Welcome to the Vicat half year results conference call. My name is Alan and I will be your coordinator for today's event. Please note this call is being recorded, and for the duration your line will be on listen only. However, you will have the opportunity to ask questions at the end. This can be done by pressing star one on your telephone keypad. If you require assistance anytime, please press zero and you'll be connected to an operator. I will now hand you over to your host, Hugues Chomel, Deputy CEO and Group CFO, to begin today's conference. 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 Head of Investor Relations. I will now be presenting to you our first half 2025 results. Before starting the presentation, please have a look at Slide 2 where you can read our disclaimer regarding the forward-looking statements that this presentation may contain on Slide 3. Let me begin with the highlights of the first half of 2025. First, organic sales remained stable, up 0.2% despite a slowdown in activity in some key regions, namely United States, India, and Africa. Our resilience reflects the balance of our geographic footprint with continued market recovery in Switzerland where our low carbon cement solutions also continue to gain traction. The Mediterranean region and Brazil also contributed positively with immense results across both geographies.
Based on our first half performance and the impact of stronger than anticipated currency headwinds, we have updated our 2025 EBITDA guidance. We now target EBITDA growth of +2% to + 5%. Like for like, finally, we made a strategic move in Brazil with the announcement of the bolt-on acquisition of REALMIX . This is a vertical integration play that enhances our presence in Central West region and creates new volume opportunities for cement and aggregate businesses. Now turning to our key financial indicators for the first half on Slide 4, consolidated sales totaled EUR 1.9 billion, down 2.7% on a reported basis, up slightly by 0.2% like for like. EBITDA came in at EUR 331 million, down 6.3% reported and down 2% like- for- like. This compares to H1 2024 EBITDA of EUR 353 million, which was the best ever EBITDA recorded by Vicat in the first half.
This inflection in H1 2025 reflects volume contraction in some regions and a slight positive price cost spread. Our EBITDA margin stands at 17.5%, still a solid level in light of volume contraction recurring. EBIT declined by 4.4% like for like, resulting in a 9% margin in line with the trend in EBITDA. Importantly, consolidated net income improved by 6.3% like- for- like, reaching EUR 116 million. This performance reflects improved financial results. Net income group share grew by 3.1% like- for- like to EUR 102 million, slightly down on a reported basis due to stronger contribution from minority interests. Overall, these results demonstrate our ability to navigate an environment with limited visibility while maintaining solid profitability. Let's now turn to Slide 5 that illustrates the geographical trends in Vicat's half sales performance.
Second quarter organic growth was 0.6% at the group level, organic sales were slightly up 0.2% in each one despite reported decline of 2.7% largely due to currency headwinds. Let's look at the regions in detail. In France, sales declined 3.8% like-for-like due to residential construction market weakness. Even if the rate of decline continues to improve on a reported basis, sales increased by 2.4% reflecting the integration of Cermix that creates a French leader with Vicat in the construction chemical business. Europe, driven primarily by Switzerland, posted a 7.1% organic increase thanks to a market recovery and growing demand for low carbon solutions. In the Americas, sales were down 1.5% like-for-like reflecting softer market conditions in the United States, particularly in California, while Brazil delivered a positive performance regrettably offset by currency effects.
Asia recorded a 10.6% decline like-for-like due to lower volumes as a result of competition in India. In the southern states, the situation improved in Q2. The Mediterranean region stood out with a strong +28.5% organic growth supported by robust exports from Egypt and improved dynamics in Turkey. Finally, in Africa, organic sales declined by 7.8%, reflecting new competition in Senegal and local disruptions in Mali. Overall, these figures highlight the strength of our diversified portfolio, with growth in Europe and Mediterranean helping to balance the softness in U.S. and India. On slide 6, this bridge shows how EBITDA evolved between first half of 2024 and first half of 2025. We started from a record high base in 2024 and ended H1 2025 at EUR 331 million, down 2%.
