Dyckerhoff cautious outlook for 2010

Dyckerhoff cautious outlook for 2010
Published: 23 March 2010

Dyckerhoff CEO Wolfgang Bauer has said that while the company believes the worst is over for the construction markets in which it operates, it is cautiously optimistic about developments in 2010.

In a statement the company said it struggled with the effects of the economic crisis in 2009, which took its toll on every one of its regions. Markets like Russia and Ukraine, which not long ago were among its growth drivers, went into free fall. In Germany, too, and in the USA, there was a sharp decline in cement consumption. All in all, the company sold 4.1Mt less cement and 2.1Mm³ less concrete. Following suit, sales dropped by around EUR600m, to just under EUR1.4bn.

Despite it all, though, " Our equity ratio is about 48 %. In the worst economic crisis since 1929, net profit, at EUR 113m, reached a level that Dyckerhoff has surpassed only five times in its entire history. The EBITDA margin is at 21.5 %, and the return on sales is 8.2 %. These are perfectly respectable numbers, even if the result was bolstered by one-time effects of around EUR 20m", Mr Wolfgang Bauer said at a press conference on the company’s annual results in Frankfurt am Main. "That the economic crisis would have a negative effect on our business and that we would not be able to continue the success story of 2008 – this was what we expected, and we took steps to ensure that, whatever the setbacks and difficulties, we would maintain our market position and be well equipped to meet the challenges of the present and the future", Wolfgang Bauer adds.

Regarding expectations for 2010 Mr Bauer explains: "The situation of the construction industries in the markets relevant to us will continue to be difficult. I nevertheless believe that the worst is over and am cautiously optimistic about developments in 2010. In Western Europe, that is, in Germany and the Benelux countries, I see good chances for strengthened demand for our cements and concretes. With price levels remaining stable or showing marginal improvement, sales will rise, too. There is little consistency in the picture for Eastern Europe. In Poland, I expect growing demand, which will also result in rising sales. My assumption for Russia is an improvement in demand, but a negative price trend. In Ukraine we will become more competitive, and there is a chance of greater cement volume, accompanied, however, by declining prices. Consequently, sales will be at the 2009 level in that country. In the Czech Republic, on the other hand, our volumes and sales will decrease compared with the previous year. The USA will show a slight increase in cement volume, but declining prices will mean lower sales.

“Against this background, we expect sales for the Dyckerhoff Group to be at the level of the previous year. EBITDA in fiscal year 2009 included positive one-time effects amounting to around EUR 20 million, so we believe 2010 will show a fall in results."