HeidelbergCement expects cement demand to increase in 2019

Building materials group HeidelbergCement says it expects worldwide demand for cement to increase further in 2019. 

Announcing its Q4 and full-year 2018 results, the group said it particularly expects demand to increase in Indonesia, India, sub-Saharan Africa and North America.

The Germany-based manufacturer posted a 5% increase in revenue for full-year 2018 to €18.1bn (previous year: €17.3bn). HeidelbergCement attributes the rise in revenue to increased sales volumes in all business lines and successful price increases.

In 2018, the cement and clinker sales volumes of the group increased moderately by 3% compared with the previous year to 130 million tonnes (previous year: 126). Deliveries of aggregates rose slightly by 1% to 309 million tonnes (previous year: 305). Deliveries of ready-mixed concrete increased by 4% to 49 million cubic metres (previous year: 47).

In the fourth quarter of 2018 the group increased the sales volumes of cement and ready-mixed concrete compared with Q4 2017. Cement and clinker sales volumes rose by 2% to 33 million tonnes (previous year: 32), driven by solid growth in Europe and Asia. Deliveries of aggregates remained stable at 76 million tonnes (previous year: 76). The growth in North America and in Western and Southern Europe offset declines in the other Group areas. Sales volumes of ready-mixed concrete increased by 8% to 13 million tonnes (previous year: 12).

Group revenue rose considerably by 10% to €4.7bn (previous year: 4.3). Currency and consolidation effects had barely any impact on the development of revenue. Result from current operations before depreciation and amortisation declined by 5% to €847mn (previous year: 892). Adjusted for the sale of the exhausted quarry in the USA in the previous year, the figure increased slightly.

“In 2018, we achieved new record values in sales volumes and revenue,” said Dr. Bernd Scheifele, Chairman of HeidelbergCement’s managing board. “In operational terms, we were almost able to offset the impact of adverse weather conditions, particularly in the USA, and the higher than expected cost inflation through growth in sales volumes and price increases.”

He added that the group’s action plan is producing its first results, and that thanks to the accelerated portfolio optimisation and expenditure discipline, HeidelbergCement was able to reduce net debt at the end of 2018 to below €8.4bn.

In its forecast from January 2019, the International Monetary Fund (IMF) expects the global upturn to continue on a broad scale. Global economic growth will slightly weaken from 3.7% in 2018 to 3.5% in 2019 in connection with trade disputes between the USA and China and recently reduced dynamics in Europe. The risks that could continue to jeopardise growth include a further escalation of the trade disputes, high public and private debt, a disorderly Brexit, and a stronger than expected economic slowdown in China.

“Considering the overall positive outlook for the global economy, we are confident about the future,” said Scheifele. “We assume that some of the factors that impaired our results in 2018 will not be present in 2019. In particular, this relates to the adverse weather conditions in the USA, energy price inflation that was stronger than expected, and the price collapse in Indonesia. 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.”

This article first appeared in our sister title Aggregates Business.

 

 

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