HeidelbergCement reports preliminary figures for Q4 and full year 2013

Transcription

1 HeidelbergCement reports preliminary figures for Q4 and full year 2013 Press release Q4 2013: Revenue stable at 3.5 billion; like for like*: +6.9% Operating income improved by 2.4% to 463 million; like for like*: +12.4% Operating margin increased to 13.3% (12.9% in Q4 2012) Full year 2013: Solid operational development masked by significant negative exchange rate effects Revenue stable at 14 billion; like for like*: +3.4% Operating income slightly above previous year at 1.61 billion; like for like*: +5.2% Further increase in operating margin FOX 2013 programme clearly exceeds expectations, achieving 1,158 million in cash-relevant savings over the three-year period (original target: 600 million) First outlook for 2014: North America: continuation of positive development Europe: recovery in the United Kingdom, Benelux, and parts of Eastern Europe; positive development in Germany, Scandinavia, Russia, and Central Asia Asia and Africa: continued growth; exchange rates adversely affect results Focus on margin improvements and divestments *adjusted for currency and consolidation effects Today, HeidelbergCement presented its preliminary, unaudited figures for sales volumes, revenue, operating income before depreciation (OIBD), and operating income (OI) for the fourth quarter and full year Cement sales volumes rose in 2013, in line with the outlook presented in the 2012 Annual Report, as a result of the continuing recovery in North America and the additional capacities that became available in India, Africa, Russia, and Australia. The emerging recovery in the United Kingdom also had a positive impact. As expected, aggregates volumes remained slightly below the level of the previous year. The Group s revenue and OI before exchange rate effects clearly increased in comparison with the previous year. Mild winter weather in Q4 supported this positive development. In contrast, the weakening of a number of currencies against the euro was significantly stronger than originally expected was a successful year for HeidelbergCement in operational terms, says Dr. Bernd Scheifele, Chairman of the Managing Board. We continued to benefit from our advantageous geographical positioning, kept our costs under control, and were able to implement price increases in major markets. Our three-year FOX 2013 programme once again exceeded expectations and led to cash-relevant savings totalling around 1.2 billion. As a result, we were able to noticeably increase revenue and OI before exchange rate effects and further improve our operating margin. Unfortunately, this achievement was masked by massive negative exchange rate effects. Nevertheless, our OI came in slightly above the previous year.

2 Preliminary Group figures Cement sales volumes rose slightly year on year, driven by the positive development in sales volumes in the North America, Asia-Pacific, and Africa-Mediterranean Basin Group areas, which more than offset the decline in demand particularly in Eastern Europe. Sales of aggregates were slightly below the previous year. Revenue and OI before exchange rate effects improved considerably, primarily as a result of the successful implementation of price increases as well as initiatives to reduce costs and increase efficiency, and of lower energy costs. The depreciation of many currencies against the euro led to a revenue decrease for the full year of 664 (Q4: 273) million and a reduction of 115 (Q4: 52) million in OI. All Group areas were affected, particularly Asia-Pacific. Nevertheless, our OI and operating margin increased slightly in comparison with the previous year thanks to the positive business development in the North America, Western and Northern Europe, and Africa-Mediterranean Basin Group areas. The FOX 2013 programme clearly exceeded expectations and led to cash-relevant savings of 1,158 million in the three-year period. The CLIMB project in the aggregates business, which is part of FOX 2013, was especially successful and further improved the competitive position of HeidelbergCement. Revenue 14,020 13, % 3.4% 3,495 3, % 6.9% depreciation (OIBD) 2,477 2, % 2.0% % 1.8% as % of revenue 17.7% 17.4% 20.0% 19.0% Operating income (OI) 1,604 1, % 5.2% % 12.4% as % of revenue 11.4% 11.5% 12.9% 13.3% Cement/clinker/GGBS (Mt) % 1.4% % 6.3% Aggregates (Mt) % -1.3% % 0.5% Rmc (Mm³) % 3.8% % 4.6% Asphalt (Mt) % -3.1% 2.1 2,3 8.9% 4.2% In the fourth quarter, sales volumes of building materials benefited from the mild weather, which led to an extended construction season in Europe. Revenue and OI before exchange rate effects rose moderately. Excluding effects from the sale of emission rights and quarries no longer in use, the operating margin before depreciation (OIBD margin) increased by just under one percentage point in the fourth quarter. At the end of the year, the number of employees at HeidelbergCement stood at 52,560 (previous year: 51,966). The increase of 594 employees results essentially from two opposing developments: on the one hand, around 750 jobs were cut in the North America Group area, Benelux, and some Eastern European countries in connection with efficiency improvement in sales and administration, location optimisations, and capacity adjustments; on the other hand, almost 1,000 new employees were hired in growth markets such as Indonesia and Central Asia. Furthermore, the number of employees rose by more than 300 because of the increase of our share in the proportionately consolidated cement company Cement Australia and the acquisition of the remaining 50% in the hitherto proportionately consolidated Midland Quarry Products, United Kingdom.

