2 January 2018
HeidelbergCement AG informs about impact of US tax reform
In the USA, a fundamental tax reform has become effective on 22 December 2017. An essential element of this tax reform is the reduction of the federal corporate tax rate from 35% to 21% as of the beginning of the year 2018. In addition, the regulations regarding the utilization of loss carryforwards were changed. As a consequence, especially deferred tax assets on losses and interest carried-forwards must be re-measured in the consolidated financial statement for 2017.
Based on initial calculations and taking into account respective restructuring measures, we expect a negative balance sheet effect of in total about € 200 million that leads to a corresponding impact on Group net profit in 2017. The exact amount can only be computed during preparation of the 2017 group financial statements. This re-measurement of the deferred tax assets is a one-time effect that is not cash-effective and has no impact on earnings before tax or cash flow in 2017.
The outlook of a significant increase of 2017 group share of profit before one-time effects remains unchanged. The write-down has no impact on the communicated, progressive dividend policy that is likewise based on the group share of profit before one-time effects.
Furthermore, we currently assume that, starting in the year 2019, the significant reduction of the effective tax rate in the USA will have a positive effect on Group net profit and cashflow. Again, the overall effect cannot be quantified with reasonable certainty at this point in time as, among others, implementation rules from the US tax authorities regarding the new legislative bill are still pending.
HeidelbergCement is one of the world’s largest integrated manufacturers of building materials with leading market positions in aggregates, cement, and ready-mixed concrete. The company employs some 60,000 people at more than 3,000 locations in around 60 countries.