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HeidelbergCement reports increased sales

Published by , Assistant Editor
World Cement,

In 2Q17, the sales volumes of HeidelbergCement’s building materials rose substantially as a result of the consolidation of Italcementi. On a pro forma basis, i.e. taking into account Italcementi’s deliveries in the same period of the previous year, sales volumes declined slightly. Growth in sales volumes was impaired by fewer working days due to Easter and the end of Ramadan, as well as rainy weather, especially in the South, Northeast, and Midwest of the USA.

The Group’s cement and clinker sales volumes increased by 47% to 32.8 million t (previous year: 22.3) as a result of the acquisition. On a pro forma basis, sales volumes declined slightly by 1%. The strongest increase on a pro forma basis was recorded in North America followed by Northern and Eastern Europe-Central Asia as well as Africa-Eastern Mediterranean Basin. In Asia-Pacific, cement sales volumes declined due to festivities at the end of Ramadan in June and the resulting fewer selling days in Indonesia. Sales volumes in North Africa decreased accordingly. This decline was more than offset by the significant growth in sales volumes in the countries in sub-Saharan Africa.

Deliveries of aggregates also registered an acquisition-related rise of 18% to 81.4 million t (previous year: 69.1). Taking into account Italcementi’s deliveries in the same period of the previous year, the growth amounts to 5%. Higher sales volumes in all Group areas, excluding Western and Southern Europe, and North America, and particularly the consolidation of the Mibau Group in Northern Europe contributed to this increase. Deliveries of ready-mixed concrete also rose as a result of the consolidations by 22% to 12.2 million m3 (previous year: 10.0). On a pro forma basis, sales volumes fell by 6%. Asphalt sales volumes declined by 5% to 2.4 million t (previous year: 2.6). In 1H17, cement and clinker sales volumes rose as a result of the consolidation by 52% to 60.7 million t (previous year: 39.9). Deliveries of aggregates climbed by 20% to 142.3 million t (previous year: 118.4) and of ready-mixed concrete rose by 26% to 22.6 million m3 (previous year: 17.9). Asphalt sales volumes fell slightly by 1% to 3.9 million t (previous year: 4.0). On a pro forma basis, cement and clinker sales volumes declined slightly by 1%. Deliveries of aggregates increased by 6%, whereas deliveries of ready-mixed concrete declined by 4%.

As a result of the consolidation of Italcementi, revenue and result from current operations before depreciation and amortisation increased significantly. Group revenue rose by 29% in the second quarter to €4611 million (previous year: 3575). The result from current operations before depreciation and amortisation improved by 22% to €964 million (previous year: 791). After depreciation and amortisation, the result from current operations rose by 14% to €683 million (previous year: 601). The implementation of the measures to integrate Italcementi is still progressing well. In North America, the operational margin of the acquired plants was already significantly increased. The synergy target for 2017 of €175 million was already achieved in the first half year. HeidelbergCement is confident to reach total synergies of around €500 million.

“In the light of the difficult general conditions, we achieved a good result in the second quarter,” says Dr. Bernd Scheifele, Chairman of the Managing Board. “We were able to almost offset the effect of higher energy costs, bad weather conditions, fewer working days, and increased competition in some emerging countries. The synergies from the Italcementi acquisition are clearly visible in the results. Thanks to the ongoing refinancing of our maturities at more favourable terms, we could further improve the financial result and thereby make an important contribution to the further rise in our cash flow. All in all, we have again increased the Group share of profit for the period despite the challenging environment.”

In view of the overall positive development of demand, HeidelbergCement still projects increasing sales volumes of the core products cement, aggregates, and ready-mixed concrete.

“We have seen a clear upward trend since Easter and expect a significantly stronger development in the second half of the year,” explains Dr. Bernd Scheifele. “We confirm our outlook for 2017. Strategically, we will maintain our focus on concluding the integration of Italcementi and reducing net debt through disciplined cash flow management. Our declared aim is to maintain a long-term investment grade rating. We will focus our investments on projects, which strengthen our market position and offer synergy potential. In operational terms, we further concentrate on the following five areas: increase in customer satisfaction, high operating leverage, cost leadership, vertical integration, and optimised geographical positioning. As a result, we will increase our efficiency and the satisfaction level of our customers, especially in the world’s rapidly growing metropolitan areas. We will continue to drive forward our global programmes to optimise costs and processes. Furthermore, we will deal more intensively with potentials arising from the digitisation of our value chain.”

“We remain cautiously optimistic about 2017,” continues Dr. Bernd Scheifele. “While the overall outlook for the global economy is positive, major macroeconomic and particularly geopolitical risks remain. HeidelbergCement will benefit from the good and stable economic development in the industrial countries, above all in the USA, Canada, Europe, and Australia. These countries generate more than 60% of our revenue. With the acquisition of Italcementi and its rapid integration, we have impressively demonstrated our tremendous business potential and strong momentum. From a global perspective, we are well positioned to achieve our strategic goals – continuous growth and sustainable returns for our shareholders.”

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