HeidelbergCement’s profits tempered by rising costs

HeidelbergCement has announced a 3% increase in turnover in the second quarter of 2011, to €3.394 million. However, operating income before depreciation (OIBD) declined by 6.1% to €651 million, due to rising energy costs since the beginning of the year. Operating income decreased accordingly to €441 million (previous year: €492 million).

The company reported an increase in sales volumes in all of its business lines compared with the same quarter of the previous year, due to the sustained recovery in demand for building materials in Europe and Central Asia and the continuing growth in Asian and African countries.

During the second quarter, the group’s cement and clinker sales volumes rose by 8.2% to 23.7 million t (from 21.9 million t in the corresponding period of the previous year). The largest contribution was made by the Eastern Europe-Central Asia group area, followed by Western and Northern Europe, Asia-Pacific, and the Africa-Mediterranean Basin.

Chairman of the Managing Board, Dr Bernd Scheifele, said of the results: “Despite a positive development of turnover and results, we are not satisfied with the second quarter.” He continued: “We were not able to offset the increase in energy costs in the cement business line with the price increases implemented so far.”

The company’s profit before tax from continuing operations amounted to €319.1 million, while net income from continuing operations came in at €218.6 million. Overall, profit for the period rose by 25.2% in the second quarter to €208.4 million.

New projects
On 1 April, HeidelbergCement opened a cement terminal in Supsa, western Georgia, to supply cement to the Black Sea coast. In mid-July, it opened the new TulaCement plant in the town of Novogurovsky in the Moscow area, with a production capacity of 2 million t of cement. This year, the company plans to put new cement capacities totalling more than 6 million tpa into operation.

In June, HeidelbergCement announced the construction of a cement plant in western Kazakhstan, near the city of Aktau, with a capacity of 0.8 million t, which is scheduled to be commissioned by mid-2013. In addition, the cement capacity of the Cesla plant near St Petersburg is set to be expanded to 1.5 million t by 2014, with the construction of a new kiln line. In Ghana, the company is constructing a new cement mill with a capacity of 1 million t; production is scheduled to start in 2012. An additional new cement mill with a capacity of 650 000 t is scheduled for commissioning in Burkina Faso in 2013. All capacity expansion plans are covered by the company’s existing investment planning.

Outlook
In the Western and Northern Europe group area, the company anticipates further recovery in demand and thus increasing sales volumes for cement and aggregates, which will be primarily driven by strong trends in Scandinavia and Germany. The company also expects varying trends in the Eastern Europe-Central Asia group area. Subject to new decisions on debt reduction by the US government, HeidelbergCement continues to expect a slight volume increase in cement and aggregates in North America driven by sustained investment in road construction in the US and the continuing growth of the oil and raw materials industry in Canada. Meanwhile, the company also confirmed that it expects demand to continue developing positively in the Asia-Pacific and Africa-Mediterranean Basin group areas.

Read the article online at: https://www.worldcement.com/europe-cis/29072011/heidelbergcement%E2%80%99s_profits_tempered_by_rising_costs/