15 March 2012

HeidelbergCement publishes Group annual results 2011

HeidelbergCement increases revenue and results in 2011 – well-equipped for 2012

2011 consolidated financial statements

  • Revenue improved by 10% to €12.9 billion
  • Operating income before depreciation increased by 4% to €2.32 billion
  • Net profit for the financial year rose by 5% to €534 million (previous year: 511) despite extraordinary charges of €138 million
  • Dividend proposal of 0.35 € (+ 40%)
  • Net debt reduced to €7.77 billion – gearing at 57.0%
  • Liquidity reserve at €4.7 billion


  • Sustained growth in Asia-Pacific and Africa-Mediterranean Basin; continuing recovery in North America and Europe
  • Focus on increasing efficiency, prices and reducing costs in order to offset rising costs and reduced margins in 2011
  • Saving targets raised by €400 million
  • Debt reduction remains top priority
  • Targeted expansion of cement capacities in growing markets will be continued
  • HeidelbergCement well-positioned to benefit over-proportionally from continuing economic growth

The key to success: geographical positioning and efficiency improvement programme “FOX 2013”

HeidelbergCement successfully concluded the 2011 financial year in an environment characterised by extreme political and economic volatility and continued to perform favourably compared with the main competitors. The advantageous geographical positioning in attractive markets and the successful implementation of the efficiency improvement programme “FOX 2013” played a major role in this development.

“The year 2011 was a further consistent step towards reaching our strategic goals”, says Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “We increased revenue and results despite the unexpectedly heavy rise in energy prices and further reduced our net debt. The positive development of our results contrasts sharply with the industry’s negative trend in 2011. Once again, the HeidelbergCement team successfully demonstrated cost efficiency, speed, and strength of implementation.”

Increased sales volumes, revenue, and results

In 2011, HeidelbergCement achieved an above-average increase in sales volumes of cement (+12%), aggregates (+6%), and ready-mixed concrete (+12%). In addition to the advantageous geographical positioning, exceptionally mild winter weather – particularly in Europe and North America – contributed to this growth. As a result, Group revenue rose by 10% to €12,902 million (previous year: 11,762).

Operating income before depreciation (OIBD) rose by 4% to €2,321 million (previous year: 2,239), and operating income by 3% to €1,474 million (previous year: 1,430). This improvement in results was achieved despite the substantial increase in energy prices and the significant drop in the prices of CO2 emission certificates. The stepping up of the “FOX 2013” efficiency improvement initiative – with the result that the savings goal set for 2011 was exceeded by €184 million –, a noticeable reduction in the investments originally planned for 2011, and the successful conversion of pension schemes in North America and Western Europe, which reduced balance sheet risks and generated savings of €129 million, contributed to the positive result development.

Thanks to these measures and price increases in key markets, HeidelbergCement succeeded in stabilising the operating margin in the aggregates business line at the previous year’s level.

HeidelbergCement was able to reduce its financing costs by €152 million, which reflects the continued debt reduction and improved credit margins. The tax ratio increased noticeably to 30%, as losses carried forward were capitalised to a lesser extent in North America. Furthermore, non-cash impairments of goodwill in Spain and fixed assets in North America and the UK amounting in total to €90 million as well as restructuring costs of €48 million impacted the results. Despite these negative effects, HeidelbergCement was able to increase the net profit for the financial year by 5% to €534 million (previous year: 511). Earnings per share rose to €1.86 (previous year: 1.83).

In view of the improved business development, the Managing Board and Supervisory Board will propose to the Annual General Meeting on 3 May 2012 an increase in the dividend to €0.35 per share (previous year: 0.25). With this dividend proposal, HeidelbergCement is gradually nearing the medium-term goal of a payout ratio of 30% to 35%. In view of the considerable uncertainties in the global economy, the company believes that a cautious, gradual approach, prioritising the further reduction of debt, is the better choice for the Group and its shareholders.

Further improvement in financing structure and credit rating

In view of uncertain financial markets and imminent maturities, HeidelbergCement further improved its financing structure through the successful placements of bonds and a debt certificate with a total volume of more than €900 million and thus increased its liquidity headroom. With the extension of the €3 billion revolving credit facility in February 2012, liquidity was secured until the end of 2015. As reaction to the successful improvement of the financing structure and good operational performance, the rating agencies further upgraded the credit rating in the first half of 2011.

