Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Cementir Holding's first quarter 2023 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Marco Maria Bianconi, Head of M&A and Investor Relations. Please go ahead, sir. Thank you, welcome everybody to Cementir Holding first quarter 2023 results. I'm here with our Chairman and Chief Executive, Francesco Caltagirone, who is happy to take your question at the end. I will go through nine slides of our presentation deck, starting with page number two with the highlights. Revenues in the first quarter increased by 14.5%, reaching EUR 414.8 million. On a non-GAAP basis, they increased by 14.2% to EUR 413.8 million, driven mainly by price increases. Cement volumes were down by around 4%, mainly Nordic and Baltic, Belgium and the U.S., partially offset by growth in Turkey. Ready-mix volumes were down 9.7% due to a negative trend in every countries except Turkey. Aggregate volumes were down by around 18%. EBITDA reached EUR 81.2 million, up by 33.8% year-over-year. On a non-GAAP basis, EBITDA reached EUR 85.6 million, up 41.1% year-over-year. The higher EBITDA is mainly Nordic and Baltic, Turkey, Belgium, and Egypt, and the lower EBITDA was recorded in the U.S. and Asia Pacific. EBIT was up 49.5% to EUR 49.2 million. On a non-GAAP basis, it was up 70% to EUR 56.2 million. Profit before taxes reached EUR 63.9 million, up 50.7%. On a non-GAAP basis, it was up 61.1% to EUR 68.3 million. Net financial debt reached EUR 32.1 million, down by around EUR 56.6 million year-on-year, including IFRS 16 impact and a EUR 28 million dividend distribution. Moving to the largest division, that's Nordic and Baltic, accounting for 48% of group EBITDA. Here in Denmark, cement volumes were down with domestic markets affected by unfavorable weather and a slowing demand due to high inflation and interest rates. Lower white cement exports were due to a decline in some export markets. Also, RMC and aggregate volumes were down. EBITDA increased thanks to a tight control of energy cost and selling prices. We return to a pre-COVID profitability level in the country. In Norway, our ready mix sales volumes were down due to a slowdown of residential and commercial demand and some adverse weather conditions and some delays in new infrastructure projects. EBITDA was down due to lower volumes and higher operating costs. The Norwegian krona depreciated around 10.7% versus the EUR. In Sweden, both ready mix and aggregate volumes were strongly down as a result of the general drop in demand, especially in the residential sector. Lower EBITDA was due to lower sales volumes and higher production costs. The Swedish krona depreciated by around 7% versus the EUR. Moving the page to four, Belgium and France, accounting for about a quarter of our EBITDA. Here, cement volumes decreased with negative performance in Belgium and the Netherlands, a stable performance in France. The falling demand was due to unfavorable weather and the slowing construction activity. The same was true for ready mix and aggregates. EBITDA increased thanks to tight control of energy cost and selling prices. Moving to page five, North America, accounting for around 7% of group EBITDA. Here, white cement volumes declined in line with the residential markets. Deliveries to Texas and California suffered from a stronger contraction due to competitive pressure from imports. EBITDA was down due to lower cement volumes and higher operating costs. There was a positive contribution from concrete products business, Vianini Pipe. Also, the dollar revaluated by around 4.4% versus the EUR. Moving to page 6, Asia Pacific, accounting for 4% of group EBITDA. Here, revenue in China was down by 6%, driven by lower cement prices and despite volumes up by around 3%. Until January 2023, cement sales were affected by lockdowns and the Chinese New Year. EBITDA was down in China due to higher variable costs and lower prices. The renminbi depreciated by around 3.1% versus the euro. In Malaysia, revenue was down by 3.4%, driven mainly by a drop in clinker export due to different calendar for shipping and lower deliveries in some countries. Domestic volumes increased as a result of good recovery in the construction market. Overall, EBITDA in Malaysia grew as a result of higher prices and reduced fuel and freight costs, partially offset by higher variable costs and lower volumes. The Malaysian ringgit was in line with the euro. Moving to Turkey on page seven, accounting for around 9% of group EBITDA. The revenue improved by 82% in euro terms. Domestic cement volumes increased with significant higher sales in northeastern Turkey and Marmara, driven by new projects and lower sales in the Anatolia region due to the depletion of infrastructure projects. Cement export were down to focus on the domestic markets. Ready mixed volumes increased in line with the market, and EBITDA it reached EUR 7.8 million, driven by cement prices more than