HeidelbergCement reports improved 1Q results due to volume and price increases

HeidelbergCement posted revenues of EUR4.238bn in January-March 2019, up 16.9 per cent when compared with the 1Q18. Like-for-like (LfL) – ie, excluding positive exchange rate effects of EUR68m – the change from the 1Q18 was 15 per cent. EBITDA jumped 58.6 per cent (25.8 per cent LfL) to EUR396m YoY while the result from current operations reached EUR60m. Key drivers were improved sales volumes in group areas Western and Southern Europe, Northern and Eastern Europe-Central Asia, and North America as well as successfully-implemented price increases in many markets. The initial application of IFRS 16 (Leases) accounting standard also supported EBITDA.

The group reported a 1.6 per cent (2.6 per cent LfL) increase in cement and clinker volumes to 28.6Mt in the 1Q19 while aggregates volumes were up 5.7 per cent (4.3 per cent LfL) to 62.9Mt. Ready-mix concrete deliveries advanced 10.8 per cent (9.2 per cent LfL) YoY to 11.3Mm3 and asphalt shipments 13.8 per cent (0.1 per cent LfL) to 1.8Mt. The rise in sales volumes across all business lines is attributed to positive momentum in many markets and an improvement in weather conditions in Europe and North America when compared with the first three months of 2018.

“HeidelbergCement has made an excellent start to 2019,” says Dr. Bernd Scheifele, chairman of the Managing Board. “We have achieved a considerable increase in revenue and result from current operations in comparison with the same quarter of the previous year. In addition to improved weather conditions, sustained strong demand and successful price increases contributed towards this positive development. Our action plan is progressing well. We have already secured savings of more than EUR50m for 2019 and we have successfully continued the optimisation of our portfolio. As a result, we have significantly reduced net debt on a comparable basis. We’re on track to achieve our goals for 2019.”

The company’s net debt edged up 0.5 per cent to EUR10.4bn although on a LfL basis, fell marginally by 0.8 per cent.

Portfolio optimisation
The group also made further progress in optimising its portfolio with the conclusion of several key transactions. These include the sale of a 7.8 per cent stake in Ciments du Maroc, the divestment of the El Minya white cement plant in Egypt and increases to 100 per cent in its shareholdings in California Commercial Asphalt in the USA (from 50 per cent) and Nordic Precast Group (from 60 per cent) in the Northern Europe group area. Overall, cash-relevant investments in maintenance and expansion, increase in ownership interests in subsidiaries fell to EUR297m (1Q18: EUR721m) in the 1Q19. Cash-relevant disposals, including the decrease in ownership interests in subsidiaries decreased from EUR243m in the 1Q18 to EUR217m in the 1Q19. The company is on track to reach its target of EUR500m of disposals in FY19, having divested in its Sri Lanka cement terminal, business activities in the Ukraine and the sale of the Testi cement plants and two grinding units in Italy. The Spoleta plant sale in Italy was concluded in April.

Outlook for 2019
Looking ahead, the Managing Board said it remains committed to the goal for 2019 of moderately increasing (3-9 per cent) its revenue, results from current operations before exchange rate and consolidation effects and the profit for the financial year before non-recurring effects.