Heidelberg Materials has released its half-year financial report for the period January to June 2024. The group’s consolidated revenue for the 1H24 was EUR9993.7m, marking a 4.6 per cent decrease from EUR10,472.6m in the 1H23. 

Its half-year result from current operations before depreciation and amortisation (RCOBD) edged up 2.3 per cent, from EUR1786.7m to EUR1828.4m. First-half RCOBD margins also saw a minor rise from 17.1 per cent to 18.3 per cent YoY.

Result from current operations (RCO) saw a 1.1 per cent boost, from EUR1189m to EUR1202m. Despite the marginal growth in RCOBD and RCO, the group’s profit for the period fell a significant 20.3 per cent, from EUR783m to EUR624m. While this could be due to the lower revenues generated, it may also have been affected by an increase in net debt from EUR6686m to EUR6771.

Continued weak European demand
The lower revenues and profit can be, at least in part, attributed to a muted sales volume in Europe. This comes as two major markets for the company, the eurozone and Germany, saw subdued economic growth of 0.9 per cent and 0.2 per cent, respectively over the period. 

Heidelberg Materials half-year revenue in the region decreased by 5.7 per cent YoY, from EUR4846m to EUR4573m. The company attributes the result to  “continuing weak market demand in Western and Southern Europe as well as some Nordic countries.” The volume increases in eastern Europe could not fully offset the volume losses in western and southern Europe, according to the 1H24 report.

North American operations see improved result
In North America, revenue slipped by 1.3 per cent YoY to EUR2403m in the 1H24 from EUR2434m in the 1H23. The RCO increased by 34.6 per cent YoY to EUR350m in the 1H24.

"Compared with the previous year, the volumes of our North American plants in the cement business line increased moderately in the first six months of the year. While volumes in the Midwest region grew significantly as a result of the modernisation of and capacity increase at the Mitchell cement plant, the Northwest region recorded a slight decline in volumes and the Northeast region a significant decrease. Deliveries in the Southeast region rose sharply due to the fly ash volumes of The SEFA Group, which was acquired last year," said Heidelberg Materials.

Asia-Pacific revenue slips
Asia-Pacific Group area revenue decreased by 6.6 per cent YoY to EUR1691m in the 1H24 while RCO was down 7.8 per cent to EUR151m. While ement and clinker deliveries in Indonesia increased significantly, excess capacity in southern India resulted in Indian volumes slipping below the previous-year's level. Slow construction markets in Bangladesh and Thailand also led to a drop in group volumes in these markets.

Africa-Mediterranean-Western Asia
Revenue in the Africa-Mediterranean-Western Asia decreased by 9.9 per ent to EUR1041m due to severe currency devaluations. The RCO fell by 19 per cent YoY to EUR167m. Volumes in the sales region remained stable overall but in some countries construction activity was affected by a difficult geopolitical and macro-economic environment.

Outlook
In response to its disappointing half-year financial performance, the group has forecast that the full-year RCO for 2024 will be between EUR3bn (the same level as 2023) and EUR3.3bn. This will be achieved by offsetting low European demand and high financing costs with, “price adjustments and strict cost management.”

However, the uncertainty surrounding the US election and the war in Ukraine have led to high energy costs and trade disputes, which will make cost management difficult for the group. Furthermore, construction in Europe is expected to decline by a further 2.7 per cent by the end of 2024, exacerbating the issue of low demand in the region.