HeidelbergCement net loss widens, confirms 2013 outlook

HeidelbergCement said its first-quarter loss widened in the first quarter of 2013 compared to a year ago as sales were impaired mostly by a weak European market. However, the German cement major reported a rise in operating income and has confirmed its 2013 outlook.

Group share of the after-tax loss was  EUR235m in the first quarter of 2013, wider than the EUR208m loss a year earlier.

Operating income before depreciation was higher on the year EUR219m from EUR212 in the same period a year earlier. Revenue in the first quarter of 2013 of EUR2.76bn was almost on a par with last year’s EUR2.80bn.

 “The improved operating income in the first quarter, despite declining sales volumes and revenue, shows that we are on the right track,” Chief Executive Officer Bernd Scheifele said in the statement. “The efficiency improvement programmes are going according to plan.”

The company's cost-cutting program "FOX 2013" led to an improvement in cash flow of EUR39m in the first quarter and the company confirmed it is well on its way to achieving its EUR1.01bn savings target.

The additional ordinary result fell to a loss of EUR32m from a loss of EUR10m in the same period a year earlier. The loss mainly relates to provisions made for anti-trust legal action taken against the company in Germany.

Due to its cost saving measures and cash management, HeidelbergCement was able to further improve free cash flow and reduce net debt by €0.6bn to €7.79bn compared to the end of 1Q12. Gearing improved to 56.2 per cent (previous year: 63.5 per cent).

Cement and clinker sales saw a slight decline of 0.7 per cent to 18.1Mt (compared to 18.2Mt in the first quarter of 2012). Sales advances in North America, Asia-Pacific and Africa-Meditteranean Basin areas almost completely compensated for losses in European markets.

Despite poor weather in eastern and northern USA, North America still achieved solid growt in sales volumes.

In Asia-Pacific and Africa-Mediterranean areas, the expansion of cement capacities in India and the high increase in volumes in Ghana and Togo contributed to a slight increase in sales volumes,

Cement sales volumes in the Western and Northern Europe Group area declined significantly due to the poor weather conditions. The harsh winter, coupled with difficult market conditions in some countries, also resulted in a loss of sales volumes in Eastern Europe-Central Asia.

During the first-quarter period the company commissioned 2.9Mt of cement capacity in Central India and increased its stake in Cement Australia from 25 to 50 per cent, adding a further 1Mta to overall group capacity. 

The group has confirmed its outlook for 2013 and sees continuing growth in Asia-Pacific and Africa-Mediterranean Basin and a sustained recovery in North America. The weakness in Europe is expected to continue with the exception of Germany, Scandinavia, and Russia.