HeidelbergCement – preliminary overview Q4 and full year 2012
Q4 2012:
- Revenue rises to €3.5 billion (+6.5% from Q4 2011)
- Operating income before depreciation up 8.2% to €691 million
- Operating income margin improved to 13.0% (12.5% in Q4 2011)
Full year 2012:
- Revenue rises to €14.0 billion (+8.7% from 2011)
- Operating income up 9.5% to €1.61 billion
- Trend reversal: operating income margin increased in 2012
- Margin recovery in core business cement and aggregates continued
- Cash saving programme “FOX 2013” clearly exceeds expectations by achieving €384 million cash effective savings (original target: €200 million)
Outlook 2013:
- Asia, Africa, North America, Russia: Positive development to continue
- Europe: Weak, with the exception of Germany and Scandinavia
- Focus on margin improvement for cement and aggregates
- “FOX 2013”: Three-year cumulated cash saving target increased to €1,01 billion (€600 million originally)
Today, HeidelbergCement presented its preliminary and unaudited figures for sales volumes, revenue, operating income before depreciation (OIBD) and operating income (OI) for the fourth quarter and full year 2012. Revenue and operating income rose in comparison to the previous year and in line with the outlook given in the 2011 Annual Report. The improvements reflect the continuing positive development in HeidelbergCement’s growth markets and the ongoing recovery in North America. Sales volumes and result declined in Europe, mainly as a result of government budget constraints in some countries which led to significant reductions in infrastructure spending. Measures to reduce costs and increase prices contributed significantly to the rise in OIBD and OI of the Group.
“We are pleased that we achieved our goal of increasing revenue and operating income despite the negative impact of the euro crisis on many countries in Europe,” said Dr. Bernd Scheifele, CEO of HeidelbergCement. “Once again we could reap the benefit from our advantageous geographical positioning in growth markets and the successful continuation of our programmes for efficiency and margin improvement. The margins in the core businesses cement and aggregates continued to increase. The strong development in our markets in Asia, Africa and North America contributed to the positive margin development.”
Preliminary Group Financials
| January - December | October - December | ||||||||
| €m | 2011 | 2012 | % | % l-f-l | 2011 | 2012 | % | % l-f-l | |
| Revenue | 12,902 | 14,02 | 8.7% | 4.2% | 3,282 | 3,495 | 6.5% | 3.4% | |
| Operating income before depreciation (OIBD) | 2,321 | 2,477 | 6.7% | 2.8% | 639 | 691 | 8.2% | 4.2% | |
| as % of revenue | 18.0% | 17.7% | 19.5% | 19.8% | |||||
| Operating income | 1,474 | 1,613 | 9.5% | 5.6% | 410 | 455 | 10.9% | 6.1% | |
| as % of revenue | 11.4% | 11.5% | 12.5% | 13.0% | |||||
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 87.8 | 89.0 | 1.4% | 1.4% | 22.4 | 21.9 | -2.1% | -2.1% | |
| Aggregates (Mt) | 254.1 | 243.0 | -4.4% | -5.1% | 63.0 | 60.2 | -4.5% | -5.7% | |
| Rmc (Mm³) | 39.1 | 39.1 | 0.0% | 0.0% | 9.9 | 10.1 | 1.8% | 2.4% | |
| Asphalt (Mt) | 9.5 | 8.6 | -9.8% | -9.8% | 2.3 | 2.1 | -11.6% | -11.6% | |
Cement sales volumes rose slightly compared to the previous year due to a positive volume development in the North America, Asia-Pacific, and Africa-Mediterranean Basin Group areas which more than compensated for the weak demand in Europe. Aggregates and asphalt sales volumes declined due to decreasing infrastructure spending in the USA, the UK, and some Eastern European countries. Group revenue and OI could be increased compared to the previous year, mainly because of the successful implementation of measures for cost reduction, efficiency improvement, and price increases. The strong development in the Group areas Asia-Pacific, Africa-Mediterranean Basin and North America contributed to the improvement of the operating income margin. The “FOX 2013” programme clearly exceeded expectations and resulted in cash savings of €384 million in 2012.