Like-for-like from a reported standpoint, the currency effect was a major headwind, subtracting EUR 17 million with significant impact from Turkish lira, Brazilian real, and Egyptian pounds. Conversely, the scope effect added EUR 2 million, mainly from the integration of Cermix into French operations. Looking at it from an organic standpoint, the decrease was 2% or EUR 7 million. This resulted from a negative volume effect of EUR 19 million which reflects a drop in activity particularly in France, United States, and India. This is the primary driver of EBITDA decline this half even as price cost differential was slightly positive on the semester, industrial performance contributed EUR 2 million. In summary, while we faced volume pressure and FX headwinds, our pricing discipline and cost control help to preserve a solid level of profitability. On Slide 7, I would like to focus on Egypt, one of the standout performers in the group portfolio.
In this country, exports have become a major driver of growth. They now represent more than 50% of total volumes. Two key factors helped us leverage this increase in demand. First, our cost base in Egypt remains highly competitive. We maintain low cash costs which enhance our margin potential, particularly on exports. Second, logistic infrastructure is a real asset. The proximity of our Sinai plant to the LRH port enables efficient shipment of cement to export markets. A notable development this year is the domestic market recovery with domestic prices that have now overtaken export prices. From a financial standpoint, the impact is clear. EBITDA rose to EUR 26 million in the first half of 2025 with a margin of 35.3%, confirming a robust turnaround over the past three years. Looking ahead, we see long term opportunity in this region.
On Slide 8, we are confident in the region's long term growth potential. This explains why Vicat has launched a buyout of minority interests in its Egyptian subsidiary through this offering aimed at streamlining the governance of Egyptian operations. Vicat, via its Vicat Egypt Cement Industry subsidiary, has submitted a tender offer to acquire the outstanding shares of Sinai Cement Company, which is listed on the Egypt Stock Exchange. The offer covers the purchase of 22.4% of the company's share capital at a price of EGP 41 per share or approximately EUR 41 million at the current euro/Egyptian pound exchange rate. The offer is currently being reviewed by the Egyptian market authorities. Slide 9, let's turn now to Brazil where we are seeing improving dynamics in a competitive market. CIPLAN, a subsidiary in Brazil, is located in the center-west region close to Brasilia.
Our cement plant at Sobradinho has a total cement capacity of 3.2 million tons, meaning we have still room to grow with limited CapEx in Brazil. The plant operates with a clinker rate of 62.7%, among the lowest in the industry thanks to its calcined clay production facilities. In the first half of 2025, our cement volume increased by high single digit and pricing was resilient. We continue to deliver high operational efficiency with EBITDA reaching EUR 27 million in the first half, plus 14% year- on- year organically. We are now moving to reinforce our vertical integration through the acquisition of REALMIX , a Ready-Mixed Concrete producer operating four batching plants in the region. Once approved by antitrust authorities, this acquisition will add 720,000 cu m of concrete capacity and strengthen our presence in key urban centers, particularly Goiânia and Brasília.
This will also create a potential uplift in cement and aggregates sales volumes, further optimizing logistics and industrial base. In short, Brazil remains a strategic market for Vicat and this move supports both growth and decarbonization. On Slide 10, turning now to Senegal, we achieved a key industrial milestone this semester. On June 7, 2025, we produced the first clinker from Kiln 6, a brand new production line at the Rufisque site. Kiln 6 is a strategic investment with a dual purpose. First, it allows us to replace expensive clinker imports which had reached 300,000- 400,000 tons per year. Eliminating this dependency will significantly improve our cost structure. Second, Kiln 6 enables us to substitute production from the older and less efficient Kilns 3 and 4, leading to additional cost savings and lower emissions.
