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SigmaRoc (LSE:SRC), a lime and minerals group, reported resilient first-half results on Monday despite facing challenging market conditions.
For the six months ending 30 June, the AIM-traded firm recorded an 8% decline in underlying revenue to £531.6 million. This decrease was attributed to reduced volumes and lower input cost pass-through. However, underlying EBITDA saw only a 3% decrease to £117.8 million, reflecting effective cost management and strategic pricing. Notably, the EBITDA margin improved by 110 basis points, indicating enhanced operational efficiency.
The group's full-year underlying EBITDA aligned with consensus expectations, while underlying earnings per share increased by over 6% to 4.27p. SigmaRoc also demonstrated robust cash generation during the period, partly due to the shift of European Union Emissions Trading Scheme (ETS) returns to the second half of the year. The company's leverage stood at 2.57x, with pro-forma leverage at 2.29x, on track to achieve its year-end target of less than 2.3x. Return on invested capital (ROIC) improved year-on-year, bolstered by recent acquisitions, with a medium-term target of 15% within reach.
Operationally, SigmaRoc's broad market presence helped mitigate challenges in specific sectors. Strong demand in infrastructure, agriculture, and food, alongside a recovery in the paper and pulp industries, balanced weaker activity in residential construction and environmental markets. Although volumes fell 4% on a like-for-like basis due to these weaker sectors, operational margins continued to improve through effective cost control measures.
The integration of European lime businesses acquired from CRH advanced ahead of schedule. SigmaRoc completed acquisitions of German, Czech, and Irish businesses in January, followed by a UK lime acquisition in March, and finalized the Polish acquisition in September after receiving anti-trust clearance. These acquisitions are performing as anticipated, with expected synergies between €35 million and €60 million by 2027.
Looking ahead, SigmaRoc anticipates ongoing strength in food, agriculture, mining, and infrastructure markets, although mixed demand persists in sectors like German power and automotive. The anticipated easing of interest rates is likely to support a recovery in residential construction. The company's full-year outlook remains consistent with market consensus.
Chief Executive Officer Max Vermorken expressed satisfaction with the first-half results, noting they surpassed expectations despite mixed market conditions. Vermorken highlighted the successful integration of the CRH acquisitions and indicated that the synergy program's target level has been increased to €35 million by 2027. With recent acquisitions completed, SigmaRoc has significantly strengthened its position in providing essential natural resources for modern processes. As of 1112 BST, SigmaRoc shares were down 2.37% at 65.8p.
