Credit Suisse upgrades HeidelbergCement

Credit Suisse upgrades HeidelbergCement
Published: 08 March 2013

Credit Suisse has upgraded HeidelbergCement from underperform to neutral and increased its target price to EUR53.00 from EUR37.00, Dow Jones reports.

The bank says a more upbeat outlook for global cement prices this year and increasing demand improve the industry’s pricing power. CS also cited lower cost pressures and HeidelbergCement’s fading balance sheet concerns as reasons for the upward revision.

Preliminary figures from HeidelbergCement show an 8.7 per cent advance in turnover last year to €14,020m, or by 4.2 per cent on a comparative basis. EBITDA improved by a more modest 6.7 per cent to €2477m and the trading profit advanced by 9.5 per cent to €1613m.

Last year its cash saving programme “FOX 2013” exceeded expectations by achieving €384m cash effective savings compared to an original target of €200m. It has now increased the three-year cumulated cash saving target to €1.01bn compared with the original goal of €600m. The company has also said it will put a special focus on price increases in 2013.

In terms of the demand outlook for cement in 2013, HeidelbergCement expects positive developments in Asia, Africa, North America, Russia to continue but Europe is expected to remain weak with the exception of Germany and Scandinavia.

Deleveraging remains the highest priority for HeidelbergCement in order to regain its investment grade rating. The company is also targeted investments to expand cement capacities in the growth markets of Asia, Africa, and Eastern Europe. Due to commissioning of further plants during the next months, it will increase its cement capacities in emerging markets by more than 5Mta in 2013.