offsetting production cost increase and currency devaluation. The Turkish lira in the period devaluated by around 29.3% versus the EUR. Moving to the last geography, Egypt, on page 8. Here, accounting for 4% of group EBITDA. Revenue declined by 12.8% because of the strong devaluation of the Egyptian pound versus the EUR. While cement volumes declined moderately with higher deliveries on the domestic market and lower exports, EBITDA increased thanks to tight control of energy cost and selling prices, despite a 79% EGP devaluation versus the EUR. The last slide on page nine is the full year guidance, which is unchanged. We expect for the year to reach around EUR 1.8 billion of revenues, EBITDA range between EUR 335 million and EUR 345 million, reach a net cash position of over EUR 200 million after a CapEx of around EUR 113 million. This guidance refers to a like-for-like ongoing operations, non-GAAP, so excluding IAS 29, and excluding any extraordinary items. This ends my short presentation, and I will leave now the floor to Mr. Caltagirone, who is happy to take your questions. Thank you. Excuse me. This is the Chorus Call conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove your question from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Matteo Bonizzoni of Kepler. Thank you. Good afternoon. I have two questions. The first one regards the margin trajectory. In Q1, your margin, your EBITDA margin ex IAS 29 was up 400 basis points. This was not due to operating leverage because volumes were down, but it was due to a widening spread between prices and costs. This impact of the pricing versus cost spread was particularly visible, I think, in Denmark, in Belgium, but also in Turkey. If you look at your guidance for the year, it implies the vice versa. It implies growing revenues and flat EBITDA, so a compression of the margin. Basically, I want to know why is that? Why do you expect margin to compress in full year 2023 when in Q1 the margin, which is a small quarter clearly, but it was up 400 basis points. In particular, do you expect this strong pricing versus cost impact to fade in the subsequent quarters? Second question is as regard is a clarification as regard what we are seeing on the net financial position. The net working capital trend proved particularly benign in Q4 last year because you were beating your EUR 60 million net cash guidance in Q4 by around EUR 30 million. There was a large reversal in the first quarter of this year. I think it was due also to working capital. Can you comment on these swings and also on the working capital evolution in the remaining parts of the year? Thanks. Thank you. Good afternoon. Regarding the distant increase of the margin percentage, this is linked mainly the opposite to that what happened last year. Last year, we saw a soaring price in raw materials and energy, and then we adjusted the price. This year, it's happening the opposite. We have adjusted the price and some of the raw materials and energy are going down. Our, let's say, cautiousness is because this month, there will be the election in Turkey. Turkey so far has performed very well, but the outcome of the election can be worse. We don't know. For this reason, even if the first quarter seemed to be very buoyant, it doesn't allow us to, let me say, move our forecast. The second thing is that, we are continuing to see, some softness in demand in the Nordics, continuing even, after the first quarter. This, keep us, let me say, cautious and vigilant, because as you are aware, we might be close to a final round of rate increase of the central bank. We don't know if, especially in autumn, we might see some other round. Let's say that, at this moment, we keep our guidance unchanged, especially because we want to see what will happen in Turkey. There will be second round of election, the 14th and the 28th of May, and then we will see who will rule the country for the next five years. Today, the polls are very close, and so, we don't know what will happen. About the net financial position. The net financial position is just a sort of natural mismatching of starting of some big investment, especially that one in Belgium that kick in in the first quarter. But this doesn't change our, let me say, outlook for the full year, and we remain addressed at EUR 200 million. Also the working capital is affected also by the sharp increase in revenues that we have seen, especially last year, but especially the last quarter against the last year, and the first quarter of this year is continuing. I think we will start to normalize the working capital in the second half. We don't see price increase for now in any other geography. Most of the costs are stabilizing, except for the pet coke, that versus the same quarter of last year is up nearly 90%. Energy, electricity, and oil and fuel oil are going down. The sum of the three, the mix is, let me say, still positive. Also the labor cost, something