5 November 2008

Overview January – September 2008

  • Group turnover increases to EUR 10.8 billion (+49%)
  • Operating income rises to EUR 1.6 billion (+15.6%)
  • Realisation of synergies from the Hanson integration is proceeding as planned
  • Immediate cost savings measures complement the “Fitness 2009” program
  • Turnover and result forecast confirmed, while risks arising form strongly fluctuating exchange rates, volatile energy costs and the potential for further economic weakening still exists
July-SeptemberJanuary-September
EURm2007200820072008
Turnover3,0923,8817,25410,809
Operating income before depreciation (OIBD)8678651,7212,141
Operating income7166641,3431,552
Additional ordinary result831691240
Results from participations371714351
Earnings before interest and income taxes (EBIT)8366982,3981,643
Profit before tax6905132,1331,092
Net income5003591,762818
Net income from discontinued operations59-101401,261
Profit for the financial year5593491,9012,079
Group share in profit5263101,8291,985
Investments8,79027412,405799

Slowdown in global growth

In the first nine months, Group turnover increased by 49.0% to EUR 10,809 million (previous year: 7,254). This was due to the inclusion of Hanson, in particular, but the countries of Eastern Europe as well as the Benelux countries, Scandinavia, Germany, Indonesia, China, and Turkey also contributed to this growth. Excluding exchange rate and consolidation effects, the increase in turnover amounted to 6.3%. Operating income rose by 15.6% to EUR 1,552 million (previous year: 1,343).

In the first nine months of 2008, the cement and clinker sales volumes of HeidelbergCement rose by 4.6% to 68.5 million tonnes (previous year: 65.5). Excluding consolidation effects, a slight increase of 0.3% was recorded. Deliveries of aggregates more than doubled, reaching 229.4 million tonnes (previous year: 98.4). Ready-mixed concrete sales volumes grew by 58.8% to 33.7 million m3 (previous year: 21.2).

Overall, the profit for the financial year increased to EUR 2,079.2 million (previous year: 1,901.2). Consequently, the Group share of profit rose to EUR 1,984.7 million (previous year: 1,828.7).

Realisation of synergies proceeding as planned

The cornerstones of the process of integrating the Hanson Group were completed by the middle of the year. Far-reaching changes were consistently implemented starting with the restructuring of our organisations in North America and the United Kingdom. Despite the considerable adverse effects of the market development in the US and United Kingdom, the realisation of synergies is proceeding as planned. In particular, progress was achieved in bringing together all purchasing activities, standardising IT and optimising production structures. A contribution of around EUR 135 million for the whole year only partially compensates for the decline in results caused by market-related factors.

HeidelbergCement makes additional savings

We have already responded to the weak global growth at an early stage with the "Fitness 2009” program. The anticipated further optimisation and efficiency increase in all business lines and the reduction of the administrative costs are expected to generate savings of EUR 250 million per year.

In addition, we have addressed the considerable deterioration of the international economy in the past few weeks by introducing further cost-saving measures that will take effect immediately. Despite this, we have already adjusted at an early stage our structures in the US and United Kingdom to the significantly lower market level in 2008/2009 because of the massive declines on the property markets. The resulting cost reductions will partially take effect this year; their full impact will come in 2009.

Prospects

The current situation is further characterised by uncertainties on the financial markets and the increasing burdens on the real economy. The forecasts for general economic development have therefore been reduced worldwide. Decisive parameters such as exchange rates and energy prices are more volatile than ever. In this now more difficult environment, HeidelbergCement has fully achieved its internal efficiency improvement and cost reduction goals of the Hanson integration. In addition, in the US and United Kingdom, the adjustment of capacities and optimisation of locations are being implemented quickly and are therefore already having a positive impact on costs this year.

“As a result of the increasingly deteriorating market situation, we have decided to introduce further cost-saving measures that will take effect immediately, in addition to the "Fitness 2009" program with annual savings of EUR 250 million,” says Dr Bernd Scheifele, Chairman of the Managing Board. “We will continue to pursue our policies consistently and with a high degree of discipline. We are using free cash flow to reduce our liabilities.

For the whole of 2008, we expect a noticeable improvement in Group turnover despite the significant decline in the US and United Kingdom,” says Dr Scheifele. The increase is attributable to positive contributions from Europe and the emerging countries as well as consolidation-related growth.

Currently, HeidelbergCement assumes to meet its results target. Risks in this context stem from strongly fluctuating exchange rates, volatile energy costs and the potential for further economic weakening.

5,546 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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