HeidelbergCement has reported its results for the second quarter, which show an increase in group revenue of 10% to €3.6 billion and a €1.6 billion reduction in net debt.
“The positive trend in terms of revenue and operating income continued in the second quarter,” said Dr Bernd. Scheifele, Chairman of the Board. “The sustained recovery in our mature markets, particularly in the United Kingdom and the United States, has made a significant contribution. In operational terms, we were able to further increase the Group margin thanks to our margin improvement programmes and price increases in some of the core markets. Furthermore, we have benefited from the weak euro and low fuel costs.”
2Q15 sales volumes increased in all business lines, boosted by a recovery in North America and the UK. Cement and clinker sales volumes were up 0.9% y/y to 21.9 million t, with the best growth seen in the Africa-Mediterranean Basin Group area, followed by North America and Western and Northern Europe. Cement sales volumes in Africa were bolstered by the commissioning of a new clinker plant in Togo. However, the delayed start to infrastructure projects in Indonesia contributed to a decline in sales volumes in the Asia-Pacific region. In the first half, cement and clinker sales volumes rose 0.1% to 38.8 million t.
Aggregates sales increased by 4.4% in 2Q15 to 67.1 million t, while ready-mix concrete deliveries were up 0.2% y/y and asphalt increased 7.2% y/y.
Positive results for revenue and operating income
Group revenue was up 10.4% in 2Q15 to €3635 million (up 0.4% excluding consolidation and exchange rate effects), driven partly by the favourable impact of the weakening of the euro against numerous currencies, which amounted to a €303 million gain.
Operating income before depreciation (OIBD) was up 14.9% to €752 million, attributed to price increases and efficiency programmes, as well as low fuel costs. Operating income increased by €71 million to €557 million. Profit before tax from continuing operations rose by 25% to €439 million, as net interest expenses reduced and the financial result improved by €17 million to €-127 million.
Net debt for the quarter was down €1.6 billion y/y to €6.3 billion, thanks in part to the sale of the building products business, which brought a cash inflow of €1.25 billion. Correspondingly, the net debt to equity ratio improved to 40.7% from 62.5%. The leverage fell to 2.5x, within the targeted range of 1.5x to 2.5 x. The liquidity reserve amounted to €4.1 billion.
HeidelbergCement expects a continuing economic recovery in North America and greater demand for building materials. Eastern Europe is expected to benefit from the EU’s new infrastructure programme, and positive market development is expected in Northern and Western Europe. Sustained demand growth is also expected in Asia and Africa.
A moderate increase in energy and raw material costs is expected and the group plans to offset this with its efficiency programmes. The group also expects process optimisations valued at €120 million to be gained by the end of 2017 thanks to its Continuous Improvement Program.
“Thanks to the good results of the second quarter, we remain on course to achieve our outlook for 2015,” said Dr Schiefele. “We updated our strategic focus at the beginning of June as part of our Capital Markets Day. For now on, we will focus on accelerated growth and higher earnings for our shareholders.”
“We are confident about 2015,” he added. “We will continue to benefit from the positive development in North America, the United Kingdom, Germany and Northern Europe. These countries generate almost 50% of our revenue. The considerable drop in the oil price and the weaker euro will provide us with additional tailwind. In view of our strong positioning in raw material reserves, our production sites in attractive locations, our outstanding vertical integration, and our excellent product portfolio, we are well positioned to achieve our goals.”
Adapted from press release by Katherine Guenioui
Read the article online at: https://www.worldcement.com/europe-cis/29072015/heidelbergcement-reports-reduction-in-net-debt-232/