HeidelbergCement’s 2Q12 results see cement and clinker sales increase in North America and Asia

Results

HeidelbergCement has released its financial results for 2Q12 and the first half of the year. The company has reported a revenue of €3.781 billion between April and June 2012, an increase from last years €3.394 billion in the same period. Revenue also rose y/y in the first six months of 2012, from €5.996 billion to €6.58 billion. Operating income also increased in both the 2Q12 and January – June, reaching €495 billion and €509 billion, respectively. Profit before tax fell from €319 billion in 2Q11 to €318 billion in 2Q12, although overall profit grew from €208 billion to €249 billion.

HeidelbergCement’s ‘Fox 2013’ initiative improved cash flow by €138 million in the first half of 2012. Two new projects have also been introduced. ‘Leo’ aims to reduce logistics costs and generate €150 million in cost savings by 2014. ‘Perform’ will target improved cement margins in Europe and North America by assessing pricing and staff training.

“The quality of our results has clearly improved in the second quarter,” stated Chairman of the Managing Board, Dr Bernd Scheifele. “This is reflected especially by the significant increase in operating cash flow which led to a noticeable reduction in net debt. The price increases that we have implemented to offset the rise in energy costs were mostly successful. This enabled us to increase our cement margins in the second quarter of 2012 compared to the previous year. We will do everything in our power to continue this positive trend in the second half of 2012.”

Sales

In January – June, cement and clinker sales volumes increased by 4.1% to 42.7 million t, whilst shipments of aggregates fell from 115.2 million t in 2011 to 114.1 million t this year. Asphalt sales were hit the hardest, dropping 11% y/y.

Cement and clinker sales in 2Q12 increased 3.5% y/y to 24.5 million, driven by growth in Asia-Pacific. Sales in North America rose 10% y/y as the construction market improved. Despite increased cement sales in most of Northern Europe, deliveries in the UK and the Netherlands decreased. Ready-mix concrete deliveries rose by 1.6% y/y to reach 10.4 million m³, whilst asphalt sales decreased by 9.3%. The sales volumes of aggregates also declined in 2Q12, falling to 67.1 million t.

Expansion plans

• Construction of a 1 million t cement kiln in Ghana and a 0.5 million t kiln in Liberia is underway, with production set to commence in 4Q12.

• Commissioning is expected to begin at a new 2.9 million t plant in Central India in the latter half of 2012.

• Cement kiln no.3 has been modernised at Tanzania Portland Cement. This will increase clinker capacity by 250 000 t.

Outlook

The company has forecast a fall in cement sales in Western and Northern Europe due to faltering demand, but expects modest growth in Eastern Europe and Central Asia as production capacities increase in the region. As the construction industry continues to recover in Northern America, cement sales are predicted to increase accordingly.

“The result of the second quarter confirmed our outlook for the 2012 financial year”, continued Dr Scheifele. “In North America, we see a stronger than expected growth in demand. In contrast, construction activity in some European countries has weakened. Regarding margin development, we expect further declining cost pressure for energy in the second half of the year. We will unabatedly continue our efforts to reduce costs, improve efficiency, and increase prices. To further support those measures, we have started the two new initiatives ‘LEO’ and ‘PERFORM’, which are aiming at reducing logistic costs across all business lines and improving cement margins.”

Adapted from press release by Louise Fordham

Read the article online at: https://www.worldcement.com/europe-cis/31072012/cement_heidelbergcement_results_profits_sales_1179/