HeidelbergCement 1Q14 sales rise by 10%
“HeidelbergCement showed strong operational development in the first quarter of 2014, continuing the positive trend of the previous year,” said Dr Bernd Scheifele, Chairman of the Managing Board. “Europe contributed significantly to the improvement of results due to the mild winter and the positive economic development in our markets. In addition, we were able to implement price increases in some important markets of our Group. Our measures to increase the margins continue to be effective.”
The mild winter weather and the positive development of the economy in HeidelbergCement’s markets have led to a significant increase in sales volumes in all business lines in Europe. In North America, the sales volumes of building materials were affected by the cold and snowy winter, but still remained at virtually the same level of the previous year. The markets in Asia and Africa continued to develop positively.
The group’s cement and clinker sales volumes rose by 10 per cent to 17.5Mt (previous year: 15.9Mt). The Western and Northern Europe as well as Eastern Europe-Central Asia Group areas reported double-digit growth rates. Poland, in particular, experienced a significant increase in demand. Sales volumes in North America declined slightly due to the cold and wet weather in the northeast of the USA and in Canada. Asia and Africa, however, were able to build on the positive development in sales volumes of the previous years.
Deliveries of aggregates across the Group amounted to 44.3Mt (previous year: 39.8Mt), an increase of 11.3 per cent. Ready-mixed concrete deliveries rose by 11.2 per cent to 7.7Mm3 (previous year: 6.9Mm3). Asphalt sales volumes grew by 28.2 per cent to 1.5Mt (previous year: 1.0Mt).
The financial figures of the first quarter 2014 were prepared for the first time in line with the new international accounting standards IFRS 10 and 11. According to the new standards, revenue and operating income of joint ventures – among others – are no longer proportionately included in the items of the consolidated income statement. This means that the results from important operations, e.g. in Turkey, China, Hungary, Bosnia and Herzegovina, and Texas, would be no longer included in the operating income of HeidelbergCement.
Group revenue for the period of January to March 2014 rose by 5.7 per cent to EUR2750m (previous year: EUR2602m). Excluding consolidation and exchange rate effects, the increase amounted to 14.8 per cent. This primarily reflects the positive development of sales volumes in all business lines and the successfully implemented price increases in major markets. While positive effects from changes in the consolidation scope to the amount of EUR18m were negligible, the weakening of numerous currencies against the euro amounting to EUR221m had a considerable negative impact on the development of revenue.
Operating income before depreciation (OIBD) rose significantly by 15.6 per cent to EUR229m (previous year: EUR198m). Besides the positive development of sales volumes and revenue, the increase in the result from joint ventures – due to the positive development especially in Turkey and China – to EUR22m (previous year: EUR7m) contributed to this growth. Operating income increased by EUR41m to EUR50m (previous year: EUR9m).
In North America, HeidelbergCement expects a continuing economic recovery and consequently a further growth in demand for building materials. Besides residential construction, commercial and infrastructural construction are increasingly making a contribution to this growth.
A stabilisation of the Eastern European market is anticipated following the weak phase experienced during 2013. Poland is expected to be the first country in this region to benefit from an incipient recovery. HeidelbergCement forecast a further rise in demand for building materials in Central Asia. Although the crisis in the Ukraine does not affect operating business in the Ukraine and Russia, the currencies of both countries have significantly lost in value against the euro since the beginning of the crisis. In Western and Northern Europe, positive market development is expected in all countries. This is based on the healthy economic development in Germany and Northern Europe, as well as a recovery in the United Kingdom and Benelux.
In Asia and Africa, the Group still counts on sustained growth in demand. In view of the positive development of demand and the commissioning of new capacities, HeidelbergCement anticipates an increase in the overall sales volumes of the core products cement, aggregates, and ready-mixed concrete.
“Business development in the first quarter has strengthened our confidence in the outlook for the 2014 financial year,” says Dr Bernd Scheifele.” Deleveraging in order to regain investment grade rating, remains the highest priority for us. To this end, we will continue to be very disciplined in our spending in 2014 and focus more intensively on the sale of the building products business line in the United Kingdom and North America, as well as other assets that do not belong to our core business. At the same time, we will remain on course with our successful strategy of targeted expansion of our cement capacities in growth markets.
“In 2014, we will benefit from the economic development in the industrial countries, particularly in North America, the United Kingdom, Germany, and Northern Europe”, continued Dr Bernd Scheifele. “These countries generate almost 50 per cent of our revenue. Furthermore, we are improving our market position in growth markets with the commissioning of modern production facilities. In view of these factors as well as our high operational efficiency, we consider ourselves well-equipped to benefit over-proportionally from the accelerating economic growth in the interests of our shareholders.”