that last year wasn't, let me say, part of the problem of the rising cost. We are seeing, as it is normal, a pressure to increase wages. Also for this reason, we don't think that probably on the cost side, we have seen the peak. Probably we will have other things that have to peak. Probably electricity and gas has peaked. Today, the gas is around EUR 40, and the electricity is around EUR 130, EUR 140, depending on year. Remember that it's three times the EUR 40 that we have seen in electricity for the last, more or less, 10 years. Also the gas price is the double of the average over the last 10 years. We don't think that we will see other, let me say, spike, but labor cost and also the cost of financing. We have a net cash position, but as you can see in the first quarter, we are negative. We, let me say, probably go back to positive in this quarter. Anyway, we have to pay interest that are different rate compared to last year. These are the main reason for our cautiousness, and I hope to have answered your questions. Yeah, thank you very much. The next question sir, is from Emanuele Negri of Mediobanca. Yes, good afternoon, everybody, and thank you for taking my question. The first one is related to pricing. We have a positive price impact in the first quarter. It is related to price increase you applied in the first quarter of the year, or it is still related to last month price increases. The second one is on the demand trend we expect in Belgium and Denmark. The third one is, if you can give us some more colors on the cash absorption dynamics in the first quarter beyond the investment in Belgium you said before. Thank you. All, let's say the increase of the price has been done during the second half of last year. This year, we haven't hiked any kind, any price, anywhere. The price are stable or a little bit, let me say, downward because with so big spike with the energy going down, it's normal also that the customer ask or push back a little bit. Let's say normal. You can see also that in this quarter, with more or less, with less quantity in every sector of our business, the revenue compared to last year increased nearly 15%. For sure, this quarter, compared to the first quarter of last year, has a substantial increase of price. Probably the next three quarter, we will see a less, let me say, a less bigger, I mean, gap, compared to last year, so the increase should be smoother. Yes. I can take this one on the, on the CapEx that the chief executive was alluding to before. I mean, clearly, we do have a plan to actually upgrade Kiln 4 in Belgium, and the main reason is driven by the alternative fuel substitution rate that is expected to exceed 75% from the current rate. Increasing both the alternatives fuel substitution rate and slightly increasing capacity. We have not disclosed the amount, but you're talking about a few million EUR investment that is gonna be spread across the industrial plan horizon, so between 2023 and 2025. That's the main reason for the upgrade of the Kiln 4 in Belgium. Okay. Thank you. Sure. The next question is from Tobias Woerner of Stifel. Yes, good afternoon, gentlemen. Thanks for taking my questions. Is this also partly a function of the fact that your exports benefit from lower freight rates in Denmark, but also within your trading division? That's question number one. Question number two relates to Turkey. Can you give us a little bit more granularity, what sort of volumes increases we've seen in the 1st quarter and how you would see the year... Well, I know there's an election now, but if it wasn't totally disturbing to the end demand, what you see there for the remainder of the year. Just lastly, your EBITDA in Norway and Sweden has clearly come down quite drastically. Again, give us a sense of what the volumes have done, you know, significant double-digit declines or what have you, and how you see the year pan out, especially in Sweden, and just remind us of the split between Norway and Sweden in terms of volumes. Yes, on the export side, the cost, the shipping cost has increased. Also this helped, for example, Egypt, quite against Denmark, and all... So we shifted some of the quantity to Egypt that we ship, especially to the United States. Your second question was, on Turkey, you know, I don't think a sudden, let me say, a soft stop of everything. Take in consideration that today, we live a very artificial situation with the inflation that is last year around 85%-90%. This year, the first quarter has been around 15%, and the rates are at 16%. For sure, if we have a change in the government, they will rise the rates sharply, I expect. They will slow down the economy, and probably they will weaken a little bit further the Turkish lira. If Erdogan will win, the move might be smoother, but for sure it's unsustainable because they have depleted all the reserves in foreign currency, and they cannot keep, let me say, the rates at this level. The