HeidelbergCement's results hit by currency effects

HeidelbergCement's results hit by currency effects
Published: 06 February 2014


The preliminary full-year 2013 figures from HeidelbergCement show turnover easing by 0.6 per cent to €13,936m, though on an underlying basis there was a 3.4 per cent increase. EBITDA eased by 2.1 per cent to EUR2424m, but improved by two per cent on a comparative basis, and the trading profit edged ahead by 0.2 per cent to €1607m.

The number of employees rose by 1.1 per cent to 52,560, as a reduction of around people 750 in North America and Europe was more than offset by the increased sphere of consolidation and additional staff being taken on in Asia, notably Indonesia.

Group sales of cementitous materials increased by 2.5 per cent to 91.3Mt, driven by the positive development in sales volumes in the North America, Asia-Pacific, and Africa-Mediterranean Basin Group areas, which more than offset the decline in demand – particularly in Eastern Europe. Aggregate volumes eased by 0.6 per cent to 241.5Mt. Ready-mixed concrete deliveries were 3.1 per cent ahead at 40.3Mm³ while shipments of asphalt edged up by 0.3 per cent to 8.6Mt. 

“2013 was a successful year for HeidelbergCement in operational terms,” says Dr. Bernd Scheifele, Chairman of the Managing Board. “We continued to benefit from our advantageous geographical positioning, kept our costs under control, and were able to implement price increases in major markets. Our three-year “FOX 2013” programme once again exceeded expectations and led to cash-relevant savings totalling around EUR1.2bn. As a result, we were able to noticeably increase revenue and OI before exchange rate effects and further improve our operating margin. Unfortunately, this achievement was masked by massive negative exchange rate effects. Nevertheless, our OI came in slightly above the previous year.”

Business development in Western and Northern Europe benefited from the emerging recovery in demand for building materials in the UK, which was driven by private residential construction and large infrastructure projects in London. Cementious cement sales were up by 1.8 per cent on a YoY basis to 20.9Mt.

2013 proved to be a difficult year for the Eastern Europe-Central Asia Group area and overall cement sales were down 2.9 per cent YoY to 16.7Mt. In the first half of the year, construction activities were adversely affected by the long winter. Demand for building materials saw a decline in many countries of Eastern Europe because of weak economic development and low infrastructure expenditure. In addition, prices were under pressure in a number of markets, as a result of the combination of low demand and increased competition. Increases in sales volumes in Russia due to the ramp up of the capacities at the Tula plant near Moscow and a slight volume increase in Georgia did not compensate for the weak demand. Consequently, revenue and OI declined in 2013. However, the situation improved in the second half of the year. Poland was the first country in Eastern Europe to show signs of a recovery. The fourth quarter was also boosted by the sustained period of mild weather.

The recovery of cement demand continued in North America through 2013, particularly thanks to growth in residential construction. On the one hand, revenue and results in North America benefited from successfully implemented price increases in 2013. However, on the other hand, they were adversely affected by the weakening of the Canadian dollar, especially, in comparison with the euro. Results in the fourth quarter include a positive contribution of EUR25m from the disposal of a quarry no longer in use.

HeidelbergCement highlighted that demand remained very strong in Asia Pacific as construction activity was stimulated by the economic growth in the region. The company’s sales volumes benefited from the increase of its share in Cement Australia from 25 to 50 per cent. Total cementitious sales for the year were up 6.5 per cent YoY to 31.9Mt and up by three per cent on a like-for-like basis.

In the Africa-Mediterranean basin area HeidelbergCement was able to increase its cement deliveries partly as a result of new capacity. The building materials business in Turkey also developed positively; only the Spanish market remained in decline. Although revenue and results in the Africa-Mediterranean Basin Group area were also impaired by negative exchange rate effects, the company was able to improve these figures thanks to the strong operational development in Turkey and Israel.

On its outlook, HeidelbergCement says it is “cautiously confident” about the future. In North America it expects continuing economic recovery and consequently a further increase in demand for building materials. Residential construction, commercial and infrastructure construction are also increasingly contributing to this growth. In Eastern Europe, a stabilisation of the markets is expected following the weak phase experienced during 2013. Poland should be the first country in this area to benefit from the emerging recovery. In Central Asia, a further rise in demand for building materials is anticipated. In Western and Northern Europe, positive market development is expected in all countries based on the healthy economic development in Germany and Northern Europe as well as a recovery in the UK and Benelux. In Asia and Africa, the Group still expects sustained growth in demand. 

“In 2014, we will benefit from the economic development in the industrial countries, in particular in North America, the UK, Germany, and Northern Europe,” Dr Bernd Scheifele notes. “We achieve nearly 50 per cent of our revenue in these countries. In addition, we are improving our market position in growth markets with the commissioning of modern production facilities. Complemented by our high degree of operational efficiency, we consider ourselves well-equipped to face the opportunities and challenges of 2014.”