HeidelbergCement bullish about 2017 outlook

HeidelbergCement said it expects “a growth in sales volumes of cement, aggregates, and ready- made concrete” for the 2017 financial year when it announced its second quarter results.

HeidelbergCement’s quarterly operating earnings before depreciation and amortisation slipped 1% on a like-for-like basis to $1.14bn (€964m). However, revenue rose 29% to $5.4bn (€4.6bn).

In the second quarter, sales volumes of HeidelbergCement’s building materials rose substantially as a result of the consolidation of its Italcementi acquisition.
Over the second quarter of 2017 Heidelberg Cement said that sales volumes of cement were up 47% to 33 million tonnes while aggregates grew 18% to 81 million tonnes. Sales of ready-mixed concrete rose 22% to 12 million cubic metres.

Cost inflation and a decline in sales volumes due to fewer working days as well as bad weather were almost offset by successful price increases and the realisation of synergies, said the company.

In California, weather-related production problems prevented a more significant improvement in results. The results in the emerging countries of Asia and Africa were significantly below the previous year due to a sharp drop in prices in Indonesia, Thailand and Ghana and the weakening of the Egyptian pound. In Northern and Eastern Europe, however, the positive development continued.

“Growth in sales volumes was impaired by fewer working days due to Easter and the end of Ramadan as well as rainy weather, especially in the South, Northeast and Midwest of the USA,” HeidelbergCement said in a statement on Tuesday.

“In the light of the difficult general conditions, we achieved a good result in the second quarter,” said Dr Bernd Scheifele, chairman of the managing board. “We were able to almost offset the effect of higher energy costs, bad weather conditions, fewer working days, and increased competition in some emerging countries. The synergies from the Italcementi acquisition are clearly visible in the results.”

In its financial statement HeidelbergCement said that the outlook for 2017 remained unchanged and “growth in sales volumes of cement, aggregates and ready-mixed concrete expected”.

“We remain cautiously optimistic about 2017,” said Scheifele. “While the overall outlook for the global economy is positive, major macroeconomic and particularly geopolitical risks remain. HeidelbergCement will benefit from the good and stable economic development in the industrial countries, above all in the USA, Canada, Europe, and Australia. These countries generate more than 60% of our revenue. With the acquisition of Italcementi and its rapid integration, we have impressively demonstrated our tremendous business potential and strong momentum. From a global perspective, we are well positioned to achieve our strategic goals – continuous growth and sustainable returns for our shareholders.”

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