other, let me say, big question mark is that the earthquake that happened a few weeks ago changed a little bit also the forecast that was in favor... Forecasts were in favor of the reelection of Erdogan. Now it seems that they are very close one to each other. I mean, 52% against 48%. Let's say that, I expect probably a tougher 2024 and 2025 than a sudden stop in 2023. For sure, whoever will win will have to rise, to raise the rates, even because around the world everybody's raising the rates, and so they cannot keep these kind of rates, forever. Okay. The third question on Sweden and Norway, just to give you a feel for the trends, I mean, if you take the three Nordic countries, you know, the decline in Denmark was within the single digits, say, the same mid-single digit range on average. In the middle, you have Norway with a low double-digit decline, and Sweden is at the far end with a high double-digit decline, if let's put it this way. This has to do partially with the dynamics in each country, Sweden being a bit more advanced in what is a bit of a like a housing recession, where interest rates have dented a bit more the demand for housing and the mortgage cost. To give you perspective, I mean, clearly each country has a different product mix. In 2022 actual, the domestic ready-mix in Denmark, apart from cement, was about 1.6 million. The domestic volumes were about 1.1 million ton CBM. In Norway, you're talking about 800,000 tons. This is the ratio between the two in terms of size. Whereas in Sweden, you're talking about a much smaller ready-mix operation, about 200,000, but a much bigger aggregates business. We sold something like 2.6 million tons of aggregates. Different product mix. A different exposure. In Sweden, we are mainly geared towards the south of the country, the Malmö area, where a number of projects also have been terminated, and this is also the reason why the aggregates fell a bit more than expected. That said, I mean, clearly the accounts would get easier along during the year, and we expect, you know, somehow, the situation to sort of gradually normalize throughout the course of the year. Obviously, nobody is sure what's going to happen. This also largely depends on how far the central European Bank is going to go as far as interest rates hiking. That's more or less the situation. I hope I answered your question. Mm-hmm. Thank you very much. Yes. Sure. As a reminder, if you wish to register for a question, please press star and one on your touch-tone telephone. The next question comes from Bruno Permutti of Intesa Sanpaolo. Yes, good afternoon, everyone. I have a question on the volumes. If you can remember, as what is your assumption for in the guidance related to the full year volumes impact on the top line. A second question concern more specifically Egypt. We have seen the sharp depreciation of the Egyptian pound. What's going on there in terms of prices before what is internal sales? I mean, prices are compensating, price increases are compensating for the depreciation. I'd like to understand what is the situation for the internal market in Egypt. Okay, this is the treat. Okay. To answer, I'll take your first question regarding the as-assumption for our guidance. I mean, this central assumption. The central assumption that we took is that volumes were, for the year, broadly unchanged or marginally down. That is the central case we have taken when making, you know, our budget and providing our guidance for the year. We were expecting, in fact, a bit of a tougher first and second quarter, and then towards the mid-mid of the year, a normalization and then an improvement. For the year, as I told you, broadly flat or slightly down volumes overall. That is the central case. Considering, you have also to consider one thing that is happening, for example, in Italy, is that a lot of public project, due to the very sharp rise, has been temporarily suspended because they need to rebid. This takes a few months or even a couple of quarters. We are seeing, let me say, in terms of macroeconomics, a slowdown due to the increase of the rates. Another, let me say, external factor is that some projects all around Europe are delaying the start because of the sharp increase we saw last year. Now the contractor is asking for a revised price, and it takes weeks or months. We think that in the second half, we should start to see a sort of normalization, especially in public. For the macro, let's say, now is the first phase where people after 10 years need to, let me say, being accustomed with this new rate that look in the past, November 20-25 years, it was normal to have 10-year rates around 3%-4%. Now this is has been sudden. Let's say that we don't see a persisting weakness of the market. We don't know if it will last one month, months more or less, or one quarter more or less. Let me say, in our, in our scenario, this year was, let me say, a year of transition. In fact, also