HeidelbergCement saw revenues rise by 13 per cent to EUR15.2bn in 2016 and completed a successful acquisition of Italcementi with synergies increased to EUR470m.
"2016 was an exceptional year for HeidelbergCement," states Dr Bernd Scheifele, chairman of the managing board of HeidelbergCement. "With the successful takeover of Italcementi, we have accelerated our growth and are now in an excellent strategic position. In our core business lines of aggregates, cement, and ready-mixed concrete, we occupy first, second, and third place globally."
The group's sales volumes of cement, aggregates and ready-mixed concrete increased significantly as a result of the acquisition of Italcementi. Revenue rose by 12.6 per cent to EUR15,166m (previous year: EUR13,465m). The consolidation of Italcementi in particular contributed to this positive development. Revenue was impaired by negative currency effects of EUR326m resulting from the depreciation of a number of currencies against the euro.
Profit before tax from continuing operations fell by EUR109m to EUR1204m (previous year: EUR1313m). Income taxes rose slightly by EUR10m to EUR305m (previous year: EUR295m). As a result, net income from continuing operations decreased by EUR119m to EUR899m (previous year: EUR1019m). Net loss from discontinued operations amounted to EUR-3m.
Cash flow from operating activities from continuing operations increased by EUR392m to around EUR1.9bn as a result of the consolidation of Italcementi and the solid operational performance. The dynamic gearing ratio increased to 2.8x (previous year: 2.0).
2017 outlook
"We remain cautiously optimistic about 2017," continues Dr Bernd Scheifele. "While the overall outlook for the global economy is positive, the major macroeconomic and particularly geopolitical risks have increased at the same time. HeidelbergCement will benefit from the good and stable economic development in the industrial countries, above all in the USA, Canada, the United Kingdom, Germany, the northern European countries, and Australia. These countries generate approximately 60 per cent of our revenue."
Higher growth rates are particularly expected for countries in Africa south of the Sahara and in Asian countries with the exception of China.
The economic situation in Russia and Kazakhstan has improved following the increase in the oil price. In the African markets, the company expects an acceleration in demand growth together with a persistent level of competition. In Asia HeidelbergCement anticipates an upturn in demand, thanks in particular to increasing infrastructure investments in Indonesia. Nevertheless, a further decline in demand and an increase in excess capacities are expected in China.
"Completing the integration of Italcementi will be a point of focus of our activities in 2017," explains Dr Bernd Scheifele. "The rapid progress makes us very confident and we have therefore increased the synergy target from EUR400m to EUR470m. Another area of focus is the reduction of debt following the Italcementi acquisition by disciplined cash management.
