18 October 2023

(EPIC: SRC / Market: AIM / Sector: Construction Materials)

SIGMAROC PLC

 ('SigmaRoc', the 'Group' or the 'Company')

Q3 Trading Update

Continued strength in Q3, margin growth and full year expectations unchanged

SigmaRoc plc, the specialist quarried materials group, is pleased to update the market on Group trading for the nine months ended 30 September 2023 (the 'Period').

Financial highlights

·      Like-for-like ('LFL') revenue growth of 7% in the Period to £435.9m, reflecting the benefits of diversified market exposure together with effective pricing actions;

·      LFL Group volumes evolved in line with 1H23, at -4%, given softer demand in the residential construction sector which was largely offset by resilient conditions in infrastructure and industrial mineral markets;

·      Underlying EBITDA margin in the Period of 20% was ahead of both the prior year and management's expectations, resulting in underlying EBITDA for the Period up 11% LFL to £87.1m;

·      Cash generation for the Period has been positive with the focus on de-gearing through to 31 December 2023;

·      The Board remains confident in the Group delivering FY23 expectations*, while being mindful of the uncertain backdrop.

Strategic update

·      Integration of businesses acquired in 2023 progressing well and delivering expected synergies;

·      Incorporation of JV with ArcelorMittal expected this week, with the site for the new lime kilns now identified;

·      Aqualung carbon capture unit has completed trials to capture CO_2, and is now being developed to utilise captured CO₂ via a dedicated purification, compression and liquefaction unit;

·      Launch of Puccini blue, a revolutionary, highly sustainable re-interpretation of Belgium Blue Stone, revealing unique features not seen in other natural stone;

·      Progress on Materials Evolution partnership to produce low-carbon concrete products with the first plant on CCP's site near Wrexham expected to be operational mid-2024.

Operations and trading

Q3 has seen continued robust trading in most markets, thereby offsetting the anticipated weakness in new build construction, some agricultural products, and the earlier weakness in paper. Overall pricing evolved favourably, while some of the higher pass-through costs abated, along with further operational improvements, translating into improved margins. As a result, revenues rose 7% LFL on slightly softer volumes at -4% LFL. Including the contribution from acquisitions, Group revenues increased by 10% year-on-year in the Period to £435.9m.

Fundamental to this solid evolution across the third quarter is the diversified model and end market exposure which continues to provide resilience with several markets outperforming expectations.

·      42% of Group revenues for the Period ('Group Revenues') are derived from industrial minerals markets which have seen demand in line with budget, supported by structural drivers. In particular a recovery in pulp, paper & board following some destocking earlier in the year, alongside positive trends in environmental, agriculture & chemicals and continued strength in metals have led to a good performance in industrial minerals markets.

·      58% of Group Revenues are derived from construction markets, with well over half of this from infrastructure applications which have experienced continued strong demand. Whilst residential markets remain soft, we continue to manage this and to divert our assets towards the stronger infrastructure areas where we have greater visibility.  

Outlook

Whilst remaining mindful of the continued challenging conditions in some of the Group's markets, the delivery of a strong set of Q3 numbers, combined with our diversified end market exposure and decentralised operating model, provides the Board with confidence in delivering unchanged full year expectations.

Max Vermorken, CEO of SigmaRoc, commented:

"We have delivered another quarter of solid performance. 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 H1 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."

*Consensus expectations for SigmaRoc, being the average of forecasts for the year ending 31 December 2023 provided by Analysts covering the Company, are revenue of £596.9m and underlying EBITDA of £110.2m.

Information on the Company is available on its website, www.sigmaroc.com.

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About SigmaRoc plc

SigmaRoc is an AIM-listed buy-and-build group targeting quarried materials assets in the UK and Northern Europe. It seeks to create value by purchasing assets in fragmented materials markets and extracting efficiencies through active management and by forming the assets into larger groups. It seeks to de-risk its investments via strong asset backing at its projects.