HeidelbergCement releases 4Q16 and 2016 results

HeidelbergCement releases 4Q16 and 2016 results
14 February 2017

HeidelbergCement saw its cement volumes rise by 50 per cent YoY to 30.8Mt from 20.5Mt in the 4Q16, according to a company statement.

Aggregates sales volumes recorded an increase of 16 per cent YoY to 73.3Mt (previous year: 63.3Mt). They include the shipments of Italcementi in France, Italy, Spain, Greece, Morocco and North America.

In the 4Q16 total ready-mixed concrete deliveries rose also due to consolidation effects by 27 per cent to 12.1Mm3 (previous year: 9.6Mm3). Group revenue rose by 25 per cent to EUR4.2bn (previous year: EUR3.4bn).

"The year 2016 was an important milestone for HeidelbergCement," said Dr Bernd Scheifele, chairman of the Managing Board. "With the acquisition of Italcementi, we made a big leap in growth and achieved the best operating income since the financial crisis."

In the reporting year, group revenue rose by 13 per cent YoY to EUR15.2bn (previous year: EUR13.5bn). Currency effects had a negative impact of EUR326m on revenue. OIBD improved by 13 per cent to EUR2.9bn from EUR2.6bn in 2015. Operating income by seven per cent YoY to EUR2bn (previous year: 1EUR.8bn).

Compared to 2015, building materials sales volumes were affected by bad weather in some regions, such as southern Germany, some parts of the USA and Canada, as well as by a weak market development in Indonesia. Cement sales volumes declined due to weak demand in Africa and Asia that could not be offset by a further increase in North America.

In North America the growth in demand for building materials continued, in particular due to the sustained economic recovery and declining unemployment figures. Main drivers in 2016 were commercial construction and the construction of multi-family houses. With the acquisition of Italcementi’s North American subsidiary Essroc in July 2016, HeidelbergCement significantly expanded its footprint in the Northeast and Midwest of the USA as well as in the eastern part of Canada.

Economic growth in the Asia-Pacific Group area further slowed down in 2016. In Indonesia, delays in infrastructure programmes on the main island of Java led to a weaker demand and to price pressure as a result of excess capacities, but Indocement was able to defend its market share.

In Australia sales volumes of building materials increased despite a reduction in mining and infrastructure projects, thanks to a strong development in residential construction on the east coast.

As a result of the significant drop in prices in Indonesia and Thailand and declining demand in Malaysia, revenue and operating income decreased in the Asia-Pacific Group area on a comparable pro-forma basis.

Market development in Africa was varied. Construction activity in the oil-exporting countries was weak. Competition with local producers increased significantly in the sub-Saharan countries, which affected especially Ghana, Tanzania and the Democratic Republic of the Congo. In Togo and Burkina Faso, however, development of sales volumes was positive. Also in Morocco, cement sales volumes increased.

The weakening of the Egyptian pound has impacted the development of revenue and operating income in 2016. On a comparable pro-forma basis revenue and operating income could be improved despite the competitive pressure. This was mainly due to lower cost for raw materials and energy as well as the successful realisation of synergies in Morocco and Egypt.

Global risks have increased significantly compared to the previous year. Macroeconomic risks include, above all, the rise in energy prices and inflation, the unpredictable consequences of the economic slowdown in China and political uncertainties in Europe in connection with to upcoming elections.

In North America HeidelbergCement, in conformity with the IMF, expects a stronger economic recovery and therefore a further increase in demand for building materials. In western and southern Europe, a positive market development is expected. In Asia the cement producer anticipates a general upturn in demand, in particular due to increasing infrastructure investments in Indonesia.

Meanwhile, in China a further decline in demand and an increase in excess capacities are expected. Repercussions on exports are limited because a large proportion of Chinese capacities is located inland.

"Considering the overall positive outlook for the global economy and our advantageous geographical positioning, we are confident about the future," says Dr Bernd Scheifele.

Published under Cement News