Overall, cement sales increased y/y thanks to positive trends in North America, Asia-Pacific and Africa-Mediterranean Basin Group areas, which made up for weaker demand in Europe. Aggregates and asphalt sales volumes declined as infrastructure spending in key markets of the US, UK and some Eastern European markets decreased. Operating income before depreciation (OIBD) and operating income (OI) improved as cost-saving measures, efficiency improvements and price increases kicked in, and this continued in the final quarter in spite of declining sales volumes. Full year revenues are positively influenced by the weakening of the euro against other currencies.
Western and Northern Europe
Revenues for the year were down by 2.7% overall (-4.8% on a like-for-like basis) to €4.201 billion, as sales volumes for cement/clinker/GBFS fell 3.9% to 21.3 million t. Though demand for construction materials remained stable in much of Germany and Northern Europe, the UK and the Netherlands weakened noticeably. OIBD and OI were significantly affected by positive pension effects in 2011.
Eastern Europe-Central Asia
Sales volumes and cement prices were positive in Russia and Central Asia, but overall results for the region were dampened by a decline in demand in Poland, Hungary and the Czech Republic. Revenues for the year totalled €1.435 billion, up 3.1% y/y (2.8% l-f-l) and for the quarter €320 million, down 0.9% y/y (-4.2% l-f-l). Cement/clinker/GBFS sales volumes fell 1% y/y to 17.2 million t for the full year, and -4.9% for the quarter.
Demand for cement and ready-mixed concrete improved in 2012, driven particularly by an increase in residential construction. Cement sales volumes recorded a double-digit growth of 10.1% for the full year (at 11.7 million t), 5.3% for the final quarter (2.9 million t). Revenues for the full year reached €3.441 billion, up 13.4% y/y (4.5% l-f-l).
Strong construction demand in the region supported a 3.9% increase in cement/clinker/GBFS sales volumes in 2012 and a 17.6% increase in revenue (12.3% l-f-l). OIBD, OI and the margins showed significant improvement, thanks largely to strong development in Indonesia where Indocement had a record year. 4Q12 showed a slight dip y/y due to weakened demand in China brought about by an early winter.
Another hotspot for Heidelberg, this region saw double-digit revenues growth, up 11% y/y (10.1% l-f-l) at €1.135 billion from €1.023 billion in 2011. Cement/clinker/GBFS sales rose slightly at 9.2 million t for the full year, up from 9.1 million t in 2011.
The International Monetary Fund expects a slightly increased growth in the global economy in 2013 provided that North America and Europe continue their efforts to resolve the debt crisis. This positive scenario is at risk from a failure to act on these points and from further armed conflict in the Middle East.
Heidelberg anticipates continuing economic recovery in North America, stable or slight growth in Germany, Northern Europe, Russia and Central Asia, and sustained positive demand in Asia and Africa. Group CEO Dr Bernd Schiefele says he is ‘cautiously optimistic’, but notes that the company has ‘not yet recovered the margin loss from massively increasingly energy costs over the past years’.
Cutting costs and improving efficiency
In January 2011, HeidelbergCement launched “FOX 2013”, a three-year programme of cost-saving measures that were intended to save US$600 million. The programme has exceeded expectations, creating US$384 million in cash savings during 2012, and so the group has decided to increase the three-year accumulated cash saving target to €1.01 billion.
“We will put special focus on price increases in 2013,” says Dr Schiefele. “For this purpose we started the projects “PERFORM” for cement in the USA and Europe and “CLIMB Commercial” for aggregates last year in order to achieve €350 million margin improvement by 2015. Deleveraging remains the highest priority for us, in order to regain our investment grade rating. We will also continue our successful strategy of targeted investments to expand cement capacities in the growth markets of Asia, Africa and Eastern Europe. Due to commissioning of further plants during the next months, we will increase our cement capacities in emerging markets by more than 5 million t in 2013.”
The complete consolidated financial statements including the outlook will be published on 14 March 2013.
Adapted from press release by Katherine Guenioui.
Read the article online at: https://www.worldcement.com/europe-cis/07022013/heidelbergcement_results_show_improvements_861/