Full year 2012 revenue and results were positively influenced by the weakening of the euro compared to other currencies. This mainly affected the Group areas of Western and Northern Europe, North America, and Asia-Pacific.
Supported by the measures for margin improvement and owing to a sustained strong development in the Group areas of Asia-Pacific, North America, and Africa-Mediterranean Basin, Group revenue and OI continued to improve in the fourth quarter 2012 despite declining sales volumes.
At the end of December 2012, the number of employees was 51,966 (previous year: 52,526). The reduction of 560 employees essentially results from two opposing developments: on the one hand, around 1,200 job cuts were made in North America, the United Kingdom, Spain, and some Eastern European countries as a result of overhead efficiency improvement programmes, location optimisations, and capacity adjustments. On the other hand, HeidelbergCement hired more than 600 new employees in growth markets such as India and Indonesia.
Western and Northern Europe
| €m | 2011 | 2012 | % | % l-f-l | 2011 | 2012 | % | % l-f-l | |
| Revenue | 4,318 | 4,201 | -2.7% | -4.8% | 1,056 | 1,038 | -1.6% | -4.2% | |
| Operating income before depreciation (OIBD) | 734 | 577 | -21.4% | -23.5% | 183 | 195 | 6.2% | 2.6% | |
| as % of revenue | 17.0% | 13.7% | 17.4% | 18.6% | |||||
| Operating income | 427 | 290 | -32.1% | -34.1% | 94 | 113 | 20.0% | 14.4% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 22.1 | 21.3 | -3.9% | -3.9% | 5.5 | 5.2 | -4.5% | -4.5% | |
| Aggregates (Mt) | 79.1 | 72.2 | -8.7% | -10.4% | 19.2 | 16.9 | -12.1% | -14.0% | |
| Rmc (Mm³) | 13.8 | 13.2 | -4.6% | -4.6% | 3.4 | 3.4 | -1.9% | -1.9% | |
| Asphalt (Mt) | 3.6 | 2.8 | -24.2% | -24.4% | 0.8 | 0.6 | -26.4% | -26.4% | |
Unlike in 2011, the business development in Western and Northern Europe in 2012 was not supported by mild weather at the beginning and the end of the year. Nevertheless, demand for construction materials remained stable in Germany and Northern Europe, driven by a positive economic development. In contrast, construction activity in the United Kingdom and the Netherlands weakened noticeably, mainly as a result of lower infrastructure spending in the United Kingdom due to budget consolidation and the decline in residential construction in the Netherlands following the end of housing subsidy programmes. Despite the good result contribution of Northern Europe, total sales volumes and revenue of the Group area decreased in 2012. The significant decline in OI is partly the result of positive pension effects in the previous year. Excluding effects from emission rights and pensions, OIBD fell by 14% and OIBD margin by 1.6 percentage points in 2012, while the development remained almost stable in the fourth quarter.
Eastern Europe-Central Asia
| January - December | October - December | ||||||||
| €m | 2011 | 2012 | % | % l-f-l | 2011 | 2012 | % | % l-f-l | |
| Revenue | 1,392 | 1,435 | 3.1% | 2.8% | 323 | 320 | -0.9% | -4.2% | |
| Operating income before depreciation (OIBD) | 327 | 317 | -3.1% | -2.1% | 81 | 81 | -0.2% | -3.3% | |
| as % of revenue | 23.5% | 22.1% | 25.0% | 25.3% | |||||
| Operating income | 217 | 193 | -11.5% | -10.2% | 49 | 41 | -16.9% | -20.2% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 17.4 | 17.2 | -1.0% | -1.0% | 4.0 | 3.8 | -4.9% | -4.9% | |
| Aggregates (Mt) | 21.7 | 19.2 | -11.5% | -11.5% | 5.6 | 5.0 | -11.4% | -11.4% | |
| Rmc (Mm³) | 4.6 | 3.8 | -17.5% | -17.5% | 1.2 | 1.0 | -18.9% | -18.9% | |
| Asphalt (Mt) | 0.0 | 0.0 | 0.0 | 0.0 | |||||
In 2012, the development in Eastern Europe-Central Asia was divided. While cement sales volumes and prices developed positively in Russia and Central Asia, the demand for construction materials declined significantly in Poland, Hungary and the Czech Republic as a result of budget consolidation measures in these countries and the completion of construction projects related to the European Football Championship in Poland. Overall, cement sales volumes increased slightly, while aggregates and ready-mixed concrete sales volumes declined significantly. Revenue rose slightly, driven by the positive development in Central Asia and Russia, especially due to new capacities in the Moscow area. Excluding effects from emission rights, the OIBD could be kept stable despite the market weakness in some countries.
