In 2022, Carthage Cement was able to ensure continued growth in sales, EBITDA and profits, despite a gloomy national context and an international environment characterized by rising raw material and energy prices.
The Tunisian cement producer was able to maintain its 23% market share in a shrinking sector, thanks to the quality of its products, which are recognized on both the local and export markets. But also thanks to a quality of service that strengthens customer relations.
In 2022, Carthage Cement’s turnover increased by 13% to TND 367 million, EBITDA (gross operating surplus) by 9.35% to TND 129.6 million and net profit by 13% to TND 35.6 million, making it the third profitable year in a row.
The financial structure of the cement company is also improving. Equity was consolidated at TND 203 million and net bank debt was reduced to TND 381.4 million (from TND 412.2 million in 2021) thanks to improved cash flow generation.
Cement producer wins $70 million contract for US market
“Thanks to its reputation and the quality of its cement,” say Mac Sa analysts, the Tunisian leader has won a contract to export one million tons of cement to the US market, with an option for a further 500,000 tons.
In fact, this firm order, which will be spread over 18 months, was due to start in September 2023, but will be delayed until it is certified for the American market, through an accreditation process that, according to Ibrahim Sanaa, is currently being carried out with the help of the client, whose identity is still being withheld by management.
Management told AfricanManager that the contract is worth $70 million. “A firm order that will be a major turning point for the company, especially as it involves the export of cement rather than clinker, which has a higher margin for the company,” note Mac’s analysts.
An ambitious but achievable BP
At its annual general meeting on June 26, Carthage Cement’s management also presented a business plan (BP) for the period 2023-2028. It forecasts revenues of TND 489.8 million in 2023, rising to TND 712.7 million in 2028, an average annual growth rate (AAGR) of 14.2%. Earnings are expected to consolidate further, rising from TND 35,650 million in 2022 to TND 50.9 million in 2023 and TND 152.6 million. Carthage Cement’s Managing Director, Ibrahim Sanaa, announced that based on these future results, the company should pay its first dividend in 2026 in respect of the 2025 financial year. It is important to note that this new American contract is not included in this business plan.
Divestment process to be restarted by early 2024
Regarding the sale of the State’s stake in CC, the Chairman pointed out that one of the obstacles encountered in the last two tenders was the agricultural nature of the land on which the plant is built. However, he said that the regulations were in the process of being changed and that the company had taken the necessary steps to change the use of its own land. Once this issue has been resolved, AL Karama Holding will launch a new tender at the beginning of the 2024 financial year, which will have a greater chance of success, supported by the good results expected for 2023.
“To sum up, Carthage Cement seems to be recovering calmly thanks to its efficient management, a state-of-the-art plant and recognized product quality, enabling it to consolidate its position in the local market and export to markets with high potential. The improvement in business levels and profitability has strengthened the company’s earning power and consequently improved its financial structure,” commented Mac Sa, the stock market broker.
Good figures at end of September
Carthage Cement recorded a total turnover of TND 322.866 million in the third quarter of 2023, an increase of 23% compared to the same period in 2022. The company continues to meet its commitments to financial institutions. In fact, at the end of September 2023, total debt reached TND 366 million, a decrease of 4%. At the same date, investments reached TND 18,525 million.
With a market capitalization of TND 715 million, Carthage Cement has a PBK (price to book ratio) of 2.813, a PER (result of dividing the share price by the net profit per share) of 14.015, an ROE (return on equity) of 25.11% and an annual performance of 10.53%.
*With financial analysis by Mac Sa
