Imerys-press-release-Q1-2024-results-30-April-2024-VENGFinal

PRESS RELEASE

                           PARIS, APRIL 30, 2024

Imerys delivers robust first quarter 2024 results with 9% year-one-year increase in adjusted EBITDA

●         Initial signs of demand recovery with first quarter revenue at €926 million, exceeding both Q3 and Q4 2023 levels

●         Adjusted EBITDA at €188 million (+9% vs last year), reflecting positive contribution of commercial actions, savings measures and lower input costs, as well as strong performance of joint ventures 

●         Positive price/cost balance maintained, demonstrating the strength of Imerys’ business model

●         Progress in strategic roadmap^[1]:

●         Creation of a new business area “Solutions for Energy Transition”, to reflect accelerating momentum in critical minerals and their growing contribution to the Group's financial performance

●         Exclusive negotiations to acquire Chemviron’s European diatomite and perlite business, enhancing Imerys offering of natural solutions for consumer goods

●         Exclusive negotiations for the divestiture of the Group's assets serving the paper market,

                                                                                                                 with closing expected in the course of the year

Alessandro Dazza, Chief Executive Officer, said:  

“As expected, low levels of activity in residential construction and industrial markets continue to penalize the recovery in end-markets, especially in Europe, while the US is showing better resilience and China is improving. We believe we have turned a corner and anticipate a positive impact from lower interest rates in the second half of the year. Amid this mixed environment, Imerys is fully leveraging its resilient business model, broad geographic exposure and end-market diversification. Furthermore, the Group once again demonstrates its ability to adapt its cost structure to fluctuating demand, maintaining a positive price-mix cost balance and generating substantial savings from the cost reduction program launched in 2023. We continue to execute on our strategic roadmap, and look forward to updating the markets in due course.”

UPDATE ON STRATEGIC PROJECTS

Imerys has formed a new business area, “Solutions for Energy Transition” (SET), to better reflect the importance and fast-growing contribution of the Group’s activities in critical minerals. It includes Imerys Graphite & Carbon business and the Group's share (50% ownership) in the joint-venture The Quartz Corporation. These activities represent key drivers of Imerys’ future growth.

As part of the Group's active portfolio management, two important transactions are under exclusive negotiations:

●         On April 29, 2024, with Chemviron, a subsidiary of Calgon Carbon Corporation, in order to acquire its diatomite and perlite business. Through this acquisition, Imerys would extend and complement its European footprint in diatomite and perlite, and broaden its Filtration and Life Sciences product portfolio, to better serve its customers in the food, beverage, filtration and pharmaceutical markets. It would also allow Imerys to expand its offering of natural solutions for consumer goods. Imerys would acquire three high-quality mining and industrial assets in France and in Italy. In 2023, this business generated approximately €50 million in revenue with 130 employees.

●         On March 28, 2024, with Flacks Group, for the divestment of the Group’s assets serving the paper market. The transaction is expected to be completed in the course of 2024. At closing, the translation reserve associated with the business disposed of (mainly relating to the devaluation of the Brazilian Real) shall be recycled to the profit and loss statement in accordance with applicable IFRS standards. The Group’s shareholders equity will not be affected by this non-cash loss currently estimated at circa €300 million as of March 31, 2024.

OUTLOOK  

We anticipate a progressive market recovery and sequential sales volumes improvement in the quarters to come as the European economy is stabilizing while the US and Asia remain resilient. In the coming months, Imerys expects to benefit from this positive trend and from innovative products, while remaining costeffective in this still uncertain environment.

COMMENTARY ON THE FIRST QUARTER 2024 RESULTS  

Revenue

Revenue in the first quarter of 2024 was €926 million, a 5.3% year-on-year decline at constant scope and exchange rates. Group sales volumes were down 3.4%, reflecting weakness in main end markets, especially residential construction and industry in Europe. Revenue shows early signs of recovery supported by gradual volume recovery, revenue in the first quarter of 2024 was 1% above Q3 2023 and 4% above Q4.

Prices were 1.9% lower in the first quarter 2024 against a high comparison base (+11% in Q1 2023 vs Q1 2022) and included lower input costs, notably energy and freight.

Revenue for the first quarter of 2024 included a negative currency effect of €15 million (-1.5%), primarily as a result of the US dollar depreciation vs the Euro. 

Adjusted EBITDA 

Effective January 1, 2024, Imerys has adopted Adjusted EBITDA as a new alternative performance measure. It is defined as current operating income before operating amortization, depreciation, impairment losses and adjusted for changes in operating provisions and write-downs, and includes the share in net income of joint ventures. 

Following this change, the 2025 adjusted EBITDA margin target becomes 19-21% vs 18-20% as set at the Capital Markets Day in November 2022 with the current EBITDA definition.

Adjusted EBITDA increased by 9.2% thanks to the positive contribution from commercial actions, savings measures and lower input costs, as well as the strong performance of joint ventures, in particular our high purity quartz business (50% owned).  

Imerys achieved an adjusted EBITDA margin exceeding 20% in the first quarter of 2024,  well above the 17.2% recorded in the first quarter of 2023.   

Current net income

Current net income, Group share, totaled €83 million, up 23.6% vs. Q1 2023. Net financial result was negative at €16 million. The income tax expense of €24 million corresponds to an effective tax rate of 22.0%.

Net income

Net income, Group share, totaled €69 million in the first quarter of 2024, after other income and expenses of -€14 million and including €1 million of minority interests. In 2023, net income included HTS divestment items, accounted for €39 million.   