North America
| January - December | October - December | ||||||||
| €m | 2011 | 2012 | % | % l-f-l | 2011 | 2012 | % | % l-f-l | |
| Revenue | 3,035 | 3,441 | 13.4% | 4.5% | 774 | 836 | 8.0% | 4.8% | |
| Operating income before depreciation (OIBD) | 473 | 577 | 21.9% | 11.4% | 160 | 125 | -22.2% | -28.0% | |
| as % of revenue | 15.6% | 16.8% | 20.7% | 14.9% | |||||
| Operating income | 230 | 327 | 42.0% | 28.1% | 100 | 63 | -36.6% | -43.3% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 10.6 | 11.7 | 10.1% | 10.1% | 2.7 | 2.9 | 5.3% | 5.3% | |
| Aggregates (Mt) | 105.8 | 104.5 | -1.2% | -1.2% | 26.3 | 25.9 | -1.4% | -1.4% | |
| Rmc (Mm³) | 5.7 | 6.1 | 6.9% | 6.7% | 1.4 | 1.4 | 4.9% | 10.4% | |
| Asphalt (Mt) | 3.5 | 3.4 | -1.9% | -1.9% | 0.9 | 0.8 | -7.3% | -7.3% | |
In our North America Group area, demand for cement and ready-mixed concrete continued its recovery in 2012, driven especially by an increase in residential construction. Cement sales volumes recorded even a double digit growth. Aggregates and asphalt shipments declined slightly due to budget consolidation and limited infrastructure spending.
Result in the fourth quarter of 2012 was affected by the storm Sandy and an early winter start in Canada. Result of the previous year included a positive amount of €42 million, due to a conversion of pension systems. Excluding the pension effect, OIBD increased by 6% in the fourth quarter compared to the previous year.
Asia-Pacific
| January - December | October - December | ||||||||
| €m | 2011 | 2012 | % | % l-f-l | 2011 | 2012 | % | % l-f-l | |
| Revenue | 2,957 | 3,477 | 17.6% | 12.3% | 824 | 929 | 12.8% | 9.4% | |
| Operating income before depreciation (OIBD) | 711 | 887 | 24.7% | 20.2% | 193 | 259 | 34.3% | 32.0% | |
| as % of revenue | 24.0% | 25.5% | 23.4% | 27.9% | |||||
| Operating income | 568 | 732 | 28.9% | 24.8% | 157 | 220 | 39.7% | 38.4% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 28.8 | 30.0 | 3.9% | 3.9% | 8.1 | 7.9 | -2.9% | -2.9% | |
| Aggregates (Mt) | 37.1 | 37.0 | -0.5% | -1.7% | 9.4 | 9.8 | 5.2% | 0.9% | |
| Rmc (Mm³) | 9.9 | 11.1 | 12.5% | 12.5% | 2.7 | 3.1 | 17.0% | 17,0% | |
| Asphalt (Mt) | 1.9 | 1.9 | 0.2% | 0.2% | 0.5 | 0.5 | 7.3% | 7.3% | |
Demand for all our products remained very strong in Asia-Pacific because construction activities were supported by economic growth in the region. As a consequence, revenue showed a double-digit growth for the full year and the fourth quarter. OIBD, OI, and the margins increased significantly in 2012, mainly due to a strong development in Indonesia, where our subsidiary Indocement achieved a record result. In the fourth quarter of 2012, cement sales volumes decreased slightly compared to the previous year, due to weakened demand in China which was also caused by an early winter start.
