Cost savings in Egypt and rising volumes in Sub-Saharan Africa were not enough to prevent HeidelbergCement’s Africa-Eastern Mediterranean Basin business reporting a fall in earnings in 2017, as weak Egyptian volumes and margin pressure in Sub-Saharan Africa more than offset the more positive trends.
Like-for-like earnings down 2.7% in 2017 at €367 million, while cement volumes were down 0.6% at 19 million t.
Volume growth in Sub-Saharan Africa was “not sufficient to compensate for the decline in Egypt due to the weak economy of the country,” HeidelbergCement said in its latest results. “On the cost side, Egypt could realise significant savings due to […] synergies and the adjustment of the fuel-mix due to the commissioning of a new coal mill. However, this was not sufficient to compensate for the margin pressure in the sub-Saharan countries.”
There was however signs of improvement through the year with sales volumes growth in 4Q17 well above the annual average. Cement volumes were up 6.2% in the final quarter, while volumes of aggregates, ready-mixed concrete, and asphalt were significantly higher. Earnings meanwhile were up 20.2% in 4Q17.
Demand growth is expected to accelerate through 2018, according to Dr Bernd Scheifele, Chairman of the Management Board at HeidelbergCement, continuing the positive trend seen at the end of 2017. Competition will however continue to pressurise margins across the region.
Read the article online at: https://www.worldcement.com/africa-middle-east/06032018/green-shoots-in-a-challenging-market/