3 Western and Northern Europe Revenue 4,201 4, % -0.3% 1,038 1, % 3.0% depreciation (OIBD) % 0.0% % -11.0% as % of revenue 13.8% 13.9% 19.2% 16.7% Operating income (OI) % 11.4% % 0.3% Cement/clinker/GGBS (Mt) % -1.8% % 1.4% Aggregates (Mt) % -5.0% % 3.9% Rmc (Mm³) % 1.9% % 5.0% Asphalt (Mt) % -5.6% % 8.3% Business development in Western and Northern Europe benefited from the emerging recovery in demand for building materials in the United Kingdom, which was driven by private residential construction and large infrastructure projects in London. of cement and ready-mixed concrete of our British plants increased from low levels by a double-digit percentage. In Benelux and Northern Europe, sales volumes were steady or experienced only a marginal decline. in Germany diminished, partly as a result of the long period of bad weather at the beginning of the year. Despite a slight overall decline in the Group area s sales volumes, revenue before exchange rate effects remained largely stable thanks to successfully implemented price increases. Falling energy costs also had a positive impact on the OI and margin. Excluding proceeds from the sale of emission rights in the previous year, the OIBD margin even rose by more than one percentage point. In the fourth quarter, sales volumes, revenue, and results benefited from the sustained construction season. Adjusted for effects from the sale of emission rights in the previous year, OIBD increased by around 12%, and the OIBD margin rose by around one and a half percentage points. Eastern Europe-Central Asia Revenue 1,435 1, % -4.2% % 8.0% depreciation (OIBD) % -13.3% % -7.7% as % of revenue 22.2% 20.2% 25.8% 22.4% Operating income % -20.0% % 12.0% Cement/clinker/GGBS (Mt) % -2.9% % 10.0% Aggregates (Mt) % 2.4% % 17.3% Rmc (Mm³) % -1.7% % 7.0% Asphalt (Mt) proved to be a difficult year for the Eastern Europe-Central Asia Group area. In the first half of the year, construction activities were adversely affected by the long winter. Demand for building materials saw a decline in many countries of Eastern Europe because of weak economic development and low infrastructure expenditure. In addition, prices were under pressure in a number of markets, as a result of the combination of low demand and increased competition. Increases in sales volumes in Russia due to the ramp up of the capacities at the Tula plant near Moscow and a slight volume increase in Georgia did not compensate for the weak demand. Consequently, revenue and OI declined in The situation improved in the second half of the year. Poland was the first country in Eastern Europe to show signs of a recovery. The fourth quarter was also boosted by the

4 sustained period of mild weather. As a result, revenue and OI improved despite negative exchange rate effects. Excluding proceeds from the sale of emission rights in the fourth quarter of the previous year, OIBD increased by around 32% and the OIBD margin improved by almost five percentage points. North America Revenue 3,441 3, % 3.4% % 0.6% depreciation (OIBD) % 9.5% % 28.0% as % of revenue 16.6% 17.8% 14.8% 18.7% Operating income % 19.9% % 61.8% Cement/clinker/GGBS (Mt) % 6.8% % 8.0% Aggregates (Mt) % -0.3% % -3.5% Rmc (Mm³) % 0.1% % -0.5% Asphalt (Mt) % -11.2% % -5.0% In 2013, the recovery of cement demand continued in North America, driven particularly by growth in residential construction. of aggregates and asphalt declined slightly as a result of reduced infrastructure investments in connection with budgetary consolidation. On the one hand, revenue and results in North America benefited from successfully implemented price increases in 2013; however, on the other hand, they were adversely affected by the weakening of the Canadian dollar, especially, in comparison with the euro. Results in the fourth quarter include a positive contribution of 25 million from the disposal of a quarry no longer in use. Excluding this capital gain, OI in the fourth quarter improved by around 13% in comparison with the previous year. Asia-Pacific Revenue 3,477 3, % 5.2% % 5.9% depreciation (OIBD) % 2.0% % -3.3% as % of revenue 25.5% 24.7% 28.0% 25.9% Operating income % 0.7% % -3.2% Cement/clinker/GGBS (Mt) % 3.0% % 6.8% Aggregates (Mt) % 4.4% % 3.3% Rmc (Mm³) % 11.9% % 5.7% Asphalt (Mt) % 16.1% % 16.5% Demand for our products remained very strong in the Asia-Pacific Group area, as construction activity was stimulated by the economic growth in the region. Our sales volumes also benefited from the increase of our share in Cement Australia from 25% to 50%. In Indonesia, we significantly stepped up our ready-mixed concrete activities by constructing new production sites. The Asia-Pacific Group area recorded the largest negative exchange rate effect as a result of the weakness of the Indonesian rupiah and Australian dollar against the euro. Revenue and OI before exchange rate effects were further improved. However, increased wage and

