The world’s third-largest cement producer, HeidelbergCement AG, reported third-quarter profit that beat analyst estimates as sales grew faster than anticipated.
Beating the average estimate of €546.6 million in a survey of analysts, the company’s operating income fell only 2% to €562 million (US$770 million). The Heidelberg, Germany-based company also stated that sales rose for a sixth consecutive quarter, advancing 7% to €3.62 billion, exceeding an estimate of €3.52 billion.
“Due to our advantageous geographical footprint, we were able to achieve a stable operating income despite significantly increased energy and raw materials costs,” Chief Executive Officer Bernd Scheifele said in a statement. Higher energy and raw material costs, particularly in the cement business, held back profit growth, he said.
The company is fighting rising fuel costs weighting on industry profits, while sales benefited from markets growing at above-average pace. According to industry group BDZ, cement shipments in Germany rose 5% in the third quarter. The company reiterated a forecast to increase sales and operating profit this year.
Cement sales volumes in the quarter grew by 12%. Aggregates volumes rose 4%, while ready-mix concrete volumes grew by 9%, the company said in a statement. Net income fell 17% to €268 million.
Net debt fell from last year’s €8.65 billion to €8.5 billion at the end of the quarter. The company aims to cut debt to about €7.5 billion over the medium term.
The company reported it achieved savings of €251 million in the first nine months, ahead of a target for €200 million for the full year.
To counter cost inflation, Scheifele said he will continue to cut costs and raise prices, particularly next year.
Lafarge SA, the world’s largest cement maker, and Holcim Ltd, another cement giant, are expected to report their earnings soon.
Read the article online at: https://www.worldcement.com/europe-cis/03112011/heidelbergcement_profits_exceed_estimates/