four. The first key point is the strong year-to-date sales growth recorded by Vicat over the first nine months of 2023. To almost +10%, the progression was driven by increases in pricing throughout all markets, and especially solid revenue growth in emerging markets.
Another main highlight was the success of the ongoing ramp-up in of our Ragland plant in Alabama, that generated strong volume and revenue growth in the U.S. During the last quarter, we also achieved a refinancing that increased the group debt liquidity and maturity. It's the group first sustainability-linked loan related to the group 2030 decarbonization targets. And most importantly, thanks to this strong Q3 performance, we've updated our guidance with expectation for 2023 EBITDA, now set to at least EUR 700 million. Moving to slide five, you have the isolated Q3 numbers that show 11.2% sales growth on a reported basis. Over the quarter, all regions posted sales growth, both in Europe, in reported and like-for-like basis.
18% of group sales are now generated in the U.S., a number we expect to see rise further in line with the ramp-up in Ragland plant. Moving to slide six, you have the regional breakdown of, for our nine-month sales figures. To note, the remarkable 20% like-for-like growth year-to-date across all regions. Let's now turn to slide seven, where you have the revenue bridge for the first nine months of the year. The volume is, effect is contributing positively at EUR 80 million to this evolution. That's 3% of our year-to-date group sales. You can clearly see the strong impact of pricing increases that total EUR 462 million across the various markets. These evolutions enabled the group to almost offset the cumulative cost inflation of the past two years.
Lastly, the group was hit by an unfavorable currency effect of -EUR 278 million, chiefly arising from the depreciation in the Turkish lira and Egyptian pound against the euro. Starting on slide eight, we present our performance by region, beginning with France. Here, revenue is EUR 930 million for the first nine-month period, and sales grew 6% on a like-for-like basis in Q3. Pricing has been strong throughout the year and has partly offset the cumulative impact of cost inflation. Cement volume showed resilience, even as Q3 saw a deterioration. Decline in concrete and aggregates is essentially due to the slowdown in residential and road construction. However, contract wins in railway infrastructures will be supporting both the cement and concrete and aggregate business going forward. On slide 9, you have the focus on Europe.
In Switzerland, too, strong pricing throughout the year helped offset the cumulative impact of cost inflation. Slight decline in cement volume was due to the slowdown in residential and public works, while the decline in concrete and aggregates volumes was offset by price hikes. On slide 10, you have here pictures that illustrate two milestone infrastructure contract wins we recorded this quarter, in France with the TELT and in Switzerland with the CFF, the national railway operator. Going forward, both will contribute to offsetting the slowdown in residential activity we are seeing in these markets. Moving to slide 11, with our performance in the Americas. I'll begin with the U.S., which represents almost a fifth of our consolidated group sales this quarter. In this country, growth was close to 20% on a like-for-like basis in Q3, as the Ragland ramp-up accelerated.
Despite volume weakness in California, new price hikes were introduced in both regions over the quarter. In Brazil, year-on-year cement revenues was lower in Q3, even if the business improved when compared with the first six months of the year. Price also held up well. On slide 12, we've laid out the evolution in sales of the Ragland plant, crossed with a gradual ramp-up in the kilns utilization rate. Year-to-date volume growth stand at +75%, and we expect nominal capacity to be reached by year-end. 2024 should be our first full year of production at nominal capacity, generating further top-line growth. In addition, it will be coupled to an improvement in our cost base that will positively impact our bottom line performance. On slide 13, you have our performance in Asia.
Beginning with India, where the market remained dynamic on the back of continued infrastructure support from the government and pre-election spending. The group also recorded strong cement volume growth in Q3, as we leveraged a decrease in cash costs. In Kazakhstan, revenues recovered in Q3 after economic activity was hampered by logistical issues. Prices were stable in Q3. On slide 14, you have our performance in the Mediterranean. In Turkey, where the environment remains marked by hyperinflation and strong depreciation of the Turkish Lira over the period, cement growth was strong in Q3, with post-earthquake incremental demand and pre-election spending fueling the construction sector. Prices grew strongly, offsetting cost inflation. In Egypt, in the context of lower volumes, prices recorded sharp increase over Q3. Activity was supported during the quarter by clinker export opportunities. Turning to slide 15, regarding Africa.
