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TimePosted 06/08/2018 00:00:00

HeidelbergCement sees positive 2H18

This week HeidelbergCement reported on its 2Q18 results, which saw healthy growth in all business areas. Cement and clinker sales were up 3.5 per cent to 33.7Mt while aggregate volumes saw a 5.2 per cent rise to 85.7Mt. Ready-mix concrete sales volumes advanced 4.2 per cent to 12.7Mm3.

Western and southern Europe saw total revenues advance by 5.3 per cent in 2Q18 to EUR1.363bn. Operating EBITDA decreased 2.1 per cent to EUR213m. Cement sales were particularly strong as volumes increased by 7.4 per cent to 8.564Mt as the company enjoyed a solid operational performance in this region.

Strong net pricing development drove performance in Africa and the eastern Mediterranean Basin with total revenues up 5.3 percent to EUR413m and operating EBITDA 14.8 per cent to EUR99m. Cement sales edged up 1.1 per cent to 4.729Mt.

Meanwhile, in northern/eastern Europe and central Asia, HeidelbergCement benefitted from a 4.5 per cent advance in total revenues to EUR831m and a 6.3 per cent rise in operating EBITDA to EUR183m. However, cement volumes slipped 0.2 per cent to 7.373Mt.

In the Asia-Pacific region total revenues remained largely stable at EUR786m, but operating EBITDA saw a 13.2 per cent drop as less working days in June impacted on Indonesian results. However, in Thailand demand is seen to be recovering. Cement sales advanced 5.9 per cent to 8.422Mt.

In North America total revenues fell by 3.1 per cent to EUR1.144bn while operating EBITDA saw a 6.7 per cent decline to EUR303m. In terms of volumes, cement sales slipped by 0.7 per cent to 4.435Mt. However, compared with the first quarter, 2Q18 performance mitigated some of the weather-related shortfalls in 1Q18.

First-half 2018 results benefit from sustained positive market dynamics
The first half of 2018 saw HeidelbergCement's sales volumes increase in all business lines. Cement and clinker volumes rose by three per cent to 61.9Mt when compared with 1H17. Aggregate volumes saw a two per cent YoY increase to 145.2Mt while ready-mix concrete sales edged up 1.4 per cent to 22.9Mm3.

The positive results were helped by a strong performance in the Africa and eastern Mediterranean Basin region where revenues increased by 3.7 per cent YoY to EUR833m and operating EBITDA jumped by 8.3 per cent to EUR201m. Cement volume growth was strong at 6.4 per cent with as the group sold 9.888Mt. Egypt, Ghana and Tanzania noted an especially solid performance, both in terms of volumes and pricing.

In western and southern Europe total revenues edged up 1.3 per cent YoY to EUR2.39bn, but operating EBITDA fell 18.8 per cent to EUR209m. Cement volumes reflected the group’s solid performance, showing an increase of 5.3 per cent YoY to 15.079Mt with volume advances particularly strong in France, Italy and Spain. Brexit uncertainty saw a more muted development of volumes and prices in the UK market. 

In northern/eastern Europe and central Asia the markets were largely stable with total revenues up 0.5 per cent to EUR1.344m and operating EBITDA showing a 1.1 per cent advance to EUR203. However, cement volumes contracted by four per cent YoY to 11.522Mt, feeling the impact of slower Russian, Ukrainian, Romanian, Kazakh and Norwegian markets. The impact of cheap Iranian imports is having a dramatic effect in Georgia where HeidelbergCement decided to close its Kiln Line 1 at the Rustavi cement plant and focus on bringing the US$100m dry-process Kaspi plant online by the end of this year. However, Bulgaria, the Czech Republic, Hungary and Poland contributed positively to cement volumes. Pricing generally advanced in all but the Bulgarian market.

Revenues were down 2.2 per cent in Asia-Pacific to EUR1.532bn and operating EBITDA noted a 15.8 per cent decrease to EUR267m. Cement volume growth was reported at 5.4 per cent as the group sold 17.529Mt of the product in this business region, driven by improved figures in Indonesia, Australia, China and India. Prices firmed up in China, Bangladesh and Australia.

Total group revenues in North America decreased by seven per cent YoY to EUR1.873bn and operating EBITDA decreased by 21.5 per cent to EUR321m. While aggregate and ready-mix volumes were up by 3.3 and 7.3 per cent, respectively, the cement tonnage was down by 2.3 per cent to 7.436Mt. While volume performance in the US was down, Canada noted progress in both volume and pricing development, shaking off the impact of prolonged wet and wintery weather in the first quarter.

Outlook
Going forward, HeidelbergCement continues to expect to benefit from positive, stable economic development in the industrialised countries, particularly in the USA, Canada, Germany, northern Europe and Australia. “The continued economic upturn, particularly in the countries of Eastern Europe, as well as in France, Spain – and to a lesser extent – in Italy, will also be to our advantage. These countries generate approximately 75 per cent of our revenue,” says the company in its interim statement. Furthermore, the economies of growth countries such as Egypt, Indonesia, Thailand, India and Morocco as well as in western and eastern Africa are expected to recover.

However, the company expects risks from volatile energy and raw material prices as well as from exchange rates to remain high. Further uncertainty lies in political crisis in the Middle East and eastern Ukraine as well as escaling trade conflicts.

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