HeidelbergCement reports good 2019 results growth
HeidelbergCement reports good 2019 results growth in addition to the preliminary unaudited figures already published on 12 February 2020, HeidelbergCement has today presented – as scheduled – preliminary unaudited figures for the group areas and the fourth quarter 2019.
"We have concluded the 2019 business year successfully," said Dr Dominik von Achten, chairman of the Managing Board of HeidelbergCement. “All group areas contributed to the good results – however with varied development in the respective group regions and quarters. This shows once more, that we profit overall from our broad regional presence and the vertical integration from cement to aggregates to ready-mixed concrete and asphalt.”
Group revenue for the whole of 2019 increased by 4.3 per cent to EUR18.9bn. Excluding consolidation and exchange rate effects, it grew by 2.1 per cent. Positive revenues in the core activities cement, aggregates, and ready-mixed concrete were offset by lower revenue in our trading business – caused especially by the trading of fuels that has been reduced in the 4Q019.
Results from current operations before depreciation increased by 15.5 per cent to EUR3580m. Like-for-like, the rise amounted to 2.5 per cent. The result from current operations increased by 8.8 per cent to EUR2186m. Like-for-like, the increase was 4.7 per cent.
All group areas contributed to the growth of results from current operations before depreciation. Western and southern Europe recorded the highest rise, followed by Asia-Pacific and northern and eastern Europe-Central Asia. Results in North America and Africa-Eastern Mediterranean Basin also developed positively.
The company noted that sales volumes decreased slightly as a result of “price over volume” strategy. Consolidated cement volumes for the year were 125.9Mt, down two per cent on a LFL basis. Aggregates volumes were down one per cent LfL at 308.3Mt. On the other hand, ready-mix sales volumes advanced by one per cent LfL to 50.7Mm3. Trading volume reached 30.4Mt in 2019
Fourth quarter focus
In North America, successful price increases in all business lines lead to revenue increase despite weaker than expected volumes. Cement sales were down by five per cent LfL to 3.86Mt, aggregates fell one per cent LfL to 30.2Mt, while ready-mix concrete deliveries rose six per cent LfL to 1.9Mm3. Solid earnings growth in the US was overshadowed by the continuing pressure in the Canada business. There were also slightly higher operating costs in aggregates as plants are running almost at full capacity.
Western and southern Europe group area market environments proved difficult due to a strong comparison base and local temporary market problems in the UK, Belgium/The Netherlands and France. Cement sales volumes fell by five per cent YoY on a LfL basis to 7.206Mt, while aggregates and ready-mix volumes both saw a six per cent LfL decline to 20Mt and 4.45Mm3, respectively. All countries within the group region were able to maintain pricing momentum during the year, despite the reduction in sales volumes.
Solid pricing, which partly compensated for weak volumes and cost inflation, lead to a margin improvement in the northern and eastern Europe-central Asia group region. Stable demand in Eastern European countries contributed to growth. Delays in infrastructure projects and a shortfall in residential is putting pressure on cement volumes in Nordics, HeidelbergCement noted. Over the 4Q19, sales volumes in cement fell by six per cent LfL to 5.67Mt, and there was a one per cent reduction in aggregates LfL to 12.68Mt and a six per cent drop LfL in ready-mix concrete volumes to 1.75Mm3.
In Asia-Pacific group region, cement sales volumes of 9.61Mt were flat on a LfL basis. Aggregates sales were down by five per cent LfL (9.96Mt) and in the ready-mix concrete segment the decline was 10 per cent LfL (3.11Mm3). Continued recovery in Indonesia and Thailand more than offsets softness in Australia. Strong pricing strategies across the region compensated for slightly weaker demand in the quarter. ffective cost management in the quarter leads to solid growth in EBITDA and margin.
Africa - eastern Mediterranean Basin saw strong result improvements in all Sub-Saharan Africa countries more than compensate weakness in Egypt. LfL cement sales volumes rose by one per cent to 4.82Mt. Ready-mix concrete and aggregate deliveries were both down by three per cent on a LfL basis.
In the Group Services segment, revenues declined 40 per cent LfL to EUR286m as a result of lower pricing in fuels and partly due to lower volumes as HeidelbergCement "decreased the shipments to the more risky countries." The company noted that clinker oversupply in Mediterranean and Middle East-Indian Ocean regions remains high and continues to put pressure on international clinker pricing.
Initial outlook 2020
In its forecast from January 2020, the International Monetary Fund (IMF) anticipates a continuation of global economic growth. The growth rate is expected to increase from 2.9 per cent in 2019 to 3.3 per cent in 2020. This positive assumption is based on signs of growing industrial production, increasing worldwide trade and looser monetary policy, favourable developments in the trade talks between the USA and China, and the prospect of an orderly Brexit.
HeidelbergCement expects demand to further develop positively in many markets in the 2020 business year, in particular in the emerging markets. Crucial factors for the actual extent of growth include local economic development, the amount of public investment, and the development of credit costs for property financing.
Complete consolidated financial statements
The complete consolidated financial statements of HeidelbergCement, including the outlook for the business year 2020, will be published on 19 March 2020.
