30 July 2009

HeidelbergCement reports Q2 2009 results

HeidelbergCement strengthened by rigorous cost reductions and impetus from growing markets

  • Group turnover reaches EUR 5.4 billion (-21.2% on a comparable basis)
  • Early and consistent cost reductions noticeably compensate impacts of decreases in sales volumes
  • Goals for “Fitness 2009” programme significantly raised to EUR 470 million
  • Counter-cyclical reduction of net debt to EUR 11.3 billion
  • Dynamic market development in China, India and Indonesia
  • HeidelbergCement benefits from implementation of infrastructural measures through strong positions in US markets

Overview January – June 2009

April-JuneJanuary-June
EURm2008*20092008*2009
Turnover3,8653,0116,9285,370
Operating income before depreciation (OIBD)8986351.290836
Operating income705446901457
Additional ordinary result8442747
Result from participations28263320
Earnings before interest and income taxes (EBIT)741516961524
Profit before tax564357579162
Net income from continuing operations449367460328
Net income / loss from discontinued operations-6-31,271-10
Profit for the financial year4433641,731318
Group share of profit4103331,674270
Investments272141524290

* Figures have been restated following the reclassification of the unwinding of discount of pensions and other provisions

Market development remains challenging

The rising demand in Asia and the additional cement capacity in Africa partially made up for the decrease in other core markets such as North America and the United Kingdom. Overall, the cement and clinker sales volumes in the first six months of 2009 fell by 15.1% to 37.7 million tonnes (previous year: 44.4). In countries such as China, Bangladesh, India, Africa and Sweden, delivery volumes were either above or at the previous year's level. The sales volumes for aggregates decreased by 25.3% to 108.3 million tonnes (previous year: 145.0). The deliveries of ready-mixed concrete fell by 24.4% to 16.8 million m3 (previous year: 22.2). Supported by the increasing activities in the infrastructure sector, asphalt sales volumes reached a level of 4.4 million tonnes (previous year: 4.9), equalling to a decrease of 9.8%.

Financial key figures reflect cost reductions

Group turnover declined by 22.5% in the first half of the year to EUR 5,370 million (previous year: 6,928). Turnover growth in Asian emerging countries such as China, India and Indonesia as well as in Africa was offset by the strong decline in the European countries and North America. Excluding exchange rate and consolidation effects, turnover decreased by 21.2%. Operating income before depreciation (OIBD) fell by 35.2% to EUR 836 million (previous year: 1,290). Operating income declined by 49.3% to EUR 457 million (previous year: 901).

HeidelbergCement responded to the economic downturn at a very early stage and has adapted capacities and production structures accordingly. The success of the comprehensive cost reduction programmes is reflected in the OIBD margin for the second quarter of 2009, which at 21.1% was only slightly below the level of the preceding year (previous year: 23.2%).

Net debt significantly decreased

The improvement of financial results by EUR 20.5 million to EUR -361.9 million (previous year: -382.4) is primarily due to the reduction of net indebtedness. The decrease in interest expenses was offset by negative exchange rate effects in the amount of EUR 11.1 million and a rise of other financial expenses.

“Contrary to the usual seasonal development, HeidelbergCement has reduced its debt in the second quarter of 2009 alone by EUR 774 million to EUR 11.3 billion. A major contributor to this development is the successful implementation of the "cash is king" initiative,” explains Dr. Bernd Scheifele, Chairman of the Managing Board.

Overall, the profit for the first six months of the financial year amounted to EUR 318.3 million (previous year: 1,730.6) for the first six months. Half-year results in the previous year were affected by the high book profit in the amount of EUR 1,276.9 million from the sale of the maxit Group. The Group share of profit amounted to EUR 270.0 million (previous year: 1,674.3).

Package of measures 2009 extended

HeidelbergCement consistently continues its cost reduction measures, which were initiated at an early stage and has intensified the "Fitness 2009" programme in important core markets. Further rationalisation measures are also planned for the second half of the year, especially in the United Kingdom and North America. The projected savings for the whole of 2009 will be raised to EUR 470 million, thus clearly exceeding the former goal of EUR 250 million. In parallel to a rigid cost management, HeidelbergCement pursues a clear cash flow orientation. The successfully launched "cash is king" initiative has the objective to generate additional liquidity in the amount of EUR 500 million.

Prospects

After the strong worldwide decline in economic growth in the first quarter of 2009, leading indicators increasingly point to a close end of the downward trend. In China positive impetus from economic stimulus programmes is already contributing significantly to economic revitalisation. In the second half of the year, the effects will most probably be felt in other regions as well. The first impetus in the US is thus expected from the infrastructural programme and is likely to intensify in 2010. Also in Europe, there is some evidence for a steady, albeit slow, economic recovery.

HeidelbergCement continues to expect a decrease in turnover and operating income for the full year 2009. The high volatility of decisive parameters does not allow for a more definite forecast at present. Regarding the second half of 2009 Dr. Scheifele says: “We expect positive contributions on profit primarily as a result of our rigorous cost-reduction programme, lower energy costs and the worldwide economic stimulus programmes. Due to its strong market positions in the US, HeidelbergCement expects to benefit above average from the planned infrastructure measures.”

6,216 characters

Andreas Schaller

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

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