SigmaRoc ends first half ahead of expectations

Lime and limestone specialist SigmaRoc reported a first-half performance ahead of expectations in an update on Tuesday.

The AIM-traded company said revenue growth reached 62% year-on-year to £469m, bolstered by contributions from recent CRH acquisitions.

Underlying EBITDA increased 82% to £100m, with an improved EBITDA margin of 21.3%, up from 19.0% in the first six months of 2023.

The firm’s pro forma revenue saw an 8% decline, and underlying EBITDA dropped 3% due to softer volumes and lower pass-through on the top line.

However, underlying earnings per share were expected to exceed 3.1p, with pro-forma underlying earnings per share surpassing 4.2p, a more than 5% increase from the first half of last year.

SigmaRoc said its covenant leverage was projected to be below 2.6x, with pro-forma leverage under 2.3x, while its full-year expectations remained unchanged.

The board said the integration of European lime businesses acquired from CRH was progressing well, with the acquisition of German, Czech, and Irish businesses completed on 4 January, and the UK lime acquisition following in March.

Since the end of the first half, Polish anti-trust clearance was obtained, with completion expected by the end of August.

The CRH lime businesses were performing in line with expectations, and the synergy programme targeting €30m to €60m by 2027 was on track.

In terms of market performance, SigmaRoc said its diversified model enabled it to navigate headwinds and leverage tailwinds effectively.

The industrial minerals market, accounting for 42.3% of first-half revenue, performed in line with budget despite initial impacts from strike action in the paper and pulp segment.

Environmental and agriculture markets, representing 17.4% of revenue, saw good volume development in food and water purification segments.

Construction markets, making up 40.3% of revenue, experienced robust demand in infrastructure applications, although residential markets remained soft.

The company also announced a chief financial officer succession plan.

Garth Palmer, after nearly eight years with SigmaRoc, would hand over his responsibilities to Jan Van Beek, the current deputy CFO.

Van Beek would join the board when Palmer steps down, and would bring extensive experience from his previous roles at Deloitte, Hexion, and ASML, the board said.

Looking ahead, SigmaRoc anticipated mixed trading conditions in Europe, with both opportunities and challenges.

The board said it remained confident in completing and integrating the Polish assets and building on SigmaRoc's position as a European leader in lime and limestone.

Its current outlook for 2024 remained unchanged, and in line with market consensus.

“2024 is a year of profound transformation as we complete the three phases of the CRH acquisitions as we build a leading industrial and construction minerals platform with a focus on lime and limestone,” said chief executive officer Max Vermorken.

“On a proforma basis the group sees its earnings per share expand again.

“Given how busy the teams have been with the integration of several new businesses, a demanding synergy programme, while also navigating mixed market conditions, this is an outstanding result.”

Vermorken said the integration of the group was progressing smoothly.

“We are confident the enlarged Group can deliver strongly in the coming years to the benefit of all our stakeholders.

“Lime is an essential product for life, used in multiple areas of the economy, from construction to industry.

“It is essential for the green transition, including flue gas cleaning, slaking rivers and lakes, the manufacture and recycling of lithium batteries, and the construction infrastructure behind green energy production.”

At 1300 BST, shares in SigmaRoc were down 0.62% at 68.47p.

Reporting by Josh White for Sharecast.com.