HeidelbergCement improves margins

HeidelbergCement improves margins
Published: 10 November 2004

In the first nine months of the year, HeidelbergCement achieved a turnover of €5215m.  This represents an underlying increase of 2.6 per cent and of 8.3 per cent in absolute terms.  The operating profit at the EBITDA level rose by 20.7 per cent to €943m, while the trading profit moved up by 49.7 per cent to €584m.  At the EBITDA level, profits were boosted by €88m from the consolidation of Indocement.  Although the consolidation of the Indocement pushed up financial charges by 23.6 per cent to €197m, the gearing level came down from 91.6 per cent to 82.2 per cent.  Group cement and clinker volumes for the period were 27.9 per cent higher at 49.44Mt.

In Germany, cement deliveries were 5.9 per cent lower at 5.49Mt, which represents an underlying decline of around 13 per cent.  Turnover rose by 10.1 per cent to €638m and the EBITDA more than doubled from €40 to €82, while at the trading level there was a €60m swing from losses into a profit of €32m.  A further price increase of €9.50 per tonne has been announced from the beginning of next year. 

The western European division saw turnover decline by 4.1 per cent to €699m, with the EBITDA being down by 6.3 per cent to €126m.  Cement deliveries were 2.3 per cent lower at 6.52Mt, with stable volumes in Great Britain and all of the drop occurring in The Netherlands and Belgium where the impact of Westphalian imports was being felt, though these pressures began to reduce in the third quarter.  

In northern Europe, domestic cement demand was strong, with increases of 28 per cent in Estonia/Russia and 8 per cent in Norway/Sweden.  However, because of kilns at Brevik and Slite being out of production for some of the time, export volumes dropped by 25.8 per cent to 1.28Mt while domestic deliveries were 12.0 per cent higher at 2.71Mt.  The turnover was off by 8.0 per cent at €512m while the EBITDA fell by 16.2 per cent to €61m.

 Eastern European cement deliveries amounted to 7.62Mt, an underlying improvement of around 11 per cent, helped by increases of 19
 per cent in Romania and of 16 per cent in Poland.  Both prices and volumes improved in the Ukraine, but Hungarian shipments were lower because of reduced exports.  Turnover rose by 3.7 per cent to €498m and the EBITDA advanced by 18.6 per cent to €159m. 

In North American, volumes were held back by a shortage of shipping capacity, but cement sales from the local plants rose by 7.3 per cent to 10.05Mt and imports added a further 20 per cent to volumes.  Higher shipping costs and a weaker US dollar also hit the numbers, with turnover just 0.59 per cent higher at €1289m but the EBITDA rising by 5.5 per cent to €240m. Cement demand rose in the group’s US markets and in British Columbia, but was slightly lower in the Canadian Prairies. 

 Thanks to the inclusion of the Indonesian and Chinese businesses, cement volumes in the Far East rose ten fold to 11.2Mt and Indocement increased its volumes by 10.7 per cent to 9.3Mt.  In Africa and Turkey, volumes were 0.5Mt higher at 4.6Mt.  All of that increase came from Africa, where, on average, volumes were 12 per cent higher, with the strongest increases coming from Congo, Sierra Leone and Ghana.  Akçansa in Turkey shipped four per cent less cement and clinker, all of it the result of reduced exports, as domestic deliveries were substantially higher.  Area turnover emerged 94.6 per cent higher at €739m, with the EBITDA jumping from €97m to €152m, of which the Far East contributed some 65 per cent, Africa 24 per cent and Turkey 11 per cent.