During its Capital Markets Day 2018 last month, HeidelbergCement presented its Vision 2020, updating financial targets and strategic priorities for the three-year period starting 2018. The company envisions $1.8 billion to $2.4 billion in acquisitions, backed by $1.2 billion to $1.8 billion in non-core asset sales, plus savings realized from continuous efficiency improvements across its building material businesses.
Pointing to the successful integration of Italcementi, acquired in mid-2016, along with the raising of dividends to record levels, HeidelbergCement Chairman Dr. Bernd Scheifele noted, “Our model is based on the most advanced vertical integration, a simple structure focused on three core business lines and a de-centralized, lean organization with strong local teams. We have a compelling strategy in place, which clearly differentiates us from our competitors, and remain the industry leader in business excellence and cost efficiency. HeidelbergCement is well positioned to capitalize on its strengths in the current business cycle.”
The company intends to further improve its asset base by active portfolio management. On the one hand, it follows a selective merger and acquisition strategy to strengthen existing cement, aggregate and concrete businesses by increasing vertical integration. On the other, management seeks to reduce complexity and risk by disposing of non-core operations, market positions with high risks or limited growth potential and idle assets. HeidelbergCement advised Capital Markets Day participants that it anticipates organic EBITDA (earnings before interest, taxes, depreciation and amortization) growth to hover 5 percent annually through 2020.
