HeidelbergCement – a return to stability

HeidelbergCement – a return to stability
Published: 02 February 2010

Only 12 months ago industry analysts were marking down HeidelbergCement as a high-profile casualty of the global financial crash. Smothered under a mountain of debt and facing a bank-led takeover, the world’s No 3 cement producer had to act quickly to save its investors from terminal losses and not least its reputation as one of Germany’s blue chip companies. Not many thought it would survive, but Bernd Scheifele, its chief executive, confounded critics by pushing through a massive refinancing operation which raised over €7bn from a mix of new and existing shares as well as a €2.5bn bond issue – in effect cutting net debt down to below €8.5bn. Further debt reductions and non-core asset divestments are in progress and some would suggest that its debt is still far too high, but the overall view is that Heidelberg has survived and without too much over-pruning of its worldwide operations, especially in its emerging markets of Africa, Southeast Asia and China.

Preliminary figures from HeidelbergCement now indicate that turnover fell by 21.6% last year to €11,117m, with the EBITDA falling by 28.6% to €2102m and the trading profit by 38.6% to €1317m. Capital expenditure is currently expected to amount to some €850m in 2010, but spending could be stretched over a longer period if markets do not improve as anticipated. Group sales of cementitious materials declined 10.9% to 79.3Mt. Aggregates volume dropped 20% to 239.5Mt, while ready-mixed concrete shipments were down by 21.2% to 35Mm³.

The European business reported at turnover 26.3% lower at €5300m, with the EBITDA dropping by 38.6% to €999m and the trading profit by 49.1% to €622m. Shipments of cementitious materials fell 18.4% to 35.3Mt, while the aggregates volume declined 17.5% to 103.2Mt, ready-mixed concrete deliveries by 20.4% to 19.2Mm³. The cyclical effects were made worse in Russia, Georgia and the Ukraine the severity of the economic crisis in those countries, with profitability being down by around €90m in the Ukraine, €40m in Russia, €35m in Kazakhstan and over €20m in Georgia. Other parts of Eastern Europe and also the UK also showed notable weakness.

In North America, turnover fell by 27% to €2892m, and the EBITDA dropped by 49.6% to €334m and the trading profit 81.4% to €76m. Had it not been for the improvement in the US dollar during the year, the turnover would have been down 30.8% in the year. Shipments of cementitious materials were down 25.9% to 10.1Mt, the aggregates volume by 24.2% to 102.1Mt, ready-mixed concrete deliveries by 37.3% to 5.7Mm³. There was increased pricing pressure in the final quarter, particularly in Georgia, Alabama, Florida and parts of Texas and California, leading to earlier-than-usual shutdowns of kilns ahead of winter maintenance.


Other markets generally did better and represented a reduction in turnover of just 2.6% to €2867m and the EBITDA improved 16.6% to €741m while the trading profit rose by 19% to €591m. Shipments of cementitious materials advanced by 5.6% to 34Mt, thanks to strong demand and increased capacity in China as well as an improving trend in Indonesia. The downstream activities are less important in Asia and Africa and hence Australia and Turkey weighed more heavily here and aggregates shipments declined by 14% to 34.2Mt and ready-mixed deliveries by 10.1% to 10.0Mm³.