HeidelbergCement volumes and revenues strengthened by Italcementi contribution
HeidelbergCement said its sales volumes of building materials rose substantially in the second quarter as a result of the consolidation of Italcementi. On a pro-forma basis, ie taking into account Italcementi’s deliveries in the same period of the previous year, sales volumes declined slightly. Growth in sales volumes was impaired by fewer working days due to Easter and the end of Ramadan as well as wet weather, especially in the South, Northeast and Midwest of the USA.
The group’s cement and clinker sales volumes increased by 47 per cent to 32.8Mt (previous year: 22.3Mt) as a result of the acquisition. On a pro-forma basis, sales volumes declined slightly by one per cent. The strongest increase on a pro forma basis was recorded in North America followed by northern and eastern Europe-central Asia as well as Africa-eastern Mediterranean Basin. In Asia-Pacific, cement sales volumes declined due to festivities at the end of Ramadan in June and the resulting fewer selling days in Indonesia. Sales volumes in north Africa decreased accordingly. This decline was more than offset by the significant growth in sales volumes in the countries in sub-Saharan Africa.
Deliveries of aggregates also registered an acquisition-related rise of 18 per cent to 81.4Mt. Taking into account Italcementi’s deliveries in the same period of the previous year, the growth amounts to five per cent. Higher sales volumes in all group areas, excluding western and southern Europe and North America, and particularly the consolidation of the Mibau Group in northern Europe contributed to this increase.
Deliveries of ready-mixed concrete also rose as a result of the consolidations by 22 per cent to 12.2Mm3. On a pro-forma basis, sales volumes fell by six per cent. Asphalt sales volumes declined by five per cent to 2.4Mt.
In the first half of 2017, cement and clinker sales volumes rose as a result of the consolidation by 52 per cent to 60.7Mt. Deliveries of aggregates climbed by 20 per cent to 142.3Mt and of ready-mixed concrete rose by 26 per cent to 22.6Mt. Asphalt sales volumes fell slightly by one per cent to 3.9Mt.
On a pro-forma basis, cement and clinker sales volumes declined slightly by one per cent. Deliveries of aggregates increased by six per cent, whereas deliveries of ready-mixed concrete declined by four per cent.
As a result of the consolidation of Italcementi, revenue and result from current operations before depreciation and amortisation increased significantly. Group revenue rose by 29 per cent in the second quarter to EUR4611m. The result from current operations before depreciation and amortisation improved by 22 per cent to EUR964m. After depreciation and amortisation, the result from current operations rose by 14 per cent to EUR683m.
Revenue increased slightly on a pro-forma basis. The result from current operations before and after depreciation and amortisation, however, declined slightly by one per cent and three per cent, respectively. Cost inflation and a decline in sales volumes due to fewer working days as well as bad weather were almost offset by successful price increases and the realisation of synergies. In California weather-related production problems prevented a more significant improvement in results. The results in the emerging countries of Asia and Africa were significantly below prior year due to a sharp drop in prices in Indonesia, Thailand and Ghana and the weakening of the Egyptian pound. In northern and eastern Europe, however, the positive development continued.
“In the light of the difficult general conditions, we achieved a good result in the second quarter,” says Dr Bernd Scheifele, chairman of the Managing Board. “We were able to almost offset the effect of higher energy costs, bad weather conditions, fewer working days, and increased competition in some emerging countries. The synergies from the Italcementi acquisition are clearly visible in the results. Thanks to the ongoing refinancing of our maturities at more favourable terms, we could further improve the financial result and thereby make an important contribution to the further rise in our cash flow. All in all, we have again increased the Group share of profit for the period despite the challenging environment.”
In the first half of the year, group revenue rose significantly by 31 per cent to EUR8394m as a result of the consolidation. Result from current operations before depreciation and amortisation improved by 21 per cent to EUR1347m and after depreciation and amortisation it rose by seven per cent to EUR791m. On a comparable pro-forma basis, revenue increased slightly compared to the previous year's level. Result from current operations before and after depreciation and amortisation declined slightly by one per cent and four per cent, respectively. Profit before tax from continuing operations increased by EUR87m to EUR594m. Profit for the period rose to EUR362m. The profit attributable to non-controlling interests declined to EUR74m. The Group share of profit therefore improved to EUR288m and earnings per share rose to EUR1.45.
2017 outlook confirmed
The Managing Board has set the goal for 2017 of increasing revenue moderately and the result from current operations before exchange rate and consolidation effects by a mid-single to double-digit percentage on a pro-forma basis – ie taking into account the contributions of Italcementi for the first half of 2016 – as well as significantly improving the profit for the financial year before non-recurring effects.
“We have seen a clear upward trend since Easter and expect a significantly stronger development in the second half of the year,” explains Dr Scheifele. “We confirm our outlook for 2017. Strategically, we will maintain our focus on concluding the integration of Italcementi and reducing net debt through disciplined cash flow management.
"Our declared aim is to maintain a long-term investment grade rating. We will focus our investments on projects which strengthen our market position and offer synergy potential. In operational terms, we further concentrate on the following five areas: increase in customer satisfaction, high operating leverage, cost leadership, vertical integration, and optimised geographical positioning.”
Dr Scheifele added that the group remains cautiously optimistic for 2017, stating: “While the overall outlook for the global economy is positive, major macroeconomic and particularly geopolitical risks remain. HeidelbergCement will benefit from the good and stable economic development in the industrial countries, above all in the USA, Canada, Europe, and Australia. These countries generate more than 60 per cent of our revenue."