our EBITDA in our, let me say, guidance is more or less flat compared to last year. Last year we did a big jump in the revenues and the EBITDA, and we need now to consolidate, let's say. Also people, companies need also to consolidate the idea that the things cost more than the last decade. Yes. Excuse me, if I may. In this scenario, perhaps also the price increases that were announced until now are likely to stick, are likely to continue to be accepted. I wouldn't see with this, with this volume scenario, a negative outlook provided. The will of the customers not to pay or requiring discounts or things like that. Is this something that is reasonable or are you seeing a different attitude from customers? Because in some way we are more used, we are all more used now to inflation and to accept price increase of everything. I think that the reason is the same of the few quarters that I gave a few quarters also ago. Now, each year, more or less everybody has to cut 3% because of the CO2. Considering that if I don't sell, I lose some margin, but I save EUR 85 of CO2. You have to consider also this in every balance sheet. Nobody is now trying to, let me say, follow the customer, decreasing the price because it decrease the margin and you spend the CO2. It's a completely silly move. When I said the last, I mean, a couple of quarter ago, that you have to look at this market as a regulated market now. Completely different, where you have from one side, the regulator that asks you to converge to a certain target in 2030, 2032, and to cap your emission with the actual technology. On the other side, the only way to do this without a technical, let me say, without a new way to produce cement, you can cut your emission or with blending or changing the fuel mix, but it has its limits. You can do till a certain point and then to cut production. For this reason, I expect that ourself and either other player are more disciplined because everybody is aware that one ton more sold gives you EUR 20 in margin and costs you EUR 80 in CO2. The... And the same is when you save. You sell 1 ton less. You have 1 ton in your pocket that you can spend all in the year, till 2030, or just to cash in. You have four times the margin that you have today in cement, as an average, more or less. For this reason, mainly, let's say, I don't think that I have to be 100% correct. I don't think like that, like other, let me say, times of downward in economy, we might see a chase to bring down the price to keep market share. Not, it's not this, the environment, where we move today. Thank you. The Egyptian pound, sorry, yes, it keeps devaluating, as you have seen in the first quarter, let's say the revenues were nearly 10% lower, the margin was higher even in... we export 50% and we serve the internal market 50%. The decrease of the Egyptian pound favors us for the export, and this is one of the reason why we increase the in absolute way, the EBITDA. Thank you. The next question is from Alessandro Cecchini of Equita. Hello, everybody. Just a quick follow-up on the pricing environment. You basically said that you expect year-on-year trending pricing to decline over the next quarter. It seems to me that is something related to comparison, or are you already assuming that you should, I mean, mitigate or to decrease pricing because some clients are asking even if the industry seems disciplined? If you can elaborate a little bit more on this topic. Thank you. Yes. I take this one. I think, I think you have to look at, you know, the year as a whole. I mean, clearly, it's very difficult to predict what's gonna happen. You know, in some countries, we do tend to agree on the undertake price negotiation on a yearly basis, so towards the end of the year for the following year. Most of the pricing for the core market has already been sort of set. Clearly, there are some area, as the chairman highlighted before, that where there is more evidence signal of a widening of the spread on-in that the spot prices of energy are declining significantly. Some clients selectively may ask for some pushbacks, but that's relatively selective. Overall, I think, the overall riding trend in Q1 has been, price increases still offsetting the average increase in energy cost. As explained before, what we see during the course of this year is a normalization on the cost side, because clearly the spot prices are now, despite the average being still high, significantly below last year average, and therefore, we would expect those costs on average to start normalizing and then decline if the spot prices remain where they are. Clearly, the price will sort of tend to follow. We cannot keep, you know, clearly increasing the price of the products in the face of a declining energy bill. That would follow. We don't see any significant disruption, I would say, in the price cost spread going forward. Probably, you know, Q1 has been a particularly, I would say, abnormal