SigmaRoc LON:SRC, the AIM-listed building materials company published its results for the six months end-June today (9th September).
As previously reported, London-headquartered SigmaRoc manages 99 sites in 18 countries. It supplies a range of materials to the trade including limestone, aggregate, asphalt and ready-mix concrete.
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Building on a good year in 2023, SigmaRoc had a strong first-half of the year. Statutory revenues were GBP468.8m, up 60% from the same period in 2023 (GBP290m). In terms of statutory earnings, SigmaRoc reported GBP82m. This was up 57% from the GBP52.3m reported for the first six-months of 2023.
SigmaRoc acquisition frenzy
The company was busy in 2023. They announced the completion of a flurry of acquisitions in early January, with the first deal, a collection of German, Czech and Irish business from CRH LON:CRH and spent the year integrating the businesses. The transaction was for a total of EUR745m (GBP645m). It included standalone German businesses Fels Holding, 75% of Vápenka Vitošov a Czech business and Clogrennane Lime Limited of Ireland.
This transaction was paid for through EUR230m from a placement and EUR350m drawn-down from a newly-arranged EUR750m of debt and EUR75m deferred.
The company followed the multi-deal with the acquisition of Goijens, a supplier of ready-mixed concrete and pumping solutions from Belgium and Juuan Dolomiittikalkki a limestone supplier in Finland for a combined GBP12m.
The company then acquired CRH’s UK and Polish lime operations, after exercising call options of EUR225m. This brought total spending on acquisitions to around EUR1bn.
The aim of the acquisitions was to further SigmaRoc’s ambition to become northern Europe’s leading limestone provider. The miner argues that lime and limestone are key minerals in the sustainability theme. They are used in the process of producing and recycling lithium-ion batteries and the decarbonisation of construction, substitution cementitious materials.
SigmaRoc believes that the lime market will reach EUR1.9bn a year by 2031 across the company’s market. The new acquisitions are expected to be significantly cash generative with a free-flow cash target of GBP211m a year. Together they have a consistent performance track record. They delivered FY22 revenue of EUR580m and are expected to deliver EUR30m of EBITDA by the end of 2027.
Acquisition effect on SigmaRoc’s pro-forma results
Obviously the acquisitions have affected the company’s results. On a pro forma underlying basis SigmaRoc’s underlying revenue was down 8%. Half of that was a result of lower input cost pass through and half due to softer volumes. Underlying EBITDA was also down 3% year-on-year. However management advised the full-year underlying EBITDA will be in-line with consensus of GBP220m and revenue of GBP1.1bn.
Max Vermorken, SigmaRoc’s chief executive said: “The results show the resilience of SigmaRoc’s diversified business and operations and are testament to the hard work of all our staff […] The integration of the core of the CRH acquisitions has gone well, with Poland completing post period end. We expect to report good progress on the integration of this last piece of the CRH acquisitions later in the year.”
The company said that the second half has started well, with many areas of the business showing good demand, despite some areas of weakness. Progress on the synergy program continues with SigmaRoc delivering a FY22 revenue of EUR580m and is expected to deliver EUR35m of synergy benefits by 2027. This is even before allowing for synergies that will arise post completion of the Polish acquisition.
Vermorken said that with the recent acquisitions now completed, SigmaRoc has transformed into a business with several lifetimes supply of a key natural resource that is essential to all the processes around modern life. He said this resource base provides SigmaRoc with a unique position in the European lime market.
Positive outlook for SigmaRoc
The company believes that trading conditions in Europe present both head and tailwinds, which it is actively managing. It said that a rebound in residential construction has not yet materialised given prevailing high interest rates and relatively low new planning applications. SigmaRoc said that its industrial minerals division will see areas of outperformance and possible challenges in relation to expected softness in automotive demand. It reports environmental markets consistently strong in the food and agricultural segments, with weather-related pockets of lower demand in power generation.
SigmaRoc was established in 2016. A newco, the company was formed by industry executives David Barrett, who is the group’s current chairman, Vermorken and Charles Trigg, the current chief technical officer. Barret, Vermorken and Trigg all had careers in the construction materials sector prior to coming together to found SigmaRoc.
The founders set up the company with the aim of creating a new kind of construction materials business that could deliver high-quality products and services to customers in a more efficient and customer-focused way. They identified a gap in the market for a company that could provide a better customer experience and offer more innovative and sustainable solutions.
Disruption and innovation
The founders of SigmaRoc believed that the construction materials industry was ripe for disruption and innovation. They felt that traditional players in the industry were not adequately addressing the needs of customers or adapting to changing market conditions and customer preferences. They also saw an opportunity to improve the efficiency and sustainability of the industry via new technologies and processes.
The company’s shares opened trading this week at 67.6p, which had fallen to 65.9p by 11:00. Over one-year shares are up 20.3% and over the year-to-date up 25%. The company has a market capitalisation of GBP750m.
SigmaRoc’s aggressive acquisition strategy has positioned it as a key player in the European lime market, leveraging the growing demand for sustainable building materials. Despite short-term challenges, the company’s long-term outlook remains positive, driven by its diversified business model and strategic investments.
