SigmaRoc flags decent revenue growth

18th Oct 2023 10:35

(Sharecast News) - Quarried materials specialist SigmaRoc reported 7% like-for-like revenue growth during the first nine months of the year on Wednesday, amounting to £435.9m.

The AIM-traded firm put the growth down to diversified market exposure and effective pricing strategies.

It said like-for-like group volumes were steady, with a 4% decline primarily due to softer demand in the residential construction sector, partially offset by robust conditions in infrastructure and industrial mineral markets.

SigmaRoc achieved an underlying EBITDA margin of 20%, surpassing the prior years' results and management expectations, resulting in a 11% increase in underlying EBITDA to £87.1m.

Positive cash generation was noted, with a focus on reducing debt until 31 December, as the board said it was confident in achieving its 2023 expectations while acknowledging an uncertain market backdrop.

In terms of strategic developments, SigmaRoc reported progress in integrating the businesses acquired in 2023, yielding the expected synergies.

The incorporation of a joint venture with ArcelorMittal was on track, with the site for new lime kilns identified.

The Aqualung carbon capture unit successfully completed carbon dioxide capture trials and was now undergoing development to use the captured carbon dioxide through a dedicated purification, compression, and liquefaction unit.

SigmaRoc also introduced Puccini blue, a sustainable re-interpretation of Belgium Blue Stone, and made advancements in the Materials Evolution partnership to produce low-carbon concrete products, with the first plant expected to be operational near Wrexham in mid-2024.

Despite expected weaknesses in new build construction, agricultural products, and paper markets, SigmaRoc reported robust trading in most markets during the third quarter, with favourable pricing trends, reduced pass-through costs, and operational improvements resulting in a 7% like-for-like revenue increase despite a 4% decline in volumes.

Including contributions from acquisitions, group revenues increased 10% year-on-year to £435.9m in the period.

The company said 42% of group revenues were derived from industrial minerals markets, which performed well due to a recovery in pulp, paper and board demand, positive trends in environmental, agriculture and chemicals, and continued strength in metals.

It said the remaining 58% of revenues came from construction markets, with a focus on infrastructure applications that experienced strong demand, compensating for softness in residential markets.

Looking ahead, SigmaRoc acknowledged challenges in some of its markets but said it was optimistic about delivering unchanged full-year expectations.

"We have delivered another quarter of solid performance," said chief executive officer Max Vermorken.

"The backdrop is not a steady one, but our team keeps delivering good products and good levels of service to our customer base, thereby securing the performance of the group.

"The strategic initiatives we launched in the first half are all now contributing, and I am looking forward to updating the market on what I expect to be another year of growth and strategic progress."

At 1010 BST, shares in SigmaRoc were up 1.01% at 49.9p.

Reporting by Josh White for Sharecast.com.