Strong Europe performance boosts HeidelbergCement 2Q16 results

Strong Europe performance boosts HeidelbergCement 2Q16 results
Published: 29 July 2016


A robust performance in Europe has contributed to HeidelbergCement’s improved 2Q16 results. The Germany-based building materials producers reported second-quarter sales of EUR3.575bn, down two per cent YoY but up one per cent on a like-for-like (LFL) basis. All business lines saw their sales increase. Operating income rose by eight per cent to EUR601m from EUR557m in 2Q15, although LFL this increase was 11 per cent and all business lines saw their margins improve. Net profit for 2Q15 improved by 19 per cent to EUR385m.

The group’s cement and clinker sales volumes rose by 1.6 per cent to 22.3Mt from 21.9Mt in 2Q15. The strongest increase was achieved in the northern and eastern Europe-central Asia group area, followed by western and southern Europe. Northern Europe recorded double-digit growth in sales volumes due to the sustained high level of construction activity in Sweden and a better-than-expected development in Norway. Cement sales in eastern Europe rose almost entirely across the board. In western and southern Europe, cement sales volumes increased in Germany, The Netherlands, and the United Kingdom, in some cases significantly. In contrast, cement sales volumes fell in the Asia-Pacific group area due to the delayed start to infrastructural projects in the company’s Indonesian core markets.

Deliveries of aggregates increased by 2.9 per cent (adjusted for consolidation effects 1.2 per cent) to 69.1Mt from 67.1Mt, helped by higher sales volumes, particularly in Australia, the USA and Germany.

Deliveries of ready-mixed concrete rose by 4.2 per cent to 10Mm3, up from 9.6Mm3 noted in 1H15, while deliveries of asphalt increased by 4.2 per cent from 2.5Mt to 2.6Mt over the same period. 

First-half 2016 performance

In the first half of the year, group revenue remained virtually stable at EUR6.407bn when compared with EUR6.470bn noted in 1H15. Operating income before depreciation improved by 5.8 per cent to EUR1.112bn and pretax profit advanced from EUR406m in 1H15 to EUR507m one year later.Net profit jumped from EUR264m to EUR376m over the same period.

In the first half of 2016, cement and clinker sales volumes rose by 2.9 per cent to 39.9Mt (previous year: 38.8). Deliveries of aggregates climbed by 4.4 per cent to 118.4Mt (previous year: 113.4Mt) and deliveries of ready-mixed concrete rose by 2.9 per cent to 17.9Mm3 (previous year: 17.4Mm3). Asphalt sales volumes fell by two per cent to 4Mt (previous year: 4Mt).

“In operational terms, the second quarter of 2016 was the best since the financial crisis and thus continued the positive trend of the previous year,” said Dr Bernd Scheifele, chairman of the Managing Board. “The positive market environment in our mature markets and the recovery of demand in eastern Europe made a significant contribution. We were able to raise the margins in operational terms in all business lines thanks to our margin improvement programmes and price increases in core markets. Furthermore, we have benefited from the declining fuel costs.”

Italcementi takeover

The takeover of Italcementi is also well on track. On 1 July 2016, HeidelbergCement completed the acquisition of a 45 per cent stake in Italcementi from Italmobiliare. All conditions for the closing of the transaction have been fulfilled following the approval by the relevant competition authorities.

Outlook

Looking ahead to the rest of the year, while geopolitical and macroeconomic risks remain, the overall outlook is positive. The company expects an increase in sales volumes of cement, aggregates and ready-mix concrete with a moderate rise in revenues. Operating income and profit are forecast to see a moderate to significant increase. “HeidelbergCement is well positioned to benefit from the recovery in mature markets, particularly in the USA, Germany, northern Europe and Australia,” said the company in a statement.