HeidelbergCement says it finished the first half of 2020 with a "good result", despite weak demand in many countries due to COVID-19 and corresponding declines in revenue.
The German building materials giant says the result from current operations before depreciation and amortisation in H1 remained almost at the level of the previous year.
Group revenue decreased by 10.4% in comparison with the previous year to €8,254mn (previous year: €9,212mn). Excluding consolidation and exchange rate effects, the decline amounted to 10.2%. In addition to lower sales volumes, the decline in revenue is also due to the changed business policy at HC Trading.
As early as February, the company launched the COPE action plan, a comprehensive package of measures with a focus on cost savings and preserving liquidity. These measures took effect especially in the second quarter, and HeidelbergCement says they made a significant contribution in compensating for the adverse impact on results due to coronavirus-related declines in revenue, largely through savings in costs, investments and in many other areas.
The result in H1 from current operations before depreciation and amortisation fell by 2.4% to €1,404mn (previous year: €1,438mn). Excluding consolidation and exchange rate effects, the operational decline amounted to €31mn, which the company says is primarily due to the drop in revenue related to COVID-19. It adds, however, that significant savings resulting mainly from the COPE action plan launched in February 2020 had an offsetting effect. The result from current operations decreased to €710mn (previous year: €754mn).
The additional ordinary result of €-3,490mn (previous year: €-128mn) was particularly affected by impairment of goodwill amounting to €2,684mn and of other fixed assets totalling €769mn due to the COVID-19-related revaluation of the asset portfolio of the HeidelbergCement Group.
Overall, the group share of the net result for the period totalled €-3,133mn (previous year: €212mn). Excluding non-recurring effects from the impairment of goodwill and other assets, the Group share rose by 5% to €356mn (previous year: €340mn).
“In the face of unprecedented challenges, we performed very well in the first half of 2020,” said Dr Dominik von Achten, chairman of the managing board of HeidelbergCement. “In the second quarter, revenue dropped in many countries, in some cases by double-digit percentages. Nevertheless, we achieved a good result, which was almost at the previous year’s level.”
HeidelbergCement says that construction activities gradually recovered in most countries over the course of the second quarter.
von Achten said the company had made a solid start in the third quarter but business prospects for the second half of 2020 remain uncertain. A further wave of infections may occur at any time, which would have an impact on construction projects already started or announced in the individual countries.
He added, however, that the long-term outlook is “positive”.
“With the good result in the second quarter, we’ve proven that we will weather the crisis well,” said von Achten. “However, development in the construction industry remains highly dynamic. Every day, we see how quickly the situation can change in terms of COVID-19 measures. It, therefore, remains difficult to provide an outlook for the year.”