In Senegal, production is expected to remain constrained in cement until the new kiln starts up in 2024. Prices rose in the third quarter, owing to the September 2022 rise in regulated prices. In aggregate, volume continued to be driven by public work projects in a positive pricing environment. In Mali, a recovery was strong, benefiting from a better macroeconomic environment. On slide 16, a word on our recent refinancing. Vicat has successfully refinanced EUR 880 million in lending facilities, increasing its liquidity and extending the maturity of its debt. Thanks to this refinancing, the group has improved its liquidity by EUR 90 million and extended the average maturity of its debt by 1 year. These new lines in sustainability-linked loan format are aligned with the Vicat Group 2030 decarbonization objectives.
Following this refinancing, almost one-third of the group's gross debt now qualify as green finance via SLLs or green loans. Finally, on slide 17, you have the updated guidance for 2023. The group expects to record significant sales growth and now expects, expects EBITDA to amount to at least EUR 700 million. We will continue to ensure discipline in our capital allocation, as we commit to no further strategic growth CapEx projects until our leverage ratio is below two. Strong increase in profitability, as strict control of working capital requirement and reduction in capital expenditures will pave the way for a decrease in group net debt from this year onward. Thank you for your attention. We may now move to question. So Jess?
Thank you. If you would like to ask a question, please press star one on your telephone keypads. Please ensure your line is unmuted locally, as you'll be advised when to ask your question. The first question comes from the line of Ebrahim Homani from CIC. Please go ahead. Ebrahim Homani from CIC, please go ahead. Your line is unmuted.
Sorry, sorry, I muted my line. Hello, hello, and congrats for your publication. I have three questions, if I may. The first one is about the cash flow generated, generation, which one is benefited from a lower working capital. Is it the same in the Q3? I know that you don't disclose the numbers, but maybe to have a flavor. Then my second question is about the volume contribution of Ragland in the Q3. And then my last question is about your leverage. Could we expect leverage below than 2x in 2023, regarding when we begin guidance? And what about the cost, the cost of your new refinancing?
Good afternoon, Ebrahim. Thank you for your questions, although the line was not very clear. Well, as expected, we do see some working capital reduction coming with orientation of energy inflation. Nevertheless, as you have seen, we are having a strong top line progression, but comes with its working capital requirement as well. But we do expect to see some improvement in working capital this year. On the volume contribution of Ragland, you have surely noted that we have specified the year-to-date contribution as being plus 75% in revenues. Large part of it is, most part of it is volume.
And you surely noted we have provided a graph presenting the ramp up of Ragland. Regarding the leverage ratio, or short-term, or first indication, previous indication was we don't want to commit to a new strategic growth CapEx until it's below two. I mean, it is possible we reach two at the end. It is not guaranteed with the current guidance, but will mostly depend on the December activity, and depending which is mostly depending on weather in the Northern Hemisphere. So difficult to tell.
Okay. The last question about the cost of your refinancing?
Okay. These lines are liquidity lines, so it's Euro plus the margin, and it is very slightly more expensive than the previous one, at the level we judge as being competitive.
Okay. Many thanks for your answers. Thank you.
The next question that comes from the line of Yves Bromehead from Société Générale. Please go ahead.
Good afternoon, thanks for taking my question. My first one is, I just wanted to circle back to France. You flagged in Q3 that you're now seeing cement volumes declining. I think in H1 it's still relatively resilient, and I think you mentioned in the presentation that you see a slowdown in road construction impacting concrete and aggregate. So I just wanted to understand first, what is the main driver of the sequential decline here in H1 in Q3? And what's the outlook for road construction in France? And my second question is on Africa. Can you give us maybe a timing of the ramp up of the plant in Senegal? Thank you.
Good afternoon, Yves, and thank you for your questions. Yeah, in France, we have indeed had quite resilient cement volumes early into the summer. We see some decline now, since it is mostly a timing difference with what we have witnessed for concrete. It is mostly a difference of exposure to the different segments. As you know, ready-mix concrete is more directly exposed to a building construction, whereas there is always a significant part of cement that goes into infra, which has been more resilient. And on top of that, that is very much regionally driven.
