Titan Cement | Greener, leaner, better
H1’23 results driving upgrades… – Following an impressive Q1’23, Titan Cement reported another blowout quarter, with Q2’23 EBITDA +45% yoy. With H1 EBITDA +77% yoy at €241mn, Titan looks set for a significant step-up in profitability in FY’23 for second consecutive year. In the light of the stellar H1, we raise our 2023-25e EBITDA by 9-11%, now envisaging FY’23e EBITDA of €411mn (+24% yoy) and FY’24e EBITDA of €428mn. Our updated estimates reflect better demand and pricing, as well as an improved cost structure on account of decreased energy and freight prices and benefits stemming from the implemented capex.… as demand trends remain healthy… – In Q1'23, Titan successfully implemented price hikes in key regions, against a background of healthy demand with H1’23 cement volumes up 3% yoy (at c.8.4mn tons). Besides the general resilient macro backdrop, Titan’s regional footprint, with exposure in Florida, Mid-Atlantic USA and Greece, provide the group with a competitive advantage as the demand outlook in these regions looks stronger. On the cost side, given the de-escalation of energy and freight costs, profitability margins are on the rise with our recalibrated estimates pointing to EBITDA margins expanding to c17% over 2023-25e compared to 14.5% for FY’22.
… and ESG focus fosters growth – Besides market driven dynamics, Titan’s increasing focus on ESG not only aligns with the Group’s targets but also facilitates higher profitability margins as follows: 1)The digitalization projects improve productivity and efficiency, 2) Alternative fuels, which currently account for c.19% of the fuel mix, sustain lower and less volatile energy costs, 3) The lower clinker/cement ratio reduces energy needs, 4) Green products (c20% of total in 2022) are being produced, for which demand is stronger, therefore justifying above-average profitability margins, and 5) Lower CO2 emissions per ton of cementitious product (now c.610) allow increased utilization rate in plants that fall under the ETS scheme.
Lower capex = higher cash flow – Titan 's heavy investment plan is set to conclude in 2023, with our estimates pointing to reduced capex of €125mn per annum in the coming years. As a result, we anticipate strong free cash flow generation of over €120mn annually through 2025. This will result in net debt falling to
Titan Cement Co. and, its subsidiaries (collectively, the Group) are engaged in the production, trade and distribution of a range of construction materials, including cement, concrete, aggregates, cement blocks, dry mortars and fly ash. The Group operates primarily in Greece, the Balkans, Egypt, Turkey and the U.S. The Group operates in 14 countries in Europe, North America and the Eastern Mediterranean and is organized in the following four operating (geographic) segments: Greece and Western Europe, North America, South East Europe, and Eastern Mediterranean.
Eurobank Equities is a Greek-based firm offering research, sales and trading services to institutional, corporate and private clients. The company is wholly owned by Eurobank, one of the 4 systemic banks in Greece.
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