HeidelbergCement: preliminary overview of Q4 and full year 2011

HeidelbergCement has announced its preliminary and unaudited figures for sales volumes, revenue, operating income before depreciation (OIBD) and operating income (OI) for the fourth quarter and full year 2011.

Preliminary Group financials

The Group’s sales volumes, revenue and OI increased compared to the prior year, driven by continued growth in HeidelbergCement’s emerging markets and the ongoing recovery of its mature markets in North America and Europe. Operating margins for the full year declined as sales price increases could not fully offset a significant surge in energy prices. The positive contribution to OI from emission rights declined by about €130 million to less than €10 million in 2011. The reduction was mainly due to two effects: the collapse of prices for emission rights in the fourth quarter of 2011 and the consequential decision to save surplus emission rights for future periods. The ‘FOX 2013’ programme exceeded expectations and resulted in cash savings of €384 million, including cost savings of more than €100 million in 2011.

Currency effects negatively influenced full year 2011 revenue and results, particularly the weakening of the US dollar compared to the euro. This mainly affected the Group areas in North America and the Africa-Mediterranean Basin. Adjusted for currency and consolidation effects, full year 2011 Group revenue, OIBD and OI increased by 10.7%, 4% and 3.2% respectively.

Supported by a solid development in all Group areas and a late winter start in Europe and North America, revenue and sales volumes continued to improve in Q4 2011. Excluding effects from emission rights and pensions, OIBD of the underlying business improved by 19.4% and OIBD margin increased by 0.8 percentage points in the fourth quarter as a consequence of the warm weather and easing energy cost pressure. Currency effects did not play a role for the Q4 2011 revenue and results.

Western and Northern Europe

The business development in Western and Northern Europe in 2011 was supported by the mild weather conditions at the beginning and end of the year that led to an extended construction season. Demand for building materials was especially strong in Germany and Northern Europe, driven by economic growth and increasing demand from residential construction in these countries. Fourth quarter sales volumes and revenue increased strongly due to the late winter start. However, OIBD and OI in Q4 declined compared with the same period in 2010 because of lower income from emission rights. OIBD of the underlying business improved by 28.3% and OIBD margin increased by 1.4 percentage points in the fourth quarter.

Eastern Europe - Central Asia

In 2011, shipments of cement and ready-mixed concrete in the Eastern Europe - Central Asia Group area rose by a double-digit percentage, driven by a strong recovery of demand in Central Asia and solid growth of construction activities in Poland and the Ukraine in preparation for the UEFA European Football Championship. OIBD and OI for the full year, and especially in the fourth quarter, were negatively affected by the decline of the price of emission rights. Excluding effects from emission rights, fourth quarter OIBD improved by 23.7% and OIBD margin increased by 0.8 percentage points.

North America

HeidelbergCement’s North America Group area continued its recovery in 2011. After a slow start due to adverse weather conditions in the first half of the year, especially in Canada, cement, aggregates and ready-mixed concrete sales volumes showed solid growth in the second half. During 2011, HeidelbergCement benefited from its balanced geographical exposure in North America, especially from the demand driven by the commodity industry in Western Canada and Texas. Results improved significantly due to the strong focus on cost cutting and efficiency improvements. OIBD in the fourth quarter increased by 37.7% and OIBD margin improved by 3.3 percentage points.

Asia-Pacific

Demand remained strong in Asia-Pacific as the economic growth in the region continued to fuel construction activities. As a consequence, revenue in the region showed double-digit growth for the full year and the fourth quarter. OIBD, OI and margins contracted in 2011, mainly due to a quarry accident in China in the first half of the year but also due to a significant increase in energy costs in the region that could not be fully compensated for by price increases. OIBD and OI rose in the fourth quarter, mainly driven by continued growth in demand in Indonesia.

Africa – Mediterranean Basin

Cement shipments and revenue in Africa increased by a double-digit percentage last year and results further improved while Spain continued to suffer from volume and price declines. In the fourth quarter of 2011, OIBD and OI were negatively impacted by a further weakening of results in Spain.

Read the article online at: https://www.worldcement.com/europe-cis/09022012/heidelbergcement-preliminary-overview-of-q4-and-full-year-2011/