HeidelbergCement – preliminary overview Q4 and full year 2011
Q4 2011:
- Revenue increases to €3.3 billion (+13.8% from Q4 2010)
- Operating income before depreciation improves by 6.8% to €639 million
- Strong growth in sales volumes for cement (+14.6%), aggregates (+7.7%) and RMC (+12.4%), supported by mild winter in Europe and North America
Full year 2011:
- Revenue increases to €12.9 billion (+9.7% from 2010)
- Operating income before depreciation improves by 3.6% to €2.32 billion
- Continued strong growth in sales volumes for all building materials
- Cash saving programme “FOX 2013” exceeds expectations in 2011
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 2011. Sales volumes, revenue and OI of the Group increased compared to the prior year, in line with the outlook given in the 2010 annual report. The improvements reflect the continued growth in HeidelbergCement’s emerging markets and the ongoing recovery of its mature markets in North America and Europe after having reached the bottom of the crisis in 2010. Sales volumes in Europe benefited from mild winter weather both at the beginning and end of 2011. Continued cost saving efforts contributed to the increase in OI and OIBD that was achieved despite a significantly larger than expected rise in energy costs in the first half of 2011 following the Fukushima accident.
“We are pleased that we achieved our goal of increasing revenue and operating income in 2011 despite the significant surge in energy costs earlier in the year,” 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 efficiency and cost-saving programmes. Furthermore, we laid the foundations for future growth with our investments in attractive markets in Eastern Europe, Asia, and Africa.”
Preliminary Group Financials
| January - December | October - December | ||||||||
| €m | 2010 | 2011 | % | % l-f-l | 2010 | 2011 | % | % l-f-l | |
| Revenue | 11,762 | 12,902 | 9.7% | 10.7% | 2,885 | 3,282 | 13.8% | 14.3% | |
| Operating income before depreciation (OIBD) | 2,239 | 2,321 | 3.6% | 4.0% | 598 | 639 | 6.8% | 6.9% | |
| in % of turnover | 19.0% | 18.0% | 20.7% | 19.5% | |||||
| Operating income | 1,430 | 1,474 | 3.0% | 3.2% | 384 | 410 | 6.9% | 7.0% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 78.4 | 87.8 | 12.0% | 10.2% | 19.5 | 22.4 | 14.6% | 14.0% | |
| Aggregates (Mt) | 239.7 | 254.1 | 6.0% | 5.8% | 58.5 | 63.0 | 7.7% | 7.5% | |
| Rmc (Mm³) | 35.0 | 39.1 | 11.8% | 11.7% | 8.8 | 9.9 | 12.4% | 12.3% | |
| Asphalt (Mt) | 9.1 | 9.5 | 4.9% | 4.6% | 2.3 | 2.3 | 1.0% | 1.0% | |
Sales volumes, revenue and OI of the Group increased compared to the prior year, driven by continued growth in HeidelbergCement’s emerging markets and the ongoing recovery of its mature markets in North America and Europe. Operating margins for the full year declined as sales price increases could not fully offset a significant surge in energy prices. The positive contribution to OI from emission rights declined by about €130 million to less than €10 million in 2011. The reduction was due mainly to two effects: the collapse of prices for emission rights in the fourth quarter of 2011 and the consequential decision to save surplus emission rights for future periods. The “FOX 2013” programme exceeded expectations and resulted in cash savings of €384 million including cost savings of more than €100 million in 2011. In consideration of the demographic development, the company successfully renegotiated several pension schemes in North America and Western Europe in order to reduce balance sheet risks arising from the expected future increase of healthcare and pension costs. These efforts resulted in savings of about €130 million on top of the FOX 2013 program over the last three quarters of 2011.
Full year 2011 revenue and results were negatively influenced by currency effects, in particular by the weakening of the US dollar compared to the euro. This mainly affected the Group areas North America and Africa-Mediterranean Basin. Adjusted for currency and consolidation effects, full year 2011 Group revenue, OIBD and OI increased by 10.7%, 4.0% and 3.2% respectively.
Supported by a solid development in all Group areas and a late winter start in Europe and North America, revenue and sales volumes continued to improve in the fourth quarter 2011. Excluding effects from emission rights and pensions, OIBD of the underlying business improved by 19.4% and OIBD margin increased by 0.8 percentage points in the fourth quarter as a consequence of the warm weather and easing energy cost pressure. Currency effects did not play a role for the fourth quarter 2011 revenue and results.
