HeidelbergCement optimistic for 2011

HeidelbergCement optimistic for 2011
11 February 2011

Preliminary figures from HeidelbergCement show 4Q volumes continued on a positive path and indicate full-year rises in EBITDA and operating income. The group says its performance reflects further growth in emerging markets and the start of recovery of mature markets in North America and Europe after having reached the bottom of the crisis in 2010. For its 2011 outlook, the company paints an optimistic picture with demand expected to increase in all regions.

Fourth-quarter 2010 figures show declining sales in western and northern Europe as well as several countries in eastern Europe due to an early and extreme start to winter. Cement volumes in key markets such as the UK, Germany, Benelux and Poland fell between 28% and 46% in December 2010 compared to December 2009. However, the group’s emerging markets in Asia and Africa continued on their growth path and the mature markets of North America saw YoY improvements, mainly driven by infrastructure spending and cost-saving measures. Overall, after consolidation adjustments, 4Q cement, aggregates and ready-mixed concrete sales volumes increased 0.5%, 2.9% and 0.2%, respectively while asphalt volumes declined 3.9%.

We are pleased with our 4Q results, which we realised despite an extremely early and harsh winter start in our European core markets," said Dr Bernd Scheifele, CEO of HeidelbergCement. “We have successfully completed our ‘FitnessPlus 2010’ cost saving programme generating €300m savings in 2010. With our advantageous geographical positioning in growth markets and the successful continuation of our efficiency and cost-saving programmes we are one of the first building materials companies to leave the crisis behind us and achieve increasing turnover and operating income."

Preliminary figures for full-year 2010 show EBITDA recovered 6.5% to €2239m, having fallen 28.6% in the previous year. The trading profit improved 8.6% to €1430m. Results did benefit from a weaker euro and the sale of emission rights which rose 26.7% to €147m. Group sales of cementitious materials declined 1.2% to 78.4Mt, while aggregates edged ahead 0.1% to 239.7Mt.  Ready-mixed concrete shipments were unchanged at 35Mm³ but sales of asphalt fell 9.4% to 9.1Mt.

The northern & western European business saw full-year turnover down 1% to €3811m and shipments of cementitious materials fall 6.3% to 19.7Mt. In eastern Europe and central Asia, turnover was also down 11.2% to €1138m. Although the weather effect in the first and last quarters was more pronounced than usual, demand is now gathering pace in Poland, Ukraine, Russia and central Asia.  However, markets in Romania and Hungary remain depressed.

North American turnover improved 4.9% to €3033m, helped by exchange rate movements, and the trading profit more than doubled rising by 119.4% to €188m. Volumes are expected to improve across the board in this region in 2011 on the back of increased spending on infrastructure.

Cement and clinker volumes in the Asia-Pacific region improved 4.3% to 26.6Mt. For 2011 the group is expecting good growth in Indonesia, China, India and Bangladesh. 

In Africa and the Mediterranean region, turnover improved by 12.3% to €940m, but the EBITDA was off by 1% to €155m and the trading profit declined 4.2% to €120m. Shipments of cementitious materials rose 13.5% to 8.3Mt due to good African and Turkish demand. Turkey should remain positive, with the strongest growth in 2011 being expected from Tanzania, Gabon, Ghana and Congo.

While it has not made any specific forecasts for 2011, HeidelbergCement states that it: "is well-equipped to benefit to an above-average degree from an economic upturn in the course of this year and next." It expects overall growth in Asia-Pacific and Africa-Mediterranean Basin and continuation of recovery in North America and Europe. Further downward pressure on prices is expected in western Europe, while the company aims to offset increases in energy costs, which it expects to be particularly high in emerging markets, by efficiency improvements and price increases.
Published under Cement News