# SigmaRoc’s Strong FY24 Performance Reinforces Growth Outlook – Zeus Capital

- Link: https://www.directorstalkinterviews.com/sigmaroc-s-strong-fy24-performance-reinforces-growth-outlook-zeus-capital/4121185884
- Published: 2025-02-05T15:28:29+00:00
- Author: Anthony Fox

**SigmaRoc** (LON:SRC) has successfully navigated a challenging market, delivering
strong results for FY24, as highlighted in Zeus Research’s latest update. The company’s
strategic execution, resilience, and ongoing portfolio optimisation have led to 
profitability and earnings outperforming expectations, reaffirming an investment
case.

#### **Executing on Strategy Amid Market Headwinds**

Despite a tough European construction market, particularly in Germany, SigmaRoc 
has demonstrated remarkable resilience. Proforma revenue for FY24 declined by only
2% on a like-for-like basis, improving from a 4% drop in Q3 and an 8% decline in
H1. This positive trend showcases the company’s ability to sustain growth even in
difficult conditions.

Zeus Research has increased its FY24 EBITDA estimate by 1% to £223 million and adjusted
EPS by 10% to 8.3p, reflecting SigmaRoc’s outperformance. The company’s divestment
of non-core concrete assets in France and Belgium for €49.5 million, with €37 million
already received, has also strengthened its balance sheet, reducing net debt estimates
to £508 million from £532.2 million.

#### **A Transformative Year with More Upside Potential**

The acquisition of European lime businesses in FY24 has significantly enhanced SigmaRoc’s
scale and asset quality. With FY25 marking the first full year of ownership, Zeus
forecasts revenue of approximately £1.1 billion, EBITDA of £250 million, and pre-
tax profits of £140 million.

According to Zeus, cost synergies could exceed the current €60 million guidance,
with the lower end of the range already increasing to €35 million from €30 million.
Additionally, refinancing the bridging loan later this year could result in significant
interest savings of up to €10 million, while further divestments could accelerate
debt reduction.

#### **Improving Profitability and Market Position**

Although market conditions remain difficult, SigmaRoc’s financial performance continues
to strengthen. The company reported a 4% reduction in proforma like-for-like volumes,
but revenue fell by only 2%, indicating the positive impact of pricing strategies
and improved business mix. More importantly, proforma EBITDA grew by 2%, with margins
expanding by 220 basis points to 22.3%, reinforcing management’s confidence in maintaining
margins above 20%.

#### **Valuation Undervalues SigmaRoc’s Earnings Quality**

Despite its improved fundamentals, SigmaRoc’s current valuation fails to reflect
its higher earnings quality. The company trades at just 5.0x EV/EBITDA and 8.2x 
earnings for FY25, significantly below historical averages and recent transaction
multiples. Zeus highlights that SigmaRoc’s position as a duopoly player in major
European lime markets enhances its competitive advantage and long-term value proposition.

Zeus remains bullish on the stock, maintaining its **BUY** recommendation and a **
158p target price**, implying a substantial 116% upside from the current share price
of 73p.

#### **In Summary**

SigmaRoc’s ability to execute its strategy effectively, improve margins, and reduce
debt underscores its strong investment case. With continued operational efficiencies,
potential cost synergies, and further deleveraging, the company is well-positioned
for sustainable growth in FY25 and beyond.

Zeus Research’s confidence in SigmaRoc remains unwavering, highlighting its attractive
valuation and significant upside potential.

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