At the end of December 2011, the number of employees in HeidelbergCement’s continuing operations was 52,526 (previous year 53,437). The reduction of 911 employees essentially results from two opposing developments: On the one hand, more than 1,200 job cuts were made in the North America Group area, the United Kingdom and some Eastern European countries as a result of overhead efficiency improvement programmes, location optimisations and capacity adjustments. On the other hand, we hired about 400 new employees in growth markets where we installed new capacities, for example in Indonesia and India.
Western and Northern Europe
| January - December | October - December | ||||||||
| €m | 2010 | 2011 | % | % l-f-l | 2010 | 2011 | % | % l-f-l | |
| Revenue | 3,811 | 4,318 | 13.3% | 13.5% | 906 | 1,056 | 16.5% | 17.7% | |
| Operating income before depreciation (OIBD) | 683 | 734 | 7.4% | 7.0% | 225 | 183 | -18.6% | -19.2% | |
| in % of turnover | 17.9% | 17.0% | 24.9% | 17.4% | |||||
| Operating income | 407 | 427 | 4.9% | 4.1% | 151 | 94 | -37.4% | -38.1% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 19.7 | 22.1 | 12.4% | 12.4% | 4.7 | 5.5 | 16.2% | 16.2% | |
| Aggregates (Mt) | 68.8 | 79.1 | 14.9% | 14.9% | 16.1 | 19.2 | 19.3% | 19.3% | |
| Rmc (Mm³) | 11.7 | 13.8 | 17.8% | 17.6% | 2.8 | 3.4 | 21.5% | 21.3% | |
| Asphalt (Mt) | 3.4 | 3.6 | 7.6% | 7.6% | 0.8 | 0.8 | 6.7% | 6.7% | |
The business development in Western and Northern Europe in 2011 was supported by the mild weather conditions at the beginning and at the end of the year that led to an extended construction season. Demand for building materials was especially strong in Germany and Northern Europe, driven by economic growth and increasing demand from residential construction in these countries. Fourth quarter sales volumes and revenue increased strongly due to the late winter start. However, OIBD and OI in the fourth quarter declined compared with the same period of 2010 because of lower income from emission rights. Excluding effects from emission rights and pensions, OIBD of the underlying business improved by 28.3% and OIBD margin increased by 1.4 percentage points in the fourth quarter.
Eastern Europe-Central Asia
| January - December | October - December | ||||||||
| €m | 2010 | 2011 | % | % l-f-l | 2010 | 2011 | % | % l-f-l | |
| Revenue | 1,138 | 1,392 | 22.3% | 17.8% | 274 | 323 | 17.6% | 19.7% | |
| Operating income before depreciation (OIBD) | 299 | 327 | 9.3% | 4.5% | 84 | 81 | -3.4% | 1.5% | |
| in % of turnover | 26.3% | 23.5% | 30.5% | 25.0% | |||||
| Operating income | 203 | 217 | 7.4% | 2.6% | 57 | 49 | -13.4% | -7.0% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 14.2 | 17.4 | 22.3% | 14.5% | 3.4 | 4.0 | 17.1% | 13.4% | |
| Aggregates (Mt) | 20.1 | 21.7 | 7.8% | 7.8% | 5.2 | 5.6 | 8.7% | 8.7% | |
| Rmc (Mm³) | 3.9 | 4.6 | 18.9% | 18.9% | 1.0 | 1.2 | 18.1% | 18.1% | |
| Asphalt (Mt) | 0.0 | 0.0 | 0.0 | 0.0 | |||||
In 2011, shipments of cement and ready-mixed concrete in the Eastern Europe-Central Asia Group area rose by a double-digit percentage, driven by a strong recovery of demand in Central Asia and solid growth of construction activities in Poland and the Ukraine in preparation for the European Football Championship. OIBD and OI for the full year and especially in the fourth quarter were negatively affected by the decline of the price of emission rights. Excluding effects from emission rights, fourth quarter OIBD improved by 23.7% and OIBD margin increased by 0.8 percentage points.
North America
| January - December | