Infrastructure Renewal Will Drive Low-Carbon Cement Progress

Key Takeaways

• Leadership in low-carbon cement and strategic asset optimization positions the company to capitalize on global sustainability trends and enhance long-term margins.
  
• Niche strength in white cement and expected volume recovery underpin stable revenues and margins, despite past disruptions and sector headwinds.
  
• Currency volatility, weak demand, rising costs, and regulatory pressures are constraining profitability and threatening long-term earnings growth across multiple Cementir markets.

Catalysts

Operates in the building materials sector in Italy, Nordic and Baltic, Belgium, North America, Türkiye, Egypt, and the Asia Pacific.

• Cementir's ongoing investments and leadership in low-carbon cement-evident through initiatives like the ACCSION carbon capture project (with a €220 million European Innovation Fund grant) and the launch of D-Carb low-carbon white cement-position the company to benefit from rising regulatory and customer demand for sustainable building materials, likely supporting future revenue growth and margin expansion as green construction accelerates globally.
  
• The company expects to recover volumes and EBITDA lost in H1 2025 due to one-off disruptions (fire in Belgium, technical restart in Egypt) in the second half of the year, with additional upside potential from insurance settlements (~€20 million) not included in current guidance, offering a potential catalyst for both earnings and cash flow improvements versus current consensus.
  
• Cementir's unique market positioning as the leading producer of white cement-"a peculiar niche" with higher pricing power-continues to offer resilience against broader cyclical slowdowns and supports both stable revenue and higher margins, as evidenced in the U.S. performance despite broader sector weakness.
  
• Management anticipates volume recovery and increased project activity in key regions (e.g., Denmark, Turkey, and the ramp-up from major infrastructure projects and the reconstruction of Syria) which tie directly to long-term growth in urbanization and infrastructure renewal, providing positive momentum for top-line growth over the next few years.
  
• The strategic disposal of underperforming or high-cost legacy assets-like the Kars plant in Turkey-frees up capital and avoids costly upgrades, supporting longer-term return on invested capital and margin stability, while reorienting the portfolio towards higher-growth, higher-return regions and product lines.

Cementir Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Cementir Holding's revenue will grow by 5.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 10.7% today to 11.8% in 3 years time.
• Analysts expect earnings to reach €231.4 million (and earnings per share of €1.41) by about July 2028, up from €178.2 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €190.0 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.3x on those 2028 earnings, up from 11.5x today. This future PE is greater than the current PE for the GB Basic Materials industry at 10.2x.
• 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 6.87%, as per the Simply Wall St company report.

Cementir Holding Future Earnings Per Share Growth

Risks

• Persistent currency devaluation-particularly in Turkey and Egypt-combined with hyperinflationary conditions and the resulting translation effects, have significantly reduced revenue and EBITDA in euro terms, exposing Cementir to ongoing exchange rate volatility that could continue to weigh on reported financial performance.
  
• Sluggish demand in mature European markets, especially in France (including a 20% volume drop in the Paris area post-Olympics) and weak residential/infrastructure spending in other regions, signals ongoing structural stagnation that could constrain volume growth and put pressure on top-line revenue in key geographic segments.
  
• Rising and unpredictable input costs, notably personnel expenses (as seen with sudden, inflation-driven wage hikes in Turkey), volatility in energy prices, and regulatory-driven switching to higher-cost fuels, contribute to declining margins and EBITDA compression across multiple regions.
  
• Price erosion in key growth markets like China and Malaysia (11.5% year-on-year revenue drop in China due to lower selling prices, and double-digit EBITDA decline in Malaysia from weaker export pricing) highlights heightened competition and limited pricing power, threatening long-term profitability and net margins.
  
• Large capital expenditure requirements for decarbonization, compliance with new ETS and carbon pricing regulations (e.g., Turkey's upcoming ETS adoption), and asset modernization in aging plants could diminish free cash flows and return on invested capital, presenting a long-term structural challenge to earnings growth.

Valuation

• The analysts have a consensus price target of €15.1 for Cementir Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €17.5, and the most bearish reporting a price target of just €13.2.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €2.0 billion, earnings will come to €231.4 million, and it would be trading on a PE ratio of 12.3x, assuming you use a discount rate of 6.9%.
  
• Given the current share price of €13.22, the analyst price target of €15.1 is 12.5% 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.