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08 November 2017

HeidelbergCement results for the Q3 2017

First publishedon www.AggBusiness.com

HeidelbergCement says in its results for the third-quarter of 2017 show revenue up by 4% to €4.6 billion, while the result from current operations before depreciation and amortisation rose by 7% to €1,058 million on a comparable basis (adjusted for currency and consolidation effects).

The group’s free cash flow of the past 12 months significantly improved to €1.2 billion.

Its outlook for 2017 remains unchanged with a positive outlook for global economy; accelerated growth in Europe; moderate increase in revenue and mid-single to double-digit percentage increase in results from current operations on a comparable pro forma basis (with the inclusion of Italcementi in the first half of 2016 and adjusted for currency and consolidation effects).

Heidelberg Cement expects a significant rise in profit for the year before non-recurring effects, and says it is well positioned to benefit from good and stable development in industrial countries, particularly in the United States, Canada, Europe, and Australia

The group reports a good operative performance continued in North America despite adverse weather conditions with the strongest growth recorded Australia, Morocco, India, as well as the markets in Northern and Eastern Europe.

The countries in Southern Europe showed clear signs of recovery, and while Germany achieved significant growth, the uncertainties regarding Brexit negatively affected sales volumes and results in the United Kingdom.

The weak markets in some emerging countries, such as Ghana, Indonesia, Thailand, and Egypt, have passed their lowest point, and Indonesia and Ghana show again clear signs of recovery of demand.

During the third-quarter, the group’s cement and clinker sales volumes grew by 2% to 33.7 million tonnes (previous year: 33.2).

Deliveries of aggregates rose by 8% to 86.7 million tonnes (previous year: 80.3), while deliveries of ready-mixed concrete fell by 0.5% to 12.4 million m³ (previous year: 12.5).

Asphalt sales volumes grew by 3% to 3.2 million tonnes (previous year: 3.1).

For the first nine months of 2017, cement and clinker sales volumes rose by 29% to 94.4 million tonnes (previous year: 73) owing to the consolidation of Italcementi. Deliveries of aggregates climbed by 15% to 229 million tonnes (previous year: 198.7) and deliveries of ready-mixed concrete also rose by 15% to 35.0 million m³ (previous year: 30.4).

Asphalt sales volumes grew slightly to 7.1 million tonnes (previous year: 7.1).

“As expected, the positive trend reversal in May led to a significantly improved development of results in the third-quarter”, says chairman of the managing board, Dr Bernd Scheifele.

“North America, Australia, Morocco, India, as well as Northern and Eastern Europe have developed very strongly. The countries of Southern Europe are showing clear signs of recovery, and the emerging countries have passed their lowest point.

“We have succeeded in reducing the rise in energy costs through the flexible use of various fuels. Synergies from the acquisition of Italcementi have already significantly exceeded the target for 2017.

“Furthermore, the refinancing of our maturities on favourable terms has made a clear impact on both result and cash flow. All in all, we have substantially increased the group share of profit for the period and earnings per share. In this way, we clearly show that we are able to create value for our shareholders from the Italcementi takeover.”

As a consequence of its disciplined capital spending, Heidelberg Cement says it will reduce its cash-relevant investments planned for 2017 from €1.4 billion to €1.2 billion. The reduction relates only to investments in growth.

“The result for the third-quarter confirms our expectations for the full year,” says Dr Scheifele.

“From a strategic perspective, we will maintain our focus on concluding the integration of Italcementi and reducing net debt through disciplined cash flow management and the sale of non-core assets.

“Our declared aim remains to achieve a long-term investment grade rating. We will focus our investments on projects that strengthen our market position and offer synergy potential.

“In operational terms, we will continue to concentrate on these five areas: an increase in customer satisfaction; high operating leverage; cost leadership; vertical integration, and optimised geographical positioning.

“While the overall outlook for the global economy is positive, substantial macroeconomic and particularly geopolitical risks continue to exist at the same time.

“HeidelbergCement will benefit from the good and stable economic development in the industrial countries, above all in the United States, Canada, Europe, and Australia. These countries generate more than 60% of our revenue.”

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