HeidelbergCement today confirmed its outlook for 2011, but reported a decline in second quarter operating income, as price increases failed to offset the rise in energy costs in the cement business.
Second-quarter operating income decreased to EUR441m from EUR492m. The company said it still expects turnover and operating income to increase in 2011.
Second-quarter net profit rose to EUR159m from EUR120m a year earlier. Turnover rose 3% during the first three months of the year, to EUR3.39bn, somewhat above analyst forecasts for EUR3.3bn. Negative exchange rate effects impaired the development of turnover, particularly in North America, but also in Asia-Pacific and Africa-Mediterranean Basin. Operating income before depreciation declined by 6.1% to EUR651m.
Excluding exchange rate and consolidation effects, turnover grew by 6%, with all group areas apart from Group Services recording an increase in turnover.
During the second quarter, the Group’s cement and clinker sales volumes rose by 8.2% to 23.7Mt (previous year: 21.9). The largest contribution was made by the Eastern Europe-Central Asia Group area, followed by Western and Northern Europe, Asia-Pacific, and Africa-Mediterranean Basin.
In the first half of the year, cement and clinker sales volumes rose considerably by 10.7% to 41Mt (previous year: 37.1).
The price increases implemented so far were unable to compensate for the considerable rise in energy costs since the beginning of the year.
"Despite a positive development of turnover and results, we are not satisfied with the second quarter," said Chairman of the Managing Board 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."
The company’s savings program FOX 2013 is on track and generated cash effective savings of EUR134m in the first half of the year. At the end of the second quarter of 2011, HeidelbergCement’s net debt amounted to EUR8.57bn, which corresponds to a reduction of EUR0.49bn in comparison with the end of the second quarter of 2010.