Thanks to successful cost-saving measures and consistent cash management, HeidelbergCement further reduced its net debt by €0.38 billion to €7.77 billion. As a result, gearing improved to 57.0% (previous year: 62.9%) and the ratio of net debt to operating income before depreciation improved to 3.3x. The liquidity reserve rose to €4.7 billion at the end of 2011.

Targeted expansion of market position in growing markets

In 2011, HeidelbergCement was consistent and disciplined in continuing the targeted expansion of its market position in the cement business line in growing markets. The expansion of clinker capacity in the Górazdze cement plant in Poland was completed in April 2011. The modernisation of the second kiln line increased its capacity from 3,500 tonnes to 6,000 tonnes of clinker per day. The TulaCement plant in Russia with a capacity of 2 million tonnes was inaugurated in summer 2011. In Bangladesh, HeidelbergCement constructed a cement mill with a capacity of 0.8 million tonnes, test production started at the end of 2011. Furthermore, the expansion of cement capacities in Central India by 2.9 million tonnes and of grinding capacities in Poland, Liberia, and Ghana is proceeding. In this way, HeidelbergCement is gradually creating new potential for further growth.

Outlook for 2012

HeidelbergCement expects global economy to continue to grow in 2012. However, growth rates will weaken in most individual markets because of the measures taken to consolidate public finances. Growth rates in the emerging countries of Asia and Africa will still be considerably higher than those in the mature markets of North America and Europe.

In the Western and Northern Europe Group area, HeidelbergCement expects further economic growth but a slight overall dip in demand and falling sales volumes in cement and aggregates. This is mainly due to the strong growth in sales volumes in the previous year, particularly because of the mild winter weather. In the Eastern Europe-Central Asia Group area, HeidelbergCement expects further growth in sales volumes of cement and aggregates, which will be largely driven by the additional capacities and ongoing increase in demand in Russia, the Ukraine, and Central Asia. In North America, the company expects demand of cement and aggregates to grow moderately because of the slow recovery of investment in private residential construction as well as commercial construction. HeidelbergCement anticipates the demand for building materials from the raw materials industry in Canada and the US to support the company’s sales volumes once again in 2012. In the Group areas Asia-Pacific and Africa-Mediterranean Basin, the company expects a sustained positive demand trend.

With regard to costs, HeidelbergCement expects a further – albeit significantly weaker – increase in energy and raw material prices as well as rising personnel costs. HeidelbergCement aims to offset the cost increase and gain back some of the margins lost in 2011 by placing a high priority on price increases and cost reduction measures. After “FOX 2013” exceeded expectations in 2011, HeidelbergCement increased its saving target from a total of €600 million to €850 million for the three-year period of the programme (2011 to 2013). The company wants to achieve a further €200 million of this total in 2012 in comparison with the base year, 2010. Additionally, HeidelbergCement plans cost reductions of €150 million by 2014 under a new supply chain optimisation programme.

On the basis of these assumptions, the Managing Board has set the objective of further increasing revenue and operating income in 2012.

“Our strategic points of focus remain unchanged in 2012”, explains Dr. Bernd Scheifele. “Deleveraging remains the highest priority for us, in order to regain our investment grade rating. We will also continue our successful strategy of targeted investments to expand cement capacities in the growth markets of Asia, Africa, and Eastern Europe. We will again intensify our efforts to reduce costs and improve efficiency. Therefore, we increase the saving target of the “FOX 2013” programme by €250 million and start a new supply chain optimisation programme to achieve further cost reductions of €150 million by 2014. Thanks to these measures, our advantageous geographical positioning in attractive markets – in both emerging and industrialised countries –, and the global market leadership in the aggregates business, HeidelbergCement is excellently positioned to benefit over-proportionally from the continued economic growth.”

Overview of the HeidelbergCement Group

Consolidated income statement
Operating income before depreciation (OIBD)2,2392,3214%4%
in % of revenue19.0%18.0%
Operating income1,431,4743%3%
Net profit5115345%
Earnings per share in € (IAS 33)**1.831.861%
Consolidated statement of cash flows
Cash flow from operating activities1,1441,33217%
Total investments (cash outflow)-872-95910%
Consolidated balance sheet
Net debt***8,1467,770-5%

*    At constant scope and exchange rates
**  Attributable to the parent entity
*** Excluding puttable minorities

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Andreas Schaller

Group Spokesman, Director Group Communication & Investor Relations
+49 6221 481 13249
+49 6221 481 13217
HeidelbergCement AG
Berliner Straße 6
69120 Heidelberg