Third quarter figures from Heidelberg Cement show that revenues are up 9% to €3.9 billion while net debt has been reduced by €740 million compared to Q3 2011.
The group says that other highlights of the results show strong operative development driven by successful cost savings and price increases; operating income before depreciation (OIBD) up 12% to €874 million; operating cement margin further improved; its FOX 2013 programme beating the annual target after nine months and generating €241 million cash savings with the pricing initiatives Perform and Climb Commercial started in order to improve the margin by €350 million until 2015.
HeidelbergCement says it has seen sustained growth expected in Asia-Pacific and Africa-Mediterranean Basin as well as continuing recovery in North America but weakening demand in parts of Europe.
The figures also show that profit before tax for the July-September 2012 period increased from €403 million to €427 million while at the end of Q3 2012, HeidelbergCement’s net debt amounted to €7.76 billion.
“In Q3 2012, cement and ready-mixed concrete sales volumes benefited from the sustained recovery of North America’s residential construction activity as well as from
the continued strong demand in HeidelbergCement’s markets in Asia. The increase in sales volumes in these group areas compensated for losses in some European
markets, caused by declining infrastructure expenditure,” says HeidelbergCement.
“Aggregates sales volumes declined in total as demand in key markets in North America and Europe weakened.
“In Q3 2012, the Group’s cement and clinker sales volumes remained stable at 24.3 million tonnes compared to Q3 2011. Sales volumes in North America increased
strongest among all Group areas, followed by Asia-Pacific and Africa-Mediterranean Basin. In North America, the recovery of the residential housing market is driving
demand for cement.
“The Indonesian cement market continued to develop strongly in the third quarter based on increasing demand for housing and infrastructure. In Central Asia,
cement volumes further increased, but could not compensate for the decline in deliveries in Poland and the Czech Republic. Cement sales volumes in Western and Northern Europe declined due to weak demand in the United Kingdom.
“Aggregates volumes fell by 9.4% to 68.8 million tonnes (previous year: 75.9). Ready-mixed concrete deliveries were about stable at 10.5 million m³ (previous year: 10.6). Asphalt sales volumes fell by 6.9% to 2.9 million tonnes (previous year: 3.1).”
“The quality of our results has further improved in the third quarter,” says Dr Bernd Scheifele, chairman of the managing board.
“This is reflected by the improving margins and the noticeable reduction in net debt.
Our FOX 2013 programme is a great success and we already beat our 2012 cash savings target. In addition, we were able to complete first disposals of non-core businesses in North America. The balanced approach of cash savings, working capital improvement, disciplined capital expenditure, and disposals of non-core businesses is clearly successful. We will do everything in our power to continue this positive trend.”
The organic growth of cement capacities in “attractive emerging markets” sees some important capacity expansion projects are nearing completion. The commissioning of new clinker and cement plants in central India with a cement capacity of 2.9 million tonnes is expected in Q4 2012. In Ghana and Liberia, HeidelbergCement is constructing new cement mills with capacities of 1 million tonnes and 0.5 million tonnes, respectively. Commissioning of the mill in Ghana is planned before year-end 2012, production start in Liberia is expected for early 2013.
Summing up the outlook for 2012, Dr Scheifele says: “The achieved margin improvement and net debt reduction in the third quarter underlinethat we are well on our way to reach our targets for 2012.
“However, macroeconomic risks remain meaningful. The need for countries to deleverage will likely dampen volume growth in mature markets for the foreseeable future. In addition, we still have not recovered the margin loss from increasing energy costs. As such, we will unabatedly continue our efforts to reduce costs and improve efficiency and will continue to right-size capacities where necessary. On top, we are pushing further margin improvements with two pricing initiatives for cement and aggregates.
“Deleveraging remains the highest priority for us, in order to regain our investment grade rating.
“We will also continue our successful strategy of targeted investments to expand cement capacities in the growth markets of Asia, Africa, and Eastern Europe. More than 5 million tonnes of additional cement capacities are expected to be commissioned in emerging markets in 2013.
“ Operating from a strong German base and with excellent positions in attractive growth markets, in both emerging and industrialised countries, HeidelbergCement is very well positioned to benefit over-proportionally from the continued economic growth.”