These two kilns will be shut down with flexibility to be restarted or adapted for future use, including calcined clay production. In terms of impact, we expect this project to deliver cost savings of around EUR 20 per ton over time, making it a major driver of competitiveness in the region. The first EBITDA contribution is expected in the second half of 2025 with further benefits from 2026 onward. This is a key milestone for Vicat and underscores our commitment to investing where we can combine industrial performance with environmental progress. On Slide 11, let's now look at our capital allocation and free cash flow generation. In the first half, we maintained a disciplined investment policy with net capital expenditures totaling EUR 124 million, down from EUR 186 million in the first half of 2024. This decrease reflects the completion of major strategic investments, most notably related to Kiln 6 in Senegal.
We confirm our full year 2025 guidance of net CapEx at around EUR 280 million, in line with our commitment to selective investment and financial discipline. This lower CapEx, combined with improved working capital performance, enabled us to generate free cash flow of EUR 44 million, significant progress from -EUR 23 million in the same period of last year. Slide 12 shows the seasonality of all free cash flow over the past three years with data as of end of June. The takeaway is that our 2025 performance should follow the same seasonal pattern we've seen in prior years with a progressive buildup in H2, where cash flow peaks with seasonality of our business. The 2024 benchmark ended with EUR 373 million in free cash flow, a historic high. The 2025 trajectory so far suggests we are on track for another strong performance.
On Slide 13, you can see that our balance sheet remains strong and well structured a s of end of June 2025. O ur financial debt stands at EUR 1.9 billion with a balanced maturity profile. The average maturity is 4.88 years, down 0.4 years since end of December, and the average interest rate is 3.9% before hedging, down 0.8% points over the past semester. Our cash position stands at EUR 529 million, bringing net debt to EUR 1.4 billion. Overall, we continue to prioritize financial discipline while maintaining ample headroom and resilience in a shifting macro environment. On Slide 14 you have our deleveraging roadmap. As of June 2025, our net debt stands at EUR 1.4 billion. This translates into a leverage ratio of 1.81x compared to 2.01x at June 2024 and follows a clear downward trajectory.
We are making progress toward reaching our year end 2025 target and remain committed to reaching less than one time by the end of 2027. Maintaining this trajectory will ensure we have strengthened our financial structure, enhanced strategic optionality and secured our investment profile going forward. Slide 15 outlines the group relative growth strategy through bolt-on acquisitions. Four criteria guide this acquisition. First, vertical integration. As illustrated by the acquisition of REALMIX in Brazil, this move strengthens our position in the Ready-Mixed Concrete segment and supports volume growth in Cement and Aggregates through downstream integration. Second, geographic complementarity. We prioritize strategic locations that align with existing footprints and offer strong potential in terms of GDP growth or demographic trends. Third, strengthen our position in adjacent business.
The integration of Cermix into our French construction chemical activity alongside VEPI creates a national leader in this segment with synergy potential and no upfront cash outlay. Fourth, securing long-term access to raw material through long-term quarry reserves. Across all projects, our priority remains clear. Any acquisition must deliver a positive short-term financial contribution including synergy capture while reinforcing strategic positioning over the long run. Turning to Slide 16, let me now update you on our climate performance, an area where we continue to make measurable progress. In the first half of 2025, Vicat net CO₂ emissions per ton of cement equivalent fell by 1.1% at group level and 2.4% in Europe. Our alternative fuel rate reached 38.9%, up 2.4 points year- on- year, with a clear acceleration in several regions, particularly in India where we ramped up new installations.
This resulted in a remarkable 13 points gain year- on- year. In that market alone, our clinker factor declined slightly to 76.1%. The ramp-up of the Argilor project in France using activated clay as a sustainable substitute for clinker will support further improvements going forward. These results confirm that we are making progress towards our 2030 climate objectives while enhancing our industrial competitiveness. On Slide 17, you have our updated guidance. Our sales guidance is unchanged. We continue to target like-for-like growth supported by improving trends in several markets and a stronger second half, particularly in Egypt and Brazil. Based on the first half performance and the macroeconomic context, particularly continued FX headwinds, we are adjusting our EBITDA anticipation for the full year 2025. We now expect EBITDA growth to be between 2% and 5% on a like-for-like basis compared to our previous guidance of low single-digit growth.