5 energy costs, partly due to energy prices based on the US dollar, led to a decline in the operating margin, particularly in the second half of the year. Africa-Mediterranean Basin Revenue 1,135 1, % 6.5% % 7.8% depreciation (OIBD) % 11.9% % -1.2% as % of revenue 17.9% 18.6% 19.7% 18.0% Operating income % 13.5% % 1.0% Cement/clinker/GGBS (Mt) % 4.3% % 5.4% Aggregates (Mt) % -8.7% % -3.6% Rmc (Mm³) % -0.6% % 5.0% Asphalt (Mt) % -5.5% % -8.2% The positive development of demand in Africa continued in We were able to increase our cement deliveries, partly as a result of new capacities. The building materials business in Turkey also developed positively; only the Spanish market remained in decline. Although revenue and results in the Africa-Mediterranean Basin Group area were also impaired by negative exchange rate effects, we were nevertheless able to improve these figures thanks to the strong operational development in Turkey and Israel. First outlook for 2014 In its forecast from January 2014, the International Monetary Fund (IMF) expects the world economy s growth to experience a significant increase during 2014 in comparison with the previous year. The main contributors to this development are the increasing pace of economic growth in the USA and the economic recovery in almost all countries of the euro zone. However, the necessary budgetary consolidation measures in the industrial countries and their influence on the emerging countries continue to threaten the development of the world economy. The tapering of the Federal Reserve, which has already commenced, may lead to further outflows of capital and exchange rate adjustments. The IMF believes that the stimulation and safeguarding of economic growth should have priority worldwide. In North America, HeidelbergCement expects a continuing economic recovery and consequently a further increase in demand for building materials. Besides residential construction, commercial and infrastructure construction are also increasingly contributing to this growth. In Eastern Europe, a stabilisation of the markets is expected following the weak phase experienced during Poland should be the first country in this area to benefit from the emerging recovery. In Central Asia, a further rise in demand for building materials is anticipated. In Western and Northern Europe, positive market development is expected in all countries. This is based on the healthy economic development in Germany and Northern Europe as well as a recovery in the United Kingdom and Benelux. In Asia and Africa, the Group still expects sustained growth in demand. Considering the positive outlook for the world economy and our advantageous geographical positioning, we are cautiously confident about the future, says Dr. Bernd Scheifele. However, substantial macro-economic risks still remain. The effect of the tapering of the Federal Reserve on the currencies in the emerging countries represents a considerable uncertainty. The decline in exchange rates in the second half of 2013 will also impair our revenue and results, particularly in the first half of We will focus on what we can directly influence: the management of our operational business. In 2014, we will once again work on further improving our margins by means of our ongoing programmes and a continued focus on reducing costs and increasing efficiency.

6 Price increases will continue to be at the forefront of our efforts in For this purpose, we are carrying out the projects PERFORM for cement in the USA and Europe and Climb Commercial for aggregates in order to achieve 350 million margin improvement by Deleveraging remains the highest priority for us, in order to regain our investment grade rating. In this respect, we will increase our focus on the disposal of our building products line and other assets that are not part of our core business. At the same time, we will continue our successful strategy of targeted expansions of our cement capacities in the growth markets of Asia, Africa, and Eastern Europe. With the commissioning of new production facilities, we will have more than 5 million tonnes of additional cement capacities in Kazakhstan, Indonesia, and the African countries south of the Sahara in In 2014, we will benefit from the economic development in the industrial countries, in particular in North America, the United Kingdom, Germany, and Northern Europe, continues Dr. Bernd Scheifele. We achieve nearly 50% of our revenue in these countries. In addition, we are improving our market position in growth markets with the commissioning of modern production facilities. Complemented by our high degree of operational efficiency, we consider ourselves well-equipped to face the opportunities and challenges of The complete consolidated financial statements of HeidelbergCement including the outlook will be published on 19 March Heidelberg, 6 February ,673 characters