7 May 2009

HeidelbergCement reports Q1 2009 results

HeidelbergCement responds with consistent cost management to declining markets

  • Turnover decreases to EUR 2.4 billion in a difficult environment
  • Operating income significantly affected by economic factors and weather conditions
  • Consistent cost management led to considerable reduction in fixed costs
  • Comprehensive reorganisation of the financing structure on track

Overview January – March 2009

January - March
EURm2008*2009
Turnover3,0622,359
Operating income before depreciation (OIBD)391202
Operating income19611
Additional ordinary result193
Results from participations6-6
Earnings before interest and income taxes (EBIT)2208
Profit/loss before tax15-195
Net income/loss from continuing operations11-39
Net income/loss from discontinued operations1,276-7
Profit/loss for the financial year1,287-46
Group share profit/loss1,264-63
Investments252149

* Figures have been restated following the reclassification of the unwinding of discount to the other financial result.Economic and seasonal trends impair first quarter significantly

HeidelbergCement's development in the first quarter of 2009 has been characterised to a considerable degree by seasonal effects, in addition to the worldwide recession. Both, Europe and large parts of North America experienced a long-lasting period of wintry weather, which also adversely affected sales volumes.

The Group's cement and clinker sales volumes fell by 18.1% to 16.0 million tonnes (previous year: 19.6). The most significant decline was recorded in the North America Group area, followed by Europe. Deliveries of aggregates amounted to 44.5 million tonnes (previous year 59.8), a decrease of 25.5%. Asphalt sales volumes fell by 8.7% to 1.8 million tonnes (previous year: 1.9). Deliveries of ready-mixed concrete decreased by 24.0% to 7.6 million cubic metres (previous year: 10.0).

Group turnover fell by 23.0% in the first quarter to EUR 2,359 million (previous year: 3,062). This was due, in particular, to the heavily declining markets in the countries of Eastern Europe and Central Asia, as well as in Spain, the United Kingdom, Turkey and North America. Excluding exchange rate and consolidation effects, turnover decreased by 21.9%. Operating income before depreciation (OIBD) fell to EUR 202 million (previous year: 391). Operating income decreased to EUR 11 million (previous year: 196). "The optimisation measures in production and maintenance have already led to a significant reduction in fixed costs", explained Chairman of the Managing Board Dr. Bernd Scheifele. "In addition, the energy costs have also fallen noticeably. HeidelbergCement will continue with its consistent cost management and focus primarily on generating the highest possible cash flow."

The financial results were around the previous year's level at EUR -203 million (previous year: -205); a decline in interest expenses was offset by negative exchange rate effects of EUR 30 million and a rise in other financial expenses.

Profit/loss before tax from continuing operations totalled EUR -195.0 million (previous year: 14.9). Negative pre-tax results for the quarter in various countries and the release of unused provisions for tax risks in Australia led to a positive figure of EUR 155.9 million (previous year: -4.1) under taxes on income. Net income/loss from continuing operations thus amounted to EUR -39.0 million (previous year: 10.7).

Overall, the loss for the financial year for the first quarter amounted to EUR -45.9 million (previous year: profit 1,287.1). The same quarter of the previous year was characterised by the book profit from the sale of maxit Group. Consequently, the Group share of loss amounted to EUR -63.0 million (previous year: profit 1,264.4).

Reorganisation of the financing structure

HeidelbergCement is working intensively on the comprehensive reorganisation of its financing structure and is continuing to examine all options on the shareholders’ equity and debt capital sides. The focus is currently on debt refinancing. HeidelbergCement has presented its bank creditors with a comprehensive refinancing concept. The company is proposing consolidation of existing loans for acquisition financing and other credit lines under a new borrowing facility, and adjustment of loan covenants to bring them into line with prevailing market conditions.

In return, HeidelbergCement is offering a significantly higher margin and an accelerated debt repayment. The debt repayment will include a reduction in investment, optimisation of working capital, consistent cost orientation and a comprehensive programme of divesting non-core business units.

Prospects

As a result of the sustained downturn, HeidelbergCement anticipates a decline in turnover and operating income in 2009. With the parameters still extremely volatile, it is not possible to make a more precise forecast. "However, with capacity adjustment measures taken at an early stage and the far-reaching cost reduction programmes, HeidelbergCement is well-positioned to overcome the difficult challenges", said Dr. Bernd Scheifele. Thanks to its strong international positioning and the focal areas of its product range, HeidelbergCement expects to benefit from the infrastructure projects launched worldwide. Nevertheless, we do not expect the first impetus until the second half of 2009.

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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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