HeidelbergCement considers further portfolio optimisation

HeidelbergCement considers further portfolio optimisation
22 March 2019

Dr Bernd Scheifele, chairman of HeidelbergCement Group, reflected positively on the group's full year 2018 results and its prospects for 2019.

HeidelbergCement's revenue rose by five per cent to EUR18.1bn from EUR17.3 in FY17, even though it was impaired by negative currency effects of EUR592m. Adjusted for currency and consolidation effects, revenue increased by eight per cent.

The cash flow also developed positively in 2018. HeidelbergCement generated sufficient cash to pay a full dividend, reduce liabilities by EUR328m and strengthen market positions by means of substantial investments in growth. With the purchase of Cementir Italia, Italcementi has continued to strengthen its market leadership in Italy and has laid the foundation for additional synergies.

In Australia, HeidelbergCement acquired the Alex Fraser Group, a leading producer of recycled building materials and asphalt, and thus strengthened its market position in the metropolitan regions of Melbourne and Brisbane. At the same time, disposals of activities that were not part of the group's core business or did not meet HeidelbergCement's return requirements generated proceeds of almost EUR600m.

"In 2018, HeidelbergCement achieved most of its goals in an operationally challenging environment," states Dr Scheifele. "In its 145-year history, our group has never sold more cement, concrete, sand, and gravel than in 2018. With more than EUR18bn, a new record figure was also achieved in revenue. The decrease in results from current operations could be more than offset by increased proceeds from portfolio optimisation as well as lower restructuring and financing costs."

Year ahead
HeidelbergCement expects increasing sales volumes for the core products cement, aggregates and ready-mixed concrete for 2019. Price increases will be prioritised in order to regain the margins lost in 2018. The company will also consistently pursue its global programmes to optimise costs and processes as well as increase margins, and focus on the implementation of the action plan announced in November 2018.

Furthermore, tailwinds from energy cost inflation, a clear result improvement in Indonesia as well as solid developments in Europe and North America, among others driven by new state infrastructure projects, should result in a solid result improvement.

"Considering the overall positive outlook for the global economy, we are confident about the future," says Dr Bernd Scheifele. "In 2019, we will focus on our action plan in order to accelerate our portfolio optimisation and increase cash flow and margins. In addition, we will press ahead with the digitalisation of our entire value chain in order to further improve our operational excellence. In view of our strong positioning in raw material reserves and production sites in attractive locations, the unique vertical integration, our excellent product portfolio and our industry-leading margin management, we believe we are well equipped for the opportunities and challenges of 2019."

Published under Cement News