European Lithium Project And Global Electrification Will Transform Advanced Minerals

Key Takeaways

• Imerys is poised for substantial, sustained earnings growth driven by transformative lithium projects, premium mineral solutions, and innovation-driven market share gains.
  
• Strategic portfolio reshaping, local supply chain advantages, and sustained demand in emerging markets position Imerys for resilient revenue and structurally higher margins.
  
• Rising regulatory, technological, and market pressures threaten to erode profitability, compress growth, and weaken Imerys' core business model amid ongoing legal, reputational, and competitive risks.

Catalysts

Engages in the supply of specialty minerals for various industries across Europe, the Middle East, Africa, Asia Pacific, and America.

• Analyst consensus anticipates Imerys will ride the EV wave, but this view significantly underestimates the transformative earnings impact of the EMILI European lithium project, which offers world-class scale, unrivaled cost competitiveness, and multidecade supply visibility-uniquely positioning Imerys for exponential revenue and EBITDA growth as the EV/energy storage adoption curve steepens.
  
• While analysts broadly expect Imerys to post margin gains from new products and pricing discipline, they overlook the accelerating margin expansion from premium, sustainable mineral solutions and innovation-driven market share gains, combined with operations weighted toward cost-advantaged, ESG-compliant production-setting the stage for structurally higher net margins.
  
• Rapid infrastructure expansion and urbanization in emerging and Asia-Pacific markets are triggering persistent, high-volume demand for construction materials, ceramics, and specialty additives, which, when coupled with Imerys' recent capacity investments and greenfield projects, are likely to drive above-market revenue growth well beyond what is currently reflected in expectations.
  
• Imerys' substantial portfolio reshaping-with divestments of low-margin legacy assets and aggressive redeployment into advanced specialty minerals-will progressively boost group profitability, elevate return on capital employed, and unlock balance sheet capacity for high-value R&D and potential bolt-on acquisitions, further accelerating earnings growth.
  
• The increasing regulatory preference for local, sustainable supply chains-especially in critical minerals for clean tech and construction-positions Imerys to capture structurally higher pricing and locked-in, long-term contracts in Europe and North America, driving resilient revenue streams and improved earnings stability even in cyclical downturns.

Imerys Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Imerys compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Imerys's revenue will grow by 7.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -4.8% today to 9.1% in 3 years time.
• The bullish analysts expect earnings to reach €383.3 million (and earnings per share of €4.54) by about September 2028, up from €-166.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 10.8x on those 2028 earnings, up from -10.7x today. This future PE is greater than the current PE for the GB Basic Materials industry at 9.6x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.02%, as per the Simply Wall St company report.

Imerys Future Earnings Per Share Growth

Risks

• Imerys faces significant risk from accelerating adoption of the circular economy and recycled materials, as this may structurally reduce demand for primary minerals and undermine long-term volume growth, putting pressure on both future revenues and operating margins.
  
• Stringent regulatory pressure surrounding ESG compliance has already resulted in higher-than-expected CapEx for the EMILI lithium project, and increasing global decarbonization efforts may cause sustained cost increases and limit demand for Imerys' higher-carbon products, negatively affecting long-term net margins and earnings.
  
• Imerys remains exposed to ongoing and unpredictable legal risks due to asbestos litigation in the U.S., with unknown schedules for resolution and potential for costly one-off charges, higher insurance costs, and reputational harm, which could suppress net earnings and increase financial volatility.
  
• The company's revenue growth in Europe is weak and relies heavily on protectionist measures; continued underperformance in its core geography, combined with slow diversification into higher-margin specialty materials, could cause Imerys to lag competitors and miss out on faster-growing opportunities in Asia and other markets, impacting top-line growth.
  
• Technological advances that enable end-customers to substitute traditional minerals with synthetic or bio-based alternatives, combined with increasing competition from large global players and low-cost suppliers, could structurally erode Imerys' sales volumes and compress profitability, jeopardizing both gross margins and market share over the long term.

Valuation

• The assumed bullish price target for Imerys is €38.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Imerys's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €38.0, and the most bearish reporting a price target of just €22.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be €4.2 billion, earnings will come to €383.3 million, and it would be trading on a PE ratio of 10.8x, assuming you use a discount rate of 9.0%.
• Given the current share price of €21.04, the bullish analyst price target of €38.0 is 44.6% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.