HeidelbergCement cancels Chinese and Russian projects

HeidelbergCement cancels Chinese and Russian projects
Published: 07 November 2007

HeidelbergCement’s results for the first nine months include Hanson just for the month of September and show a 22.2% increase in turnover to EUR7254.1m, which represented an underlying increase of 11.8%.  The EBITDA improved by 33.1% to EUR1720.9m and the trading profit rose by 40.9% to EUR1342.8m and the net attributable profit forged ahead by 153.7% to EUR1,828.7m, boosted by the capital gain on Vicat.  The net interest charge was 48.5% higher at EUR253.3m while the net debt at the end of September stood at EUR29,713m top give a gearing level of 195.4% compared with 60.1% a year earlier.  Capital investment in the existing business rose by 88.7% to EUR617m in the period.  Cement and clinker shipments rose by 11.5% to 65.5 m tonnes and ready-mixed concrete deliveries were 14.5% higher at 21.3Mm³, including 2.1Mm³ from Hanson in September.  The aggregates volume rose by 34.0% to 55Mt, of which the one month from Hanson contributed 26.7Mt, 59.6% of which was in the United States.
 
The financing of the Hanson deal is also being helped by the cancellation of the investment in Liaoning Gongyuan Cement, as the Chinese authorities will not now allow HeidelbergCement to raise its stake to 80% as had been planned. Another project that will not go ahead as planned is the investment in a 2Mta cement plant at Volsk in the Saratov region of Russia, originally intended for completion towards the end of 2008.  The Volsk project, planned with a local partner, has been postponed indefinitely.
 
In Europe, which for HeidelbergCement includes all of the former Soviet Empire, turnover advanced by 25.3% to EUR3,858m and the EBITDA increased by 44.2% to EUR960m.  Cement, clinker and ground granulated slag volumes rose by 10.6% to 32.64Mt, which represented a 4.3% advance on a comparable basis.  The strongest growth was seen in Romania, Poland, the Baltic states and Kazakhstan, with Sweden and Norway also showing good growth. However, German demand weakened in the third quarter.  The addition of Hanson has given the group a strong position in the British slag market, increasing the presence in cement extenders.   Aggregates deliveries rose by 34.0% to 55.01Mt, thanks to a 6.6Mt boost from Hanson and good levels of demand in Eastern and Northern Europe and in the Benelux.  Ready-mixed concrete volume advanced by 13.3% to 11.33Mm³, of which Hanson contributed 1Mm³.
 
North America, where the Hanson influence is the greatest, turnover increased by 10.9% to EUR2090m and the EBITDA improved by 12.4% to EUR470m.  In US dollar terms, turnover increased by 19.8%. The decline in housebuilding activity has been partially compensated for by an increase in civil engineering, but there was still an underlying 4.3% decline in cement shipments. Thanks to the absorption of Hanson’s Californian cement business, group volume was just 2.4% lower at 11.16m tonnes and the impact on profitability was limited through reducing imports. Underlying downstream volumes were slightly ahead, but the addition of Hanson for the strong month of September led to a 76.1% increase in aggregates deliveries to 38.86m tonnes and ready-mixed concrete shipments improved by 4.9% to 7.22m m³.  US price increases averaging US$5 per short ton have been announced for the beginning of 2008 to compensate for higher wages and energy costs.