In our view, there's nothing very different between the two segments, but timing and region-wise. The slowdown in residential is a very documented and well-known trend that we have all observed for quite some time now. Regarding Senegal, we do expect SOCOCIM to start up in the second half of the year. We do not expect to have any significant contribution next year. We see this project as being the growth driver of profitability for 2025 and 2026.
Thank you. Sorry, the slowdown I was referring to, the road slowdown that you put in, in
This mostly is linked to the aggregates business that is more linked to the road construction, because you know, it does not consume that much cement.
Okay. Thank you very much.
We currently have no questions in the queue. As a reminder, please press star one if you'd like to ask a question. The next question comes from the line of Yves Bromehead from Société Générale. Please go ahead.
Hi again. Sorry, just maybe a quick one. I know it's very early already, but 2024 is around the corner. Clearly the ramp-up of Ragland is progressing well. Is it too early to ask whether or not we should expect a further EBITDA growth next year, and further margin improvement next year? Any comment on 2024? I know it's early days, but that would be really helpful. Thank you.
Indeed, Yves, thank you for asking the question, but as you know, it's quite early in the game. We usually do give more color with full year results. I can nevertheless share a few thoughts on that. First of all, Ragland is a growth driver. We have not operated at full capacity this year, so this opens more opportunity going forward in an area that is very dynamic. The Southeast has been very resilient this year. It has come with quite a lot of logistic project around Atlanta. The IRA is prompting quite a good number of industrial project in Southeast.
With Ragland, with the industrial project, we have implemented quite a few new terminals that will allow us to reach out to the market and respond to the market needs. So we will have the tool to produce, we will have the tool to distribute, and we believe the demand is there. So we really see Ragland as a growth driver. Beyond that, we expect a soft landing in developed markets with, of course, some slowdown linked to the residential market. But we are committed to restore our margin and levels at pre-crisis level.
So we will endeavor to do so, and we believe that, although there has been some energy price reduction lately, it is still far above 2021, so everybody shall be rational. Emerging markets are still dynamic. I mean, there is obviously very different situation from one country to another, but we see those as various possibilities around. That's probably about what I can share at this point. Sorry for not being more precise for now.
No, thanks for the color anyway. Have a nice day. Bye, guys.
The next question comes from the line of Alan from Onfield Investment Research. Please go ahead.
Hello, can you hear me?
Very well. Thank you.
Thank you. Thank you for your presentation, and I have two questions. First one is the, I cannot see the sales breakdown about the India and the Turkey. So, can you please provide the sales figure in Q3, in the million of euro for the U.S., India, and, Turkey? And the m y second question is, can you quantity the level of price increase you have announced to your clients in France, Switzerland, and U.S., et cetera? Thank you.
Thank you. We usually don't. As you know, we report by geographical area, so we don't report quarterly by country, because this is-
Okay.
the competitive information. Sorry for that.
Okay.
But I think you have quite a few indication that should help you in the press release. Regarding price increases, of course, it is early to share what is coming up in early 2024. What we can say is that in the main market, in U.S., there has been a price increase in September, in both regions, substantial one. So we believe that the next one should be as usual in April, and it will be very much linked to the inflationary environment. And although inflation is slowing down in the U.S., there is still some need for it, so we do expect to have another hike at this point.
In Europe, there has been some decrease in energy costs. Nevertheless, there is an underlying inflation on wages and salaries, on maintenance costs, and this needs to be passed through. So we do expect to pass price increase early in the year. Of course, less significant than last year, the context is different. But as we mentioned, we are committed to restore the margin levels, and we will continue to pursue this objective. We have a similar situation in Switzerland. In emerging markets, it's very much a monthly adjustment of prices, unless it is regulated.
Okay, thank you.
We currently have no questions in the queue. So as one last reminder, please press star one if you'd like to ask a question. We have no further questions in the queue, so I'll now turn the call back over to your host for some closing remarks.
Thank you, Jess. Our next call is set for 14 February 2024, for our full year 2023 results, and our first look at 2024. Before we meet on that day, I'd like to remind you that we enter 2024 confident, like, that Ragland highly efficient new kiln will act as a growth driver. As the group remains focused on its priorities, which is executing its decarbonization strategy, restoring its profitability ratio to pre-crisis levels, and deleveraging further. Thank you for your interest in Vicat, and have a beautiful day.
Thank you for joining today's call. You may now disconnect your line.