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TimePosted 05/08/2019 09:23:27

HeidelbergCement reports challenging environment in 1H19

This week HeidelbergCement released its 1H19 results, which were impacted by falling volumes in Ukraine, USA and Egypt. Nevertheless, the group saw evenues up by seven per cent and price increases of just under six per cent.

The group's cement and clinker sales volume decreased by 1.4 per cent to 61Mt in 1H19. Deliveries of aggregates rose by 0.3 per cent to 145.6Mt in 1H19 and sales of ready-mixed concrete increased by 6.3 per cent to 24.4Mm3 in the 1H19.

"Despite a persistently challenging environment, we increased our revenue and result in the first half of 2019," said Dr Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. "In general, the market dynamics weakened slightly in the second quarter because of our strong global positioning. Good margins in Asia as well as western and southern Europe more than compensated for the weaker business due to adverse weather conditions in North America and the Africa-Eastern Mediterranean Basin Group area."

Regional results
Western and southern Europe

In the 1H19 the group's clinker and cement sales volumes in western and southern Europe were stable at 15.1Mt. While Germany, Belgium/The Netherlands, the UK and France achieved moderate growth. Spain recorded a significant decrease from lower export deliveries. Italian cement sales remained stable, while the Testi cement plant in Tuscany and two grinding plants in Piedmont were sold to Buzzi Unicem on 1 July 2019.

Aggregates sales volumes rose by 7.6 per cent to 42.3Mt in western and southern Europe. Sales in Germany were just below those of 1H18, while France and the UK recorded moderate increases and Belgium/The Netherlands, Italy and Spain had significant increases in volumes.

Deliveries of ready-mixed concrete rose by 9.1 per cent in the region to 9.2Mm3 from 8.1Mm3 in 1H18. There was substantial growth in Germany, Belgium/Netherlands, Italy and Spain and moderate increases in France, but deliveries fell in the UK while asphalt deliveries were slightly up in the UK.

Northern/eastern Europe and central Asia
Cement and clinker volumes in the Northern/Eastern Europe and Central Asia group area fell by 2.7 per cent to 11.2Mt from 11.5Mt in 1H18. The drop in volumes is attributed to the deconsolidation of the group's business in Ukraine. In addition, eastern Europe was adversely affected by heavy rainfall in May. Nordic countries declined because of delays in infrastructure projects and lower export volumes.  Sales volumes in Bulgaria and Poland weakened, but Czechia, Russia, Kazakhstan and Greece achieved sales expansion and Romania significant growth.

Aggregate sales in the region fell by 5.3 per cent to 21.8Mt from 23Mt in 1H18. Northern Europe was adversely affected by building delays in Stockholm and subdued demand in Norway and by volume falls of the Mibau Group. In eastern Europe - central Asia, growth in Poland, Romania and Greece were in contrast to sales decreases in Czechia, Kazakhstan, Slovakia and Russia.

Ready-mixed concrete deliveries reached 3.2Mm3 the same as in 1H18. Overall, north European countries recorded a slight decrease in sales volumes, while in eastern Europe and central Asia, Poland, Czechia and Greece saw slight increases in volumes.

North America
Cement deliveries of North American plants recorded an increase of 0.5 per cent to 7.5Mt. In Canada deliveries remained slightly below those of 1H18 due to weather conditions. Lively construction activity in British Colombia mitigated the fall in volumes. In the west, California deliveries were hampered by severe rainfall until May. Southern regions saw significant growth and sales prices rose in all regions.

Aggregate volumes in the west were restricted by weather conditions. Deliveries rose considerably in the northeast and southeast of USA. Overall, aggregates sales volumes grew by 3.9 per cent to 57.7Mt up from 55.3Mt in 1H18.

Ready-mixed concrete declined in the west due to weather conditions. The north region achieved slight increases and Canada and the south regions saw significant increases in volumes. Total ready-mix volumes rose by 8.7 per cent to 3.6Mm3 up from 3.3Mm3 in 1H18.

Asphalt sales grew by 24.5 per cent to 1.9Mt up from 1.5Mt in 1H18.

Asia-Pacific
Cement and clinker deliveries in the Asia-Pacific region fell by 2.6 per cent to 17.1Mt in the 1H19, up 2.6 per cent on 1H18. Domestic cement consumption fell in Indonesia by 2.3 per cent as numerous building projects were completed at the end of 2018 and there were delays in new projects due to the April 2019 elections. Indocement clinker sales volumes rose by 0.7 per cent.

Cement and clinker deliveries in central and southern India remained below totals in 1H18 and were affected by the April 2019 elections. Political uncertainty in Thailand led to a slowdown in cement sales. Prices rose in Thailand and Bangladesh.

Aggregate deliveries fell by 10.9 per cent to 19.7Mt from 22Mt in 1H18. Sales volumes in Australia remained lower than 1H18 due to a weakening construction sector. Deliveries in Indonesia and Thailand also fell, whereas Malaysia achieved a slight growth.

Ready-mixed concrete deliveries rose by 6.6 per cent to 5.6Mm3 from 5.3Mm3 in 1H18. Sales of asphalt rose by 1.5 per cent on account of consolidation effects in Australia but declined by 5.3 per cent excluding the consolidation effects and with weak demand in Malaysia.

Africa and Mediterranean Basin
Cement and clinker sales volumes in Africa and the Mediterranean Basin fell by 0.4 per cent to 9.8Mt. Excluding a consolidation effect in Egypt, sales volumes saw a slight 0.8 per cent increase. There was growth in Togo, Sierra Leone, Benin, Liberia, Gambia and the Democratic Republic of Congo but operations in Ghana, Tanzania, Mozambique and Burkina Faso saw a drop in sales. Togo's cement sales benefitted from domestic demand and increased clinker deliveries to neighbouring countries. Volume growth in Morocco was unable to offset lower volumes in Egypt.

HeidelbergCement is expanding capacity in the Dominican Republic of Congo by expanding the Cimenterie de Lukala plant. The new kiln line will be completed at the end of 2019.

Deliveries of aggregates fell by 20.5 per cent to 4.4Mt due to volume losses in Israel and Morocco.

Ready-mixed concrete sales volumes grew by 3.3 per cent to 2.6Mm3 while asphalt volume sales declined by 24.8 per cent in Israel due to weather conditions.

Outlook
HeidelbergCement expects favourable energy costs and solid development in Europe, North America and Asia, especially Indonesia going forward. "We are confident about the second half of the year," said Dr Bernd Scheifele. " We are continuing to focus on our action plan to accelerate the portfolio optimisation and increase our margins as well as cash flow."

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