Africa – Mediterranean Basin
| January - December | October - December | ||||||||
| €m | 2011 | 2012 | % | % l-f-l | 2011 | 2012 | % | % l-f-l | |
| Revenue | 1,023 | 1,135 | 11.0% | 10.1% | 255 | 289 | 13.7% | 13.1% | |
| Operating income before depreciation (OIBD) | 164 | 203 | 24.1% | 24.3% | 34 | 57 | 66.1% | 69.0% | |
| as % of revenue | 16.0% | 17.9% | 13.4% | 19.6% | |||||
| Operating income | 128 | 166 | 29.0% | 29.9% | 25 | 46 | 81.3% | 87.4% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 9.1 | 9,2 | 0.9% | 0.9% | 2.2 | 2.3 | 3.5% | 3.5% | |
| Aggregates (Mt) | 14.2 | 13.7 | -3.6% | -3.6% | 3.4 | 3.2 | -6.8% | -6.8% | |
| Rmc (Mm³) | 5.1 | 4.9 | -3.5% | -3.5% | 1.3 | 1.2 | -4.1% | -4.1% | |
| Asphalt (Mt) | 0.5 | 0.5 | 1.7% | 1.7% | 0.2 | 0.1 | -18.7% | -18.7% | |
The positive market development in Africa continued also in 2012, especially in our key markets Ghana and Tanzania. Consequently, revenue and OI recorded double-digit growth and a new record result. Aggregates shipments further declined, due to the weak market in Spain.
Outlook 2013
In its January 2013 forecast, the International Monetary Fund expects a slightly increased growth for the global economy compared to the previous year, provided that the advanced economies of North America and Europe continue their efforts to resolve the debt crisis and consolidate their budgets. There are still risks for the global economy resulting from the high indebtedness of the USA, the euro debt crisis, and armed conflicts in the Middle East.
In North America, the company expects a continuing economic recovery and consequently a further increasing demand for building materials, especially from residential construction and the raw materials industry. In Europe and Central Asia, HeidelbergCement anticipates a divided development: while markets in Germany, Northern Europe, Russia, and Central Asia should remain stable or continue growing, a weak development of the economy and demand for building materials is expected in all other regions. In Asia and Africa, the company expects a sustained positive demand.
“Due to the continuing strong economic growth in the emerging markets and the recovery in the USA, we are cautiously confident for the future”, says Dr. Bernd Scheifele. “Macroeconomic risks have recently eased, but still remain significant. The need for countries to deleverage will likely dampen volume growth in mature markets for the foreseeable future. In addition, we still have not recovered the margin loss from massively increasing energy costs over the past years. Therefore, we will unabatedly continue our efforts to reduce costs and improve efficiency and will continue to right-size capacities where necessary.”
“Since our “FOX 2013” programme clearly exceeded expectations in 2012, we increased the three-year cumulated cash saving target to €1.01 billion compared with the original goal of €600 million. We will put special focus on price increases in 2013. For this purpose we started the projects “PERFORM” for cement in the USA and Europe and “CLIMB Commercial” for aggregates last year in order to achieve €350 million margin improvement by 2015. Deleveraging remains the highest priority for us, in order to regain our investment grade rating. We will also continue our successful strategy of targeted investments to expand cement capacities in the growth markets of Asia, Africa, and Eastern Europe. Due to commissioning of further plants during the next months, we will increase our cement capacities in emerging markets by more than 5 million tonnes in 2013.”
“We will benefit from two important factors in 2013”, says Dr. Bernd Scheifele. “On the one hand our continuous investment through the crisis in new cement capacities in strongly growing emerging markets is paying off, now. Meanwhile, we have a strong footprint in these regions with more than 60% of our worldwide cement capacities. In addition, we benefit from our strong market presence and the continuing market recovery in our Group area North America that contributes about 25% of our revenue.”
The complete consolidated financial statements of HeidelbergCement including the outlook will be published on 14 March 2013.
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