HeidelbergCement Releases Positive Second Quarter Results

In the second quarter of 2016, HeidelbergCement’s sales volumes increased in all business lines. The positive market environment, particularly in Europe, Australia and the United States, made a significant contribution to this growth, noted the company.

The group’s cement and clinker sales volumes rose by 1.6 percent to 22.3 million tons (previous year: 21.9) in the second quarter. The strongest increase was achieved in the Northern and Eastern Europe-Central Asia Group area, followed by Western and Southern Europe. In contrast, cement sales volumes fell in the Asia-Pacific Group area due to the delayed start to infrastructural projects in core markets in Indonesia. In the first half of 2016, cement and clinker sales volumes rose by 2.9 percent to 39.9 million tons (previous year: 38.8).

“In operational terms, the second quarter of 2016 was the best since the financial crisis and thus continued the positive trend of the previous year,” said Dr. Bernd Scheifele, chairman of the managing board. “The positive market environment in our mature markets and the recovery of demand in Eastern Europe made a significant contribution. We were able to raise the margins in operational terms in all business lines thanks to our margin improvement programs and price increases in core markets. Furthermore, we have benefited from the declining fuel costs.”

Group revenue remained virtually stable in the second quarter of 2016 at €3.6 billion ($4 billion). Excluding consolidation and exchange rate effects, it increased by 0.6 percent from the previous year. Operating income before depreciation (OIBD) improved by 5.2 percent to €791 million ($8.83 million), and operating income rose by 7.8 percent to €601 million ($671 million). Excluding exchange rate and consolidation effects, the rise in operating income before and after depreciation and amortisation amounted to 8.5 percent and 11.2 percent, respectively. Besides the growth in sales volumes and price increases in core markets, the declining cost of fuels in particular also made a contribution to the positive development of results.

“The good results of the second quarter confirm our outlook for 2016,” said Scheifele. “We will continue to concentrate on the strategic points of focus announced in 2015: shareholder returns and continuous growth. Key prerequisites for the achievement of these goals are investment discipline, a solid investment grade rating, and a progressive dividend policy. Furthermore, we are concentrating on four strategic levers: high operating leverage, maintenance of cost leadership, pronounced vertical integration, and optimal geographical positioning. In this way we will increase our efficiency and the satisfaction of our customers, especially in the world’s rapidly growing metropolitan areas. Our global programs to optimize costs and processes and to increase margins will once again be consistently pursued in 2016. These include, in particular, the Continuous Improvement Programs for the aggregates and cement business lines, as well as for purchasing.

“Thanks to the positive development in the first half of the year, HeidelbergCement is in a strong position to successfully conclude the takeover of Italcementi,” continued Scheifele. “The outlook for the global economy is positive, even though the macroeconomic and political risks have increased following the Brexit decision. HeidelbergCement will continue to benefit from the good and stable economic development in the industrial countries, above all in the USA, Germany, Northern Europe and Australia. With the acquisition of Italcementi, we are strengthening our global market position. In our core business lines aggregates, cement, and ready-mixed concrete, we will occupy first, second, and third place on a global scale. In the next few years, we intend to consistently develop the characteristics that set HeidelbergCement apart from the competition: cost leadership and operational excellence. At the same time, we plan to achieve a sustainable level of earnings power for shareholders that is unprecedented in the group.”

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