Highlights Q2 2010 and prospects:
- Trend change: sales volumes of cement, aggregates and ready-mixed concrete increase in comparison to last year.
- Turnover at €3.3 billion (+9.5% compared to same quarter last year).
- Operating income at €492 million (+10.4% compared to same quarter last year).
- Profit for the period of €166 million includes expenses of €101 million for restructuring and refinancing.
- Cost-saving programme "FitnessPlus 2010" on track.
- Liquidity and maturity profile further improved through the issue of a new Eurobond.
- Sustained growth expected in Asia-Pacific, Africa-Mediterranean Basin, and North America.
- Focus on reducing debt and targeted expansion of cement capacities in growth regions.
Q2 sales volumes benefit from recovery in North America
While HeidelbergCement's development in the first quarter of 2010 was characterised not only by economic factors but also, to a considerable extent, by the long period of wintry weather, demand for building materials recovered significantly in the second quarter. Thanks to sustained growth in Asia-Pacific and Africa, as well as recovering markets in North America, the sales volumes for cement, aggregates and ready-mixed concrete in the second quarter were above the figures for the same quarter of the previous year. In North America, the Group is now seeing the effects of the infrastructure projects, while demand is recovering in Western and Northern Europe, exceeding last year's level for aggregates and ready-mixed concrete. In the Eastern Europe-Central Asia Group area, sales volumes further decreased in the second quarter, although the declines were noticeably smaller. The growth in the other Group areas clearly outweighed these losses.
During the second quarter, the Group’s cement and clinker sales volumes rose by 1.2% to 21.9 million t (previous year: 21.6). The biggest contribution was made by the Asia-Pacific Group area, followed by North America and Africa-Mediterranean Basin. In Asia, HeidelbergCement benefited from its strong position in Indonesia; activities in North America were driven primarily by demand in Canada and the northern part of the United States. While volumes in Eastern Europe-Central Asia experienced a significant decline once again, figures in Western and Northern Europe almost reached last year's level.
In the first half-year, cement and clinker sales volumes slightly decreased by 1.6% to 37.1 million t (previous year: 37.7). Deliveries of aggregates remained stable at 108.3 million t. Deliveries of ready-mixed concrete decreased by 2.0% to 16.4 million t (previous year: 16.8). Asphalt sales volumes fell by 15.4% to 3.7 million t (previous year: 4.4).
Development of turnover and results
Group turnover rose by 9.5% in the second quarter to €3296 million (previous year: €3011 million). Turnover improved in all Group areas except Eastern Europe-Central Asia. Excluding exchange rate and consolidation effects, turnover increased by 0.8%. Operating income before depreciation (OIBD) improved by 9.3% to €693 million (previous year: 635). Operating income rose to €492 million (previous year: 446).
"As a result of the improved development in our core markets and the successful continuation of our cost-saving programmes, we were able to increase our turnover and operating income in the second quarter in comparison with last year", said Chairman of the Managing Board Dr. Bernd Scheifele. "In addition, we further strengthened our liquidity and maturity profile. Our 'FitnessPlus 2010' continues to be on track and generated savings of €124 million in the first half of the year."
Further improvement in maturity structure and liquidity
By issuing a new Eurobond on 22 June 2010 (closing date on 1 July) with an issue volume of €650 million and a term ending on 15 December 2015, HeidelbergCement further improved its maturity profile and increased its liquidity. At the end of the second quarter, the liquidity amounted to €2874 million; as a result of the bond issue, liquidity increased to €3524 million on a pro-forma basis. Net debt rose by around €100 million in comparison with the same quarter of last year to €9066 million. This was mainly a result of exchange rate effects and a slight increase in working capital; both effects were only partially offset by a positive cash flow. In comparison with 30 June 2009, net debt decreased by €2.2 billion.
The OECD and IMF have raised the forecasts for global economic growth for the whole year as a result of the positive development in the first half of the year. Development dynamics still clearly differ from region to region. In Asia, continued growth is anticipated, although growth rates in China are expected to weaken slightly in the second half of the year. Economic activity in Western Europe and North America has undergone a significant recovery following the long, hard winter, while Eastern Europe is still grappling with the crisis. According to all forecasts, uncertainties still remain over the strength and timescale of the economic recovery because of the high level of unemployment and national debt in individual countries.
HeidelbergCement continues to expect a noticeable positive business development in the Asia-Pacific and Africa-Mediterranean Basin Group areas. In North America, on the basis of the considerable increase in expenditure on road construction, the recovery is expected to continue in the second half of the year.
“Debt reduction remains an important area of focus,” said Dr. Scheifele. “At the same time we will continue with our targeted investments in future growth, particularly in cement activities, in the emerging countries of Asia, Africa, and Eastern Europe. With improved cost structures, our operational strength and leading market positions, we believe we are well-equipped to benefit to an above average degree from an economic upturn in the course of this year and the next."
The full results can be found at www.heidelbergcement.com
Read the article online at: https://www.worldcement.com/europe-cis/30072010/heidelbergcement_increases_turnover_and_operating_income/