We maintain our guidance of net capital expenditures at EUR 280 million in line with our investment plan and tight capital discipline. Finally, we reaffirm our deleveraging priority, targeting a leverage ratio of 1.3x by year end and below 1x by 2027. These updated objectives reflect more careful reading of the economic context, particularly the persistent FX headwind, but equally our confidence in the business model, our resilience in a challenging environment, and our commitment to our disciplined execution. On Slide 18, we've laid out the strategic priorities that are guiding Vicat's action over the next few years. First, we are committed to maintaining EBITDA margin of at least 20% over the 2025, 2027 period. Second, we are focused on continuing our deleveraging trajectory, and third, we are accelerating on our climate roadmap, investing in decarbonization, developing low carbon products, and embedding sustainability across all geographies and business lines.
These three pillars, profitability, financial discipline, and sustainability, define a roadmap for profitable and responsible growth. I will conclude on Slide 19 with the catalysts of the coming years that will be supporting Vicat's growth with the existing industrial assets. First, in Senegal, the new Kiln 6 is a major cost efficiency driver as it replaces clinker imports and allows us to retire older, higher cost capacities. Its contribution will start in the second half of 2024 and wrap up in 2026 and 2027. Second, in Europe, we anticipate a recovery in residential construction volumes starting from historically low levels. It has already started in Switzerland, and we expect it to begin in France next year. Third, the TELT rail project, the Lyon-Turin Tunnel link, is Europe's largest civil engineering project.
It is a multi-year driver for all cement and aggregate businesses, with volume visibility extending well beyond 2030 and should represent between 5%- 10% of Vicat volumes in France over the coming years. Finally, the Mediterranean region, particularly Egypt and Turkey, continue to offer medium-term compelling opportunities. Together, these catalysts position Vicat for resilience and balanced growth aligned with our long-term industrial and environmental strategy. Alan, can we move to questions please?
Thank you. If you'd like to ask a question or make a contribution on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. You will be advised when to ask your question. We will take our first question from Ebrahim Homani, CIC. Your line is open. Please go ahead.
Hello.
Thank you. Hello Pierre. I have three questions if I may. The first one is about the cement volumes in France. How do you explain the acceleration of the volume decline in France between Q1 and Q2, and could you give us the tight contribution in these figures? My second question is on price and volume dynamics in Switzerland. It accelerated between Q1 and Q2, and the same what to expect in H2, especially since the comparison basis seems less favorable in Q3 and Q4. My last question is about the Senegal contribution to expect in H2 2025.
Thank you, Ibrahim. Good afternoon. Regarding the French cement market, as we mentioned, we still see negative market trends across the board but are slightly decelerating, so the decline is smaller quarter after quarter. As we mentioned before, we are not expecting a market recovery this year, but do expect some recovery at some point of 2027, 2026, sorry. Regarding volumes in Switzerland, as we mentioned during the full year presentation, we saw a first positive sign late last year and we continue to see some market recovery quarter after quarter. This is further supported by projects in our catchment area as well as some traction coming from our new low carbon offering. Maybe one additional comment on the French market, we have not yet seen very substantial contribution from the TELT project so far.
This is a huge industrial project that is slightly late at the moment, but we do expect this to come on stream going forward and the volume secured from a commercial standpoint. Finally, on Senegal, several comments on this market. First of all, it is a long-term growth market. Historically, we have been seeing mid to low single digit growth figures year- after- year. There has been some slowdown since the election. Now the authorities have started to relaunch some infrastructure projects that are gaining pace now. In H1, we have seen a relatively slow market but it has been somewhat disturbed by the entrance of a new player that has put some pressure on price. I mean, it's a limited erosion, I would say as far as we are concerned. We have been able to start production of Kiln 6 at the beginning of June.
We are still in the test phase and do expect to enter industrial production in the coming weeks and to enjoy a ramp up through H2. Thank you.
Thank you.
