HeidelbergCement ‘confident’ on 2015 outlook

HeidelbergCement’s 2014 consolidated financial results show increases in revenue and operating income, and significant increases are expected for the year in hand.

The group's turnover increased by four per cent last year to EUR12,614m, or by 8.4 per cent on a comparative basis, and the EBITDA improved by a 2.9 per cent to EUR2288m and the trading profit advanced by five per cent to EUR1595m, or by 12.9 per cent adjusting for currency movements and changes in the scope of consolidation. After a 17.1 per cent increase in net interest payments to EUR629m, the pre-tax profit declined by 8.9 per cent to EUR931m and the net attributable profit fell by 34 per cent to EUR486m after a EUR179m loss from discontinued activities and a 2.5 per cent higher minorities charge of EUR202m, though the tax charge was 69.3 per cent lower at EUR65m. The dividend is being increased by 25 per cent to EUR0.75 per share.

Net debt at the end of the year was 5.2 per cent lower at EUR6929m and the gearing ratio fell from 58.3 per cent to 48.6 per cent. Capital investment declined by 9.3 per cent to EUR1,125m and is expected to amount to around EUR1200m in 2015.

Group sales of cementitious materials improved by 4.7 per cent to 81.8Mt and the aggregates volume rose by 5.6 per cent to 243.6Mt. Ready-mixed concrete deliveries were ahead by 4.8 per cent to 36.3Mm³, while shipments of asphalt increased by 11.4 per cent to 9.3Mt. The international trading turnover improved by 14.5 per cent to EUR1,077m and the EBITDA rose by 27.8 per cent to EUR27m as cement and clinker volumes advanced by some 18 per cent to 7.4Mt, helped by strong volumes in East Africa, Egypt, Bangladesh and South America.


The northern & western European business increased turnover by 6.2 per cent to EUR4012m and the EBITDA improved by 7.2 per cent to EUR562m and the trading profit rose by 13.7 per cent to EUR329m. Shipments of cementitious materials recovered by 3.4 per cent to 21.6Mt while deliveries of aggregates were ahead by 5.0 per cent to 65.2Mt. Ready-mixed concrete deliveries advanced by 7.7 per cent to 13.0m m³ and sales of asphalt rose by 17.9 per cent to 3.1Mt. Demand for construction materials rose further in Great Britain and was also ahead in Germany and benefited from the increased size of the operations in Belgium. British margin improvements helped operating income to double. Cement volumes lower in Norway and Sweden but up in Estonia. The Netherlands experienced lower volumes and prices across all product categories.

In eastern Europe & Central Asia turnover declined by 4.9 per cent to EUR1182m, largely because of the drop in the value of the Russian and Ukrainian currencies and lower volumes in the Ukraine were not fully compensated for by the volume improvements in Poland, Czech Republic, Romania, Russia, Georgia and Kazakhstan. The EBITDA declined by a further 11.1 per cent to EUR230m and the trading profit came down by 14 per cent to EUR129m. The cementitious volume, however, did increase by 7.3 per cent to 17.1Mt and aggregates shipments improved by 8.9 per cent to 20.4Mt and ready-mixed concrete staged a 9.2 per cent recovery to 2.9Mm³. Prices for cement in particular, were under pressure in several markets.

The North American turnover increased by 10.2 per cent to EUR3049m and excluding the exchange rate effects, the improvement was 11.9 per cent. EBITDA improved by 9.9 per cent to EUR610m and the trading profit rose by 14.1 per cent to EUR413m. Shipments of cementitious materials rose by 4.1 per cent to 12.1Mt and sales of aggregates were ahead by 6.1 per cent to 110.5Mt. Ready-mixed concrete deliveries improved by 8.5 per cent to 6.3Mm³ and pricing improved. Sales of asphalt showed a 16.4 per cent recovery to 3.6Mt. The higher prices achieved more than compensated for the weakness of the dollar against the euro. Growth in cement volumes were strongest in the south, principally in Texas.

The Asia-Pacific turnover declined by 2.1 per cent to EUR2818m, but in constant currency would have shown a 7.3 per cent improvement, and EBITDA was down by 4.6 per cent to EUR743m. The trading profit eased by 4.4 per cent to EUR623m, because of the lower value of the Indonesian and Australian currencies and higher labour costs. Cement and clinker volumes improved by five per cent to 24.6Mt, thanks to the increased production capacity in Indonesia and in India. Downstream, shipments of aggregates rose by 4.2 per cent to 37.7Mt, but ready-mixed concrete deliveries eased by 0.3 per cent to 11.4m m³ while asphalt sales rose by 4.7 per cent to 2.3Mt. Good volume growth was seen in Bangladesh, but prices were weaker. Australia saw volume growth in all activities.

In the Africa and Mediterranean region, turnover eased 4.1 per cent to EUR910m, though there was an underlying improvement of 11.4 per cent, and the EBITDA did rise by nine per cent to EUR213m while the trading profit rose by 10.4 per cent to EUR184m. Shipments of cementitious materials declined up by 1.9 per cent to 6.4Mt and the aggregates volume came down by 4.2 per cent to 10.8Mt, but ready-mixed concrete deliveries showed a 1.2 per cent recovery to 3Mm³. The asphalt business in Israel saw volumes drop by 22.8 per cent to 0.4Mt. Volumes were ahead in Ghana, but the results suffered from devaluation of the currency. Tanzania and Togo both saw higher volumes and improved results. Pricing improved in Turkey, where domestic deliveries were some five per cent higher, but exports declined.

Outlook
Looking ahead, the HeidelbergCement management is expecting volume growth in all areas as well as lower financing costs. In the USA, cement consumption is forecast to increase by 4.8 per cent this year and by 7.9 per cent next year, while in Great Britain cement demand is forecast to increase by seven per cent this year and by 4.5 per cent in 2016. Increased growth and additional capacities should lead to higher volumes in Indonesia and India and solid performances are expected from Germany and from Australia as well as improvements in Poland, Belgium, The Netherlands, the Czech Republic and Romania.

“We are confident about 2015”, continued Dr Bernd Scheifele. “The outlook for the global economy is positive, but there are still macroeconomic and especially geopolitical risks. We will continue to benefit from the positive development in North America, the United Kingdom, Germany, and Northern Europe. These countries generate almost 50 per cent of our revenue. The considerable drop in the oil price and the weaker euro will provide us with additional tailwind. The results of the first two months in 2015 confirm our outlook.”