Sustained recovery in demand for building materials in Europe and Central Asia helped Heidelberg Cement to record increases in both turnover and profits in the second quarter of 2011, compared to the same period last year. Turnover was up 3% to €3.4billion, while profit was up 25.2% to €208million due to lower financing costs.
Despite the improvement in the bottom line, Heidelberg said that there had been a significant increase in energy costs in the last three months. Also, negative exchange rate effects impaired the development of turnover, particularly in North America, but also in Asia-Pacific and Africa-Mediterranean Basin. Excluding exchange rate and consolidation effects, Heidelberg’s turnover grew by 6%.
“Despite a positive development of turnover and results, we are not satisfied with the second quarter," said Heidelberg chairman of the managing board Dr Bernd Scheifele. "We were not able to offset the increase in energy costs in the cement business line with the price increases implemented so far. In contrast, the aggregates business is experiencing a pleasing development, which confirms our strategy of focusing on two core products. Our “FOX 2013” programme is well on schedule and generated cash effective savings of €134million in the first half of the year."
Looking ahead to the rest of the year, Heidelberg said that in Europe, the forecasts for cement growth in 2011 for the company’s core countries in Scandinavia and Western and Eastern Europe, with the exception of the UK, were raised. In contrast, the expected growth rates in the euro zone's crisis regions in Southern Europe and Ireland – areas in which we do not have a presence apart from some small-scale activities in Spain – were reduced further. In addition, Heidelberg is not active in the crisis regions of North Africa or in Japan.
“In the Western and Northern Europe Group area, we generally anticipate further recovery in demand and thus increasing sales volumes for cement and aggregates, which will be primarily driven by strong trends in Scandinavia and Germany,” said the company in an official statement. “We expect varying trends in the Eastern Europe-Central Asia Group area: while we continue to anticipate consistently weak development in Hungary and Romania, we expect a rise in demand particularly in Poland and in the Czech Republic.”
Scheifele said, "For the whole of 2011, we still anticipate a slow recovery in the mature markets as well as continuing growth in the emerging countries. Our objective is to offset the cost and inflationary pressure, particularly in the cement business line, by means of continued cost-saving measures as well as the price increases already implemented and those planned for the second half of the year.
"We will consistently continue our efforts to reduce costs and increase efficiency within the scope of the "FOX 2013" programme. The CLIMB subproject is well on the way to further increasing margins in our aggregates activities. In addition, we are maintaining our focus on improved cash flow in order to reduce our debt and further improve the key financial ratios. At the same time, we will continue our targeted investments in new cement capacities in growing markets. Thanks to the advantageous geographical presence in attractive markets and as global market leader in aggregates, Heidelberg is ideally positioned to benefit over-proportionally from a further global economic recovery."
