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HeidelbergCement experiences good revenue and results growth in 2019

Published by , Deputy Editor
World Cement,

Highlights include:

  • Revenue up by 4% to €18.9 billion.
  • Results from current operations before depreciation increase by around 16% to €3.6 billion.
  • All Group areas contribute to growth of results.
  • Net debt significantly reduced by €1.2 billion to €7.1 billion.

In addition to the preliminary unaudited figures already published on 12 February 2020, HeidelbergCement presents today – as scheduled – preliminary unaudited figures for the Group areas and the fourth quarter 2019.

“We have concluded the 2019 business year successfully,” said Dr. Dominik von Achten, Chairman of the Managing Board of HeidelbergCement. “All Group areas contributed to the good results – however with varied development in the respective group regions and quarters. This shows once more, that we profit overall from our broad regional presence and the vertical integration from cement to aggregates, to ready-mixed concrete and asphalt.”

Good revenue and results growth

Group revenue for the whole of 2019 increased by 4.3% to €18.9 billion (previous year: 18.1) compared to the previous year. Excluding consolidation and exchange rate effects, it grew by 2.1%. Positive revenues in the core activities cement, aggregates, and ready-mixed concrete were offset by lower revenue in the company’s trading business – caused especially by the trading of fuels that has been reduced in the fourth quarter of 2019.

Results from current operations before depreciation increased by 15.5% to €3 580 million (previous year: 3,100). Like-for-like, the rise amounted to 2.5%. The result from current operations increased by 8.8% to €2 186 million (previous year: 2,010). Like-for-like, it rose by 4.7%.

All group areas contributed to the growth of results from current operations before depreciation. Western and Southern Europe recorded the highest rise, followed by Asia-Pacific and Northern and Eastern Europe-Central Asia. Results in North America and in the Group area Africa-Eastern Mediterranean Basin also developed positively.

In the fourth quarter 2019 results of the group areas were characterised by various dynamics. In North America, business in the US developed positively, while results in Western Canada declined. Results in Western- and Southern Europe were impaired by the strong comparable basis of the previous year’s quarter as well as market-related temporary effects in the UK, Belgium/Netherlands, and France. In the group area Northern and Eastern Europe-Central Asia, especially the eastern European countries, contributed to the results growth. In Asia-Pacific, good results in Indonesia and Thailand more than offset the weaker development in Australia. Recovery in the group area Africa-Eastern Mediterranean Basin continued in the fourth quarter.

Net debt reduced more than expected

Net debt could be significantly reduced in the fourth quarter 2019. Before accounting for lease liabilities amounting to around €1.3 billion, net debt declined by approximately €1.2 billion to €7.1 billion compared to the previous year. Dynamic gearing ratio fell to 2.3x. “As in the third quarter, we were able to generate a strong cash flow in the last quarter and thereby net debt fell markedly below the already downward adjusted forecast from November 2019,” said Dr. Lorenz Näger, Chief Financial Officer of HeidelbergCement.

Initial outlook 2020

In its forecast from January 2020, the International Monetary Fund (IMF) anticipates a continuation of global economic growth. The growth rate is expected to increase from 2.9% in 2019 to 3.3% in 2020. This positive assumption is based on signs of growing industrial production, increasing worldwide trade and looser monetary policy, favourable developments in the trade talks between the USA and China, and the prospect of an orderly Brexit.

The development of economic output is also reflected in the estimated demand for building materials. HeidelbergCement expects demand to further develop positively in many markets in the 2020 business year, in particular in the emerging markets. Crucial factors for the actual extent of growth include local economic development, the amount of public investment, and the development of credit costs for property financing.

The complete consolidated financial statements of HeidelbergCement, including the outlook for the business year 2020, will be published on 19 March 2020.

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