HeidelbergCement reports robust 2021 results despite high energy prices

HeidelbergCement reports robust 2021 results despite high energy prices
24 February 2022

Germany-based HeidelbergCement posted a 6.3 per cent rise YoY and an eight per cent like-for-like (LfL) rise in revenues to EUR18,720m in 2021 (2020: EUR17,606m). The result from current operations before depreciation and amortisation (RCOBD) was up 4.5 per cent (LfL 5.9 per cent) to EUR3875m when compared with EUR3707m in 2020. The result from current operations (RCO) saw a 10.6 per cent YoY hike and a 12 per cent LfL increase to EUR2614m.

The additional ordinary result amounted to EUR481m (previous year: EUR-3678m). This includes EUR466m in connection with the sale of the business activities in the West region in the USA. The financial result improved by EUR86m to EUR-201m. Profit for the financial year was EUR1902m (previous year: loss of EUR-2009m). The profit relating to non-controlling interests increased by EUR13m to EUR143m from EUR130m in 2020. As a result, the group's share of profit amounts to EUR1759m as compared with a group share of a loss of EUR-2139m. Excluding the additional ordinary result and non-recurring tax effects in the reporting and previous year, the group share increased by 14.3 per cent to EUR1561m from EUR1365m in the previous year.

Record return on invested capital and further net debt reduction
In addition, HeidelbergCement saw a record return on invested capital (ROIC) as the indicator increased to 9.3 per cent, up from 7.9 per cent in 2020.  "Thanks to the solid operating performance and successful portfolio optimisation, capital efficiency again improved significantly and rose to a record level," said Chief Financial Officer, René Aldach. "In line with our guidance, we have thus increased the return on invested capital to over nine per cent and achieved our strategic medium-term target of well over eight per cent earlier than expected."

The group also further reduced its net debt to EUR5bn in 2021, down from EUR6.9bn in 2020. The company attributes this to good operating business and disciplined investment policy. The leverage ratio decreased to 1.3x, which is below the target band of 1.5-2.0x.

Portfolio optimisation continues
Furthermore, the company also continued its portfolio optimisation as part of its “Beyond 2020” strategy as it simplifies the country portfolio and prioritises the strongest market positions. The company sold business activities in Greece, Kuwait, Sierra Leone, Spain, the West region in the USA, and the United Arab Emirates. To further improve the Group's presence in existing, profitable markets with high returns, HeidelbergCement acquired business activities in Australia, Italy, Tanzania, the United Kingdom, and in the Northeast and Pacific Northwest of the USA.

Optimism for 2022
The group’s outlook for 2022 is optimistic with sales volumes being driven by global infrastructure measures and continued good momentum in private residential construction.

However, challenges remain, including persistently high energy costs. To address these issues, the company is implementing strict fixed cost management and further price increases.

On this basis, HeidelbergCement expects a significant increase in revenue as well as a slight advance in result from RCOBD and RCO (before exchange rate and consolidation effects). A ROIC of around nine per cent is also forecast while in terms of net debt, the leverage ratio is expected to remain within its target band of 1.5-2.0x.

Published under Cement News