SigmaRoc posts strong first half results

SigmaRoc says it has returned a strong performance in the first half of 2020, despite the negative effects of the Covid-19 pandemic.
Quarry Products / August 4, 2020
By Liam McLoughlin
SigmaRoc CEO Max Vermorken
SigmaRoc CEO Max Vermorken

The London, UK-based buy-and-build construction materials company adds that, for the six-month period ended 30 June, it expects to report unaudited revenues of £54.5m and underlying EBITDA of £10.9m, representing 83% and 91% increases respectively over the same period in 2019.

Underlying EBITDA margins also improved to 20%, a net improvement on the prior year of 5%. SigmaRoc says this strong performance is explained by a return to stronger trading in May and June, cost reduction and operational efficiency projects, expansion of its product and service offerings, as well as some seasonality and foreign exchange effects.
Comparing these results on a like-for-like basis adjusting for subsequent acquisitions, revenues recorded for the period were approximately 100% of revenues for the same period in 2019.

Max Vermorken, CEO of SigmaRoc, commented: "The group's performance across the first six months of 2020 is extremely strong given the context and risks we faced. As a group we have demonstrated again that a decentralised business model focused on local markets works well in our industry and in challenging times. The group is further supported by a solid asset base."
The company says that, since February 2020, it has delivered a comprehensive and effective response to Covid-19, leveraging its decentralised and agile structure to enable each platform and business to implement specific forward-looking protocols; government health & safety and social distancing measures; and continual dialogue personally to their local communities, unions, staff, customers, suppliers and service providers.  
As a result of the solid trading performance and cash management strategies implemented, SigmaRoc's cash position increased by £7.4m over the six month period, to £17.3m, as at 30 June 2020. Group net debt evolved from £49.8m at 31 December 2019 to £46.5m at 30 June 2020. The company says the primary drivers of this change are good cash generation, foreign exchange fluctuations and standard intra-year financing of Belgian social security payments (to smooth its cashflow impact).
With regard to the group's operations, restrictions have now been lifted in the Channel Islands allowing Ronez to resume more normal trading, albeit against a backdrop of somewhat reduced activity in Guernsey. The group says it awaits further updates from the States of Guernsey and Jersey on infrastructure spending and while the project pipeline remains somewhat subdued in Guernsey and stronger in Jersey, it is possible some projects may be deferred to 2021.
In the UK, the group's PPG platform moved toward full production in May with stronger than expected performance in June as RMI and housing demand recovered. The supply of large-scale precast concrete products for infrastructure projects is helping the PPG platform deliver good results and residential refurbishment work has further supported demand for landscaping products as well as concrete blocks.
South Wales has only returned to normal trading during July as local road schemes and construction work resumed. As a result, the recovery of that section of the business remains behind that of other platforms. In general, however, the platform performed relatively well, shows good signs of recovery and should benefit from pent-up demand in the second half of the year.
In Belgium, operations returned to full capacity during May, with a strong month of June as a result. The drivers of this recovery have been a mix of a return to normal activity, catch up of temporarily suspended construction work and new demand for domestic projects as homeowners decided to refurbish their homes. Supplies to the Netherlands continued at a strong pace as the consequences of lock-down were less severe. Aggregate supplies resumed with the reopening of SigmaRoc's partner's operations in May and had a strong month in June as a result of the trends mentioned above.
Notwithstanding the consistent recovery in activity levels since May, SigmaRoc's board says that it is still too early to provide accurate guidance for the remainder of the year given continued uncertainty over the full impact of Covid-19 on the economy as well as the scale and timing of government support for spending in various construction market segments. This position will be kept under review and reassessed at the time of the release of full H1 2020 results planned for 7 September 2020.