 (1) Share of net income from joint ventures contributes 2.1 and 5.9 percentage points to Q1 2023 and Q1 2024 adjusted EBITDA margin, respectively

PERFORMANCE BY ACTIVITY

Following the creation of the business area “Solutions for Energy Transition”, Imerys is organized around the following activities :

●         Performance Minerals, split in two geographic areas, Europe, Middle East, Africa and Asia-Pacific (PM EMEA & APAC), and the Americas (PMA), serving mainly plastics, paints & coatings, filtration and life sciences, and ceramics and building products;  

●         Solutions for Refractory, Abrasives and Construction (RAC) serving the refractory, foundry, abrasive and building chemistry markets;

●         Solutions for the Energy Transition, comprising Graphite & Carbon, mainly serving the mobile energy market, and Imerys’ participation in The Quartz Corporation (TQC), a 50%-owned joint-venture, serving the solar and semiconductor markets with high-purity quartz solutions.

Performance Minerals (63% of consolidated revenue)

Revenue generated by the Performance Minerals activity was down 5.6% like-for-like in the first quarter 2024. On a reported basis, the 6.9% decline includes a negative currency effect of €9 million (-1.4%). However, Performance Minerals revenue shows signs of recovery: in the first quarter of 2024, it was 3% above Q3 2023 and 4% above Q4.

Revenue in the Americas was down 1.2% at constant scope and exchange rates in the first quarter 2024, reaching €259 million. Sales were impacted by a slowdown in demand for minerals in the construction industry in the US and in filtration markets. Compared to Q3 2023 and Q4 2023, Performance Minerals Americas improved by 1% and 5% respectively. 

Revenue in Europe, Middle East, Africa and Asia-Pacific decreased by 7.5% at constant scope and exchange rates in the first quarter 2024.  Dynamic sales of plastics have partly compensated for weak ceramics demand in construction markets. On a reported basis, Performance Minerals EMEA sales exceeded the two last quarters of 2023 by 4% and 5% respectively. 

Solutions for Refractory, Abrasives and Construction (32% of consolidated revenue)   

Revenues for the Solutions for Refractory, Abrasives & Construction segment decreased by 6.1% on a reported basis with an unfavorable currency effect of €4 million (-1.4%). Volumes in the construction and industrial end-markets in Europe were sluggish, but the refractory business, particularly in the US, showed some signs of volume recovery. The business posted growth of 1% vs Q3 2023 and of 4% vs Q4.  

Solutions for Energy Transition (5% of consolidated revenue)

The graphite and carbon business posted a 10% decrease in revenue reflecting persistent destocking in the entire EV value chain.  

The Quartz Corporation (high purity quartz joint venture, 50% owned by Imerys) sales will be disclosed on a half-year basis.

2024 first quarter results webcast 

The press release is available on the Group’s website www.imerys.com. The Group will hold a live webcast to discuss the first quarter 2024 results at 6.30 PM (CET) on April 30, 2024, which can be accessed  via this link.

Financial                                                                                                                                                                          Calendar  

These       dates       are           subject    to             change    and          may         be            updated on            the           Group’s    website https://www.imerys.com/finance.  

Imerys is the world’s leading supplier of mineral-based specialty solutions for the industry with €3.8 billion in revenue and 13,700 employees in 54 countries in 2023. The Group offers high value-added and functional solutions to a wide range of industries and fast-growing markets such as solutions for the energy transition and sustainable construction, as well as natural solutions for consumer goods. Imerys draws on its understanding of applications, technological knowledge, and expertise in material science to deliver solutions which contribute essential properties to customers’ products and their performance. As part of its commitment to responsible development, Imerys promotes environmentally friendly products and processes in addition to supporting its customers in their decarbonization efforts.

Imerys is listed on Euronext Paris (France) with the ticker symbol NK.PA.

More comprehensive information about Imerys may be obtained from its website (www.imerys.com) in the Regulated Information section, particularly in its Registration Document filed with the French financial markets authority (Autorité des marchés financiers, AMF) on March 26, 2024 under number D.24-0183 (also available from the AMF website, www.amf-france.org). Imerys draws investors’ attention to chapter 2 “Risk Factors and Internal Control” of its Registration Document.

Disclaimer: This document contains projections and other forward-looking statements. Investors should be aware that such projections and forward-looking statements are subject to various risks and uncertainties (many of which are difficult to predict and generally beyond the control of Imerys) that could cause actual results and developments

to differ materially from those expressed or implied.

Analyst/Investor Relations: 

Cyrille Arhanchiague : +33 (0)6 07 16 67 26  finance@imerys.com

Press contacts:

Claire Garnier : +33 (0)1 49 55 64 27

Mathieu Gratiot : +33 (0)7 87 53 46 60

Hugues Schmitt (Primatice) : + 33 (0)6 71 99 74 58 Olivier Labesse (Primatice) : + 33 (0)6 79 11 49 71

APPENDIX

Key income statement indicators

Sales and EBITDA 2023, following the adoption of the new organization and new definition

GLOSSARY

Imerys uses “current” indicators to measure the recurrent performance of its operations, excluding significant items that, because of their nature and their relatively infrequent occurrence, cannot be considered as inherent to the recurring performance of the Group (see section 5.5 Definitions and reconciliation of alternative performance measures to IFRS indicators in the 2021 Universal Registration Document).