HeidelbergCement lifts revenues, raises savings target

HeidelbergCement lifts revenues, raises savings target
Published: 16 March 2012


German cement major HeidelbergCement has reported a rise in revenues in 2011 driven significantly by its exposure to attractive growth markets, continuing recovery in most group markets and successful implementation of its “FOX 2013” improvement programme.

“The year 2011 was a further consistent step towards reaching our strategic goals”, says Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “We increased revenue and results despite the unexpectedly heavy rise in energy prices and further reduced our net debt.”

Turnover in 2011 increased 9.7% to €12,901.9m while EBITDA improved 3.6% to €2320.7m. At the trading level, the improvement was 3.2% to €1376.6m and pre-tax profit came in at €794.2m. After a virtual quadrupling of the tax charge and a 10.6% increase in minorities, net attributable profit emerged just 1.6% higher at €348.1m.

Net debt at the end of the year was 4.8% lower at €7740m and the gearing ratio fell from 62.9% to 57%. Capital investment increased 10% to €959m.

Group deliveries of cementitious materials increased by 12% to 87.8Mt, but the international trading volume did see a 9.2% decline to 8.7Mt, primarily in sales to North Africa. The biggest volumes of cement and clinker supplied went to Africa and Bangladesh. Exceptionally mild winter weather, notably in North America and Europe, also helped lift revenues.

Notable project completions during 2011 included modernisation of a second kiln line at Góradze in Poland, raising capacity from 3500tpd to 6000tpd. The 2Mta TulaCement plant in Russia was inaugurated last summer and in Bangladesh, a new 0.8Mt cement mill began trial production at year-end.

In terms of regional performance, Western Europe cement and clinker shipments increased by 12.4% to 22.1Mt. The cement tonnage rose by 12.4% to 22.15Mt, with improving volumes across the Nordic area and in Belgium, Germany and Great Britain. German cement volumes rose 16% in 2011, but are expected to ease a little in 2012.

Eastern-Europe Central Asia cement and clinker deliveries reached 17.4Mt, up 22.3%. Cement deliveries improved strongly in Russia, the Ukraine, Poland, the Czech Republic and Kazakhstan, while domestic sales in Hungary and Bosnia-Herzegovina declined further. Last year, the group began construction of the 0.8Mta Caspi Cement plant in Kazakhstan and this year aims to complete Phase 2 of its Góradze modernisation. North American cement and clinker sales reached 10.6Mt, up 6.4% YoY. Plants in California reported double-digit growth where the construction sector has begun to recover from a low level. However, sales volumes of Canadian plants remained just short of the previous year.

Cement and clinker sales in Asia-Pacific grew 8.4% to 28.8Mt with notable gains in Indonesia (overall volumes up 15.3% to 16Mt). In Indian market, construction lost momentum due to lack of infrastructure investments but a 7.1% increase in deliveries was seen in the second half of the year. New capacities coming on stream in 2012 should take the capacity to 6Mt. The Chinese joint ventures saw cement volumes decline by 1.0% to 7.2Mt. Volumes in Bangladesh were marginally lower due to prolonged rainfall and nationwide strikes. Australian floods also resulted in domestic sales being slightly down YoY.

In Africa, Ghana, Sierra Leone, Benin and Gabon made a considerably strong contribution to growth, as did the consolidation of activities in the DR of Congo acquired in September 2010. The high level of demand meant that the company’s plants reached their capacity limits in all markets. Total cement deliveries rose by 16.6% to 6.1Mt and excluding consolidation effects, sales growth was 10.5%.

As with peers Lafarge and Holcim, the company sees emerging markets continuing to drive growth in 2012. Asia-Pacific and Africa-Mediterranean Basin are expected to see a sustained positive demand trend and Eastern Europe-Central Asia will largely be driven by additional capacities and rising demand in Russia, Ukraine and Central Asia. A slight dip in cement sales is forecast for Western and Northern Europe due to a strong base in 2010 while growth in North America is anticipated to moderate because of a slow recovery in the residential and commercial sectors.

Going forward, the group has pledged to focus on increasing efficiency and prices and reducing costs to offset rising expenses and reduced margins in 2011. The group has increased the “FOX 2013” saving target by €250m and will start a new supply chain optimisation programme to achieve further cost reductions of €150m by 2014. It will also continue to expand cement capacities in the growth markets of Asia, Africa and Eastern Europe.