17 March 2008

HeidelbergCement – successful exceptional year 2007

  • Strategic reorientation with Hanson acquisition
  • Geographic and product diversification
  • Strong development due to organic growth and consolidation effects
    • Group turnover: EUR 11 billion (like-for-like +11%)
    • Operating income: EUR 1.8 billion (like-for-like +27%)
    • Group share in profit: more than EUR 2 billion (like-for-like +52%)
  • Consistent and fast integration of Hanson is a precondition for the realisation of high synergies of EUR 400 million as of 2010

Integration and growth lead to record figures

The acquisition of the building materials manufacturer Hanson and the resulting changes had a decisive influence on the development of HeidelbergCement in 2007.
Group turnover rose by 35.8% to EUR 10,862 million (previous year: 7,997). This was due mainly to the initial consolidation of Hanson on 24 August and the strong organic growth in the countries of Eastern Europe and Central Asia, as well as Norway, Africa, Asia and Turkey.

In addition, results were affected by one-off effects resulting from the sale of the participations in Vicat S.A. and Florida Rock Industries Inc. Operating income increased by 35.8% to EUR 1,805 million (previous year: 1,329). The net income from continuing operations - without maxit Group - improved to EUR 1,974 million (previous year: 916). The resulting return on turnover amounts to 18.2% (previous year: 11.5%). The Group share in profit rose to EUR 2,022 million (previous year: 951). With EUR 17.11 (previous year: 8.22), earnings per share more than doubled. The Managing Board and Supervisory Board will propose to the annual General Meeting on 8 May 2008 the distribution of a dividend of EUR 1.30 per HeidelbergCement share.

“We have developed HeidelbergCement into a globally positioned building materials group with leading market positions worldwide in the core business areas of cement, aggregates, as well as downstream ready-mixed concrete activities,” says Dr. Bernd Scheifele, Chairman of the Managing Board.

Geographic expansion and extension of the product range in all Group areas

Cement and clinker sales volumes increased by 10.3% to 88 million tonnes (previous year 80). Deliveries of aggregates more than doubled, reaching 180 million tonnes (previous year: 86). Ready-mixed concrete sales volumes rose by 31.4 % overall to just under 33 million cubic metres (previous year: 25).

As a result of the inclusion of the Hanson activities, the Europe-Central Asia Group area has been extended to include Israel and Spain; the United Kingdom has also become considerably more important. In most countries of the Group area, the construction industry was the growth driver in the past year. The turnover increased by 35.5% in 2007 to EUR 5,732 million (previous year: 4,230), with Hanson contributing EUR 878 million. The operational increase amounted to 11.9 %.

As a result of the acquisition of Hanson, HeidelbergCement is one of the leading manufacturers of aggregates, ready-mixed concrete, cement, asphalt and building products in North America. Last year, construction activity in the US decreased considerably as a result of the decline in residential construction and the sub-prime crisis. The turnover in the North America Group area rose by 31.0% to EUR 3,205 million (previous year: 2,447), of which EUR 893 million were contributed by Hanson. Excluding consolidation and exchange rate effects, the record level of last year’s turnover rose again by 3.1% while achieving a stable quality of results.

Following the takeover of Hanson, the Group area Asia-Australia-Africa-Mediterranean now also includes Malaysia and Singapore as well as Australia. We benefited from lively construction activity in almost all markets. Overall, the turnover of this Group area rose by 46.6% in 2007, reaching EUR 1,909 million (previous year: 1,302), with Hanson contributing EUR 370 million to this increase. Excluding the consolidation and exchange rate effects, the increase amounted to 16.9%.

Turnover in the Group Services business unit, which includes the trading companies HC Trading and HC Fuels, improved by 5.9% in 2007 to EUR 680 million (previous year: 642).

Investments

In 2007, cash relevant investments in continuing operations amounted to a total of EUR 12,774 million (previous year: 821). EUR 1,039 million (previous year: 506) was invested in tangible fixed assets and intangible assets. As a result of the takeover of Hanson, investments in financial fixed assets rose to EUR 11,735 million (previous year: 315).

Larger investments in tangible fixed assets related to the modernisation of the Beremend cement plant in Hungary, the expansion of capacities at the Wazo Hill plant in Tanzania, the construction of the new Jingyang cement plant in the Chinese province of Shaanxi, the purchase of the Ladik cement plant in Turkey and the construction of a second production line in the Çanakkale plant in Turkey. Other significant investments were used for the commissioning of a cement import terminal on the west coast of the US near Seattle, the installation of modern equipment at aggregates locations in the Canadian province of Manitoba, the construction of coal mills in Georgia and second production lines in the Fufeng and Jingyang cement plants in China, as well as the installation of equipment for the use of alternative fuels in Poland.

Sustainable development

Sustainable development is firmly established in HeidelbergCement's corporate strategy. The same is true for the enlarged Group that now includes Hanson. Dealing carefully with raw material deposits in order to preserve species diversity is becoming increasingly important. HeidelbergCement wants to make use of its opportunities to counteract the worldwide decrease in species diversity, by consistent measures in the extraction of raw materials and the renaturation of quarries.

Reducing the consumption of resources and increasing resource efficiency are the foundations of sustainable business. Therefore, HeidelbergCement further intensified the use of alternative materials in 2007. Last year, the company achieved an alternative fuel ratio of 17%. Climate protection is another central topic. HeidelbergCement has made a commitment to reducing specific net CO2 emissions by 15% by 2010 compared with 1990. The progress made in 2007 shows that the company is on the right track for achieving the reduction targets.

Prospects: Further rise in turnover and results

For 2008, the company anticipates strong contributions once again from its markets in Europe-Central Asia and in the emerging countries - particularly in Asia – of the Asia-Australia-Africa-Mediterranean Group area. In North America, residential construction will further decline; infrastructure measures partly compensate for this decline.

The major steps towards the integration of Hanson will be completed by the middle of 2008. The consistent exploitation of synergy potential from the integration of Hanson will contribute to a noticeable growth in results. Due to the improved geographical diversification and the expansion of the raw material base and product portfolio, HeidelbergCement is very confident for 2008.

“In this context, we will significantly increase turnover and results once again in 2008 and expand into a new dimension,” says Dr. Scheifele.

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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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