Cementir Holding (BIT:CEM) Could Easily Take On More Debt

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.' So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. We note that Cementir Holding N.V. (BIT:CEM) does have debt on its balance sheet. But the more important question is: how much risk is that debt creating?

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When Is Debt Dangerous?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can't fulfill its legal obligations to repay debt, shareholders could walk away with nothing. While that is not too common, we often do see indebted companies permanently diluting shareholders because lenders force them to raise capital at a distressed price. Of course, plenty of companies use debt to fund growth, without any negative consequences. When we think about a company's use of debt, we first look at cash and debt together.

What Is Cementir Holding's Debt?

You can click the graphic below for the historical numbers, but it shows that Cementir Holding had €88.1m of debt in June 2025, down from €150.9m, one year before. But on the other hand it also has €309.5m in cash, leading to a €221.3m net cash position.

A Look At Cementir Holding's Liabilities

Zooming in on the latest balance sheet data, we can see that Cementir Holding had liabilities of €414.8m due within 12 months and liabilities of €343.6m due beyond that. Offsetting this, it had €309.5m in cash and €274.5m in receivables that were due within 12 months. So its liabilities outweigh the sum of its cash and (near-term) receivables by €174.4m.

Of course, Cementir Holding has a market capitalization of €2.12b, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time. Despite its noteworthy liabilities, Cementir Holding boasts net cash, so it's fair to say it does not have a heavy debt load!

See our latest analysis for Cementir Holding

The good news is that Cementir Holding has increased its EBIT by 2.8% over twelve months, which should ease any concerns about debt repayment. When analysing debt levels, the balance sheet is the obvious place to start. But ultimately the future profitability of the business will decide if Cementir Holding can strengthen its balance sheet over time. So if you're focused on the future you can check out this free report showing analyst profit forecasts.

Finally, a company can only pay off debt with cold hard cash, not accounting profits. Cementir Holding may have net cash on the balance sheet, but it is still interesting to look at how well the business converts its earnings before interest and tax (EBIT) to free cash flow, because that will influence both its need for, and its capacity to manage debt. During the last three years, Cementir Holding generated free cash flow amounting to a very robust 83% of its EBIT, more than we'd expect. That positions it well to pay down debt if desirable to do so.

Summing Up

We could understand if investors are concerned about Cementir Holding's liabilities, but we can be reassured by the fact it has has net cash of €221.3m. And it impressed us with free cash flow of €231m, being 83% of its EBIT. So is Cementir Holding's debt a risk? It doesn't seem so to us. Over time, share prices tend to follow earnings per share, so if you're interested in Cementir Holding, you may well want to click here to check an interactive graph of its earnings per share history.

At the end of the day, it's often better to focus on companies that are free from net debt. You can access our special list of such companies (all with a track record of profit growth). It's free.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.