quarter in the delta, in the price cost spread. Overall, we see this normalizing over the course of this year. We, you know, for a number of reasons, as explained, linked to the uncertainty of the Turkish election, et cetera, we prefer to maintain the guidance where it is, also because Q1 represents a relatively small proportion of the yearly profits. It's a bit early days to draw any meaningful conclusion as far as the rest of the year. Thank you. You said about labor cost. This kind of inflation, it's already in your numbers, in the first quarter, or do you expect that the pickup in inflation in labor costs, you can see, I mean, in the second quarter or second half? Just to better understand this. Thank you. Depending from the country, for example, you know, in Italy, we were used to have a scala mobile that has been, let me say, abrogated 10, 15 years ago. There is no mechanical adjustment. For example, in Turkey, due to the very big inflation every quarter, the government decided to align the wages. In Belgium, last year, we had an 80% realignment for labor cost. In other countries, it depends. We have, let me say, put in every country an increase of labor cost, let's say, depend, as I said, on in some part is automatic, in other country are, let me say, driven from the central government, we don't know. They are, let's say, included in our. The guidance is already included this kind of, let me say, adjustment. Okay, many thanks. The next question comes from Giuseppe Grimaldi of BNP Paribas. Good afternoon, everybody. I have actually two questions. The first one relates to development that you have seen in April and in May. If you could give us an update, if we are still facing a scenario in which volumes are still double-digit down or high single-digit down, or things are improving. The second questions relate to the energy. If I remind correctly from the latest call, you mentioned energy as something like more than EUR 20 million headwind into the EBITDA of the year or something like that. If you look at the current spot price, do you think it is still fair to assume a headwind from energy costs in the whole year? Say is that what we see is that there is clearly a favorable development in energy because the spot prices today, despite being the average higher than the average of the last few years, still is way below what it was last year. The comps going forward, you know, Q2, Q3, would get easier. And so given the way the spot prices are and our hedging policy, which is a bit rolling. So we do generally hedge a high proportion of electricity and a lower proportion of thermal energy, especially coal, because in the case, for example, of pet coke, is not always easy to hedge or is almost unhedgeable in strict terms. We see that there is a favorable development in that the prices that we have envisaged and forecast and included in our numbers, when we did the budget that was in Q3, Q4 of last year, were higher than the spot price of today. If spot prices remain where they are, there could be a positive, I would say, tailwind, in our favor on the energy front. It's a bit early days given what happened last year, and you know very well what happened, especially from Q1, half of Q1 up to Q3. Over the summer, you know, prices of almost everything shot through the roof. We have to be cautious. If trends continue, I think there is, you know, a favorable development as far as this specific cost is concerned. With regard to April and May, flavor of how things are going, I would say that there is no evident reversal of the trends that we've seen in Q1. We still see a pretty much the same trend, at least, for the month of, you know, of April or May. We do expect, though, a stabilization towards mid-year, because of just mechanical factor, i.e, either comps, but also because we think that at some point these, you know, interest rate hikes will have, you know, sort of run it their course and the market should start to react also because, as you know, there are significant public investment programs in the different countries sustaining repair and maintenance, sustaining infrastructure, construction projects, et cetera. We're not like, you know, hugely optimistic, but we are confident over the medium term that the outlook for the industry is favorable. Especially also for the transition to a green economy, because you need quite a lot of building materials and cement in particular for the transition. I hope to have, you know, answered your question. No, very clear. Thanks a lot. Sure. Once again, if you wish to ask a question, please press star and one on your touch-tone telephone. For any further questions, please press star and one on your telephone. Gentlemen, at this time, there are no questions registered. Thank you very much then for your interest in Cementir Holding, and we wish all of you a pleasant rest of your day. Thank you. Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.