We will take our next question from Tom Zhang, Barclays. Your line is open. Please go ahead.
Yeah, afternoon. Thank you for taking your questions. Two from me. First one, I'll take them one by one. First one just on the U.S. market. You've said, you know, you expect prices to remain resilient. I think the Q1 print you guys had been talking about maybe the potential for some hikes actually in California, I guess that is no longer really on the cards. Is there any risk that you might have to give up a little bit of pricing in the U.S. in H2 just given what seems to be quite competitive pricing from imports, you know, if there's any differentiation as well between California and the Southeast? Yeah, that's the first question.
Good afternoon Tom, thank you for your question. Indeed, as you mentioned, there has been no new price increase in the U.S. this year. We have enjoyed previous year's increase as average to average in California. In California, there were talks of increase for July. They have been postponed to September, and we'll see depending on the market trend. Regarding imports, of course they are competitive, but I would say less today than yesterday, most significantly with a 20% additional tariff for Vietnam, which is the main provider in California. We don't see that as a significant effect on market price going forward in the Southeast. Obviously, the situation is somewhat different. Catchment area is farther from the shore. There have been contrasted market trends from one city to another and a slower market. For example, in the Atlanta market, whereas we see some stronger markets in other regions.
We see some price weakness in Atlanta and more resilient prices in other regions. There is, we do not intend to announce price increases there in H2.
Okay, that's clear, thank you. Just the second one, more broadly around your guidance, I mean, you know, like-for-like you're still guiding for some growth in sales. You're guiding to 2%- 5% pre-EBITDA. I'm kind of reading that as margin expansion in the second half. It doesn't sound like, you know, pricing doesn't feel great in the U.S. Senegal, you have, you know, the new kiln ramping up. As you say, the earnings contribution probably will be quite gradual through H2 and into 2026 and 2027. Are there any other levers that we're kind of missing in terms of, you know, how you're actually going to expand this margin in the second half? Yeah.
Okay. First of all, as you may know, there is very strong seasonality in margins in our industry, depending on how the large maintenance programs are spread out. They are most usually in H1 rather than in H2. This is, I would say, a structural element in the seasonality of margin. Secondly, we are continuing to expand the prices in some emerging markets. Mediterranean, Kazakhstan, there has been a substantial price increase in Q2 in India. We do believe that this will last. We have a strongly improved cost base and we see the volume effect globally continuing to improve, notably in Europe.
Okay, that's clear. Thank you. I'll turn it back.
Once again, if you would like to ask a question, please press star one on your telephone keypad. Now we will take our next question from Isaac Ocio of Field Investment Research. Your line is open. Please go ahead.
Hi, thank you for taking my question. Coming back to the EBITDA organic growth guidance, from which region specifically would you expect to see a turnaround in H2 versus H1? My second question would be, now that the cement plant in Senegal is complete, what CapEx can we expect in 2026? Thank you.
As you probably observed, we are not publishing margin guidance by region, so I will stay a little bit generic in my answer. As I mentioned just a minute ago, we believe that some of the things that went well in H1 are set to continue. We will have an easier base of comparison in H2 than in H1. We see, as I mentioned, the price improvement in India that should last, and the volume softness that we are acknowledging both in the U.S. and in Europe in H1 should improve somewhat. As a general comment, obviously it's a little too early to give you numbers for 2026. As a general comment, we said that we will focus on deleveraging and continue to have, I would say, a well-controlled level of CapEx. You should probably expect a new limited decrease in CapEx.
Okay, thank you very much.
As a final reminder, if you would like to ask a question, please press star one on your telephone keypad. Now we will pause for a moment to allow everyone an opportunity to signal for questions. There are no further questions on the line, so I will now hand you back to your host for additional or closing remarks.
Thank you, Alan. This concludes our call for today. Thank you for your interest in Vicat. Our third quarter review will be published on November 3. We wish you a nice summer and à bientôt.
Thank you for joining today's call. You may now disconnect.