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HeidelbergCement reports Q3 results

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World Cement,

Highlights Q3 2016 and outlook:

HeidelbergCement reports Q3 results

  • Significant improvement in sales volumes, revenue, and operating income after first-time consolidation of Italcementi – premium earned on cost of capital
  • Sales volumes: 33 million t of cement (+52%), 80 million t of aggregates (+11%), 12 million cubic metres of ready-mixed concrete (+29%).
  • Group revenue up by 25% to €4.5 billion (previous year: 3.6).
  • Operating income before depreciation (OIBD) increased by 17% to €1.0 billion (previous year: €865 million).
  • Profit and net debt include acquisition-related costs.
  • Group share of profit of €339 million contains acquisition-related extraordinary charges of €63 million; ytd adjusted EPS increaes to €3.39 (prior year: €3.34).
  • Rise in net debt to €8.9 billion following payment of the acquisition price for a 49% stake in Italcementi and takeover of the liabilities of Italcementi – pro forma leverage rose to 2.8 times.

  • Italcementi takeover completed
  • Mandatory takeover bid successful at the first attempt; squeeze out and delisting of Italcementi share completed.
  • HeidelbergCement holds 100% of the Italcementi shares as from 12 October.
  • Sale of business activities in Belgium and the USA almost completed as a condition of the antitrust authorities.
  • Divestment proceeds totalled €1.14 billion (more than €100 million above plan).

  • Italcementi integration faster than expected
  • Management changes in all key country organisations of Italcementi.
  • Redundant headquarters closed.
  • Reduction in staff much faster than expected.
  • HeidelbergCement very confident to exceed the €400 million synergy target.

  • New efficiency improvement programs initiated
  • “Competence Centre RMC” (CCR): improvement in result of €120 million over three-year period thanks to optimisations in logistics and mix design.
  • “Sales is a Science”: best-in-class sales and price management.

  • Outlook 2016 including Italcementi confirmed
  • Increase in sales volumes of cement, aggregates, and ready-mixed concrete.
  • Moderate increase in revenue and high single to double-digit increase in operating income on a comparable pro forma basis.

Q3 sales volumes at significantly higher level – first-time consolidation of Italcementi and positive market environment in mature markets

In the third quarter, the sales volumes of HeidelbergCement’s building materials rose significantly, as a result of the first consolidation of Italcementi. In addition, demand developed positively in numerous markets, especially in Europe, where sales volumes of cement, ready-mixed concrete, and asphalt further increased. In contrast, a very rainy summer in some parts of North America resulted in a slight decline in demand for cement and aggregates.

The Group’s cement and clinker sales volumes rose by 52% to 33.2 million t (previous year: 21.8) in the third quarter. The sales volumes of Italcementi’s markets in Italy, France, Spain, Greece, Bulgaria, Kazakhstan, India, Thailand, Egypt, Morocco, Mauritania, Gambia, and North America were included for the first time. Taking into account Italcementi’s deliveries in the same period of the previous year on a pro forma basis, the growth amounts to 5%. Cement sales could be increased in all Group areas. The strongest rise on a pro forma basis was achieved in the Northern and Eastern Europe-Central Asia Group area, followed by Asia-Pacific, and Africa-Eastern Mediterranean Basin. In North America, sales volumes rose slightly despite adverse weather conditions in some regions.

Deliveries of aggregates increased by 11% to 80.3 million t (previous year: 72.6). The sales volumes of Italcementi’s markets were included in this figure for the first time, particularly in France, Italy, Greece, Morocco, and North America. Taking into account Italcementi’s deliveries in the same period of the previous year on a pro forma basis, the growth amounts to 1%. Higher sales volumes, particularly in the Western and Southern Europe as well as Africa-Eastern Mediterranean Basin Group areas, contributed to this development. Deliveries of ready-mixed concrete also rose as a result of the new consolidation by 29% to 12.5 million cubic metres (previous year: 9.7). On a pro forma basis, the increase reached 2%. Asphalt sales volumes grew by 8% to 3.1 million t (previous year: 2.9). Italcementi has no asphalt production facilities and therefore did not contribute any additional sales volumes.

In the first nine months of 2016, cement and clinker sales volumes rose by 4% on a pro forma basis to 94.2 million t (previous year: 90.8). Deliveries of aggregates increased by 3% to 214.1 million t (previous year: 207.8) and deliveries of ready-mixed concrete rose by 2% to 35.7 million cubic metres (previous year: 35.1). Asphalt sales volumes also increased by 2% to 7.1 million t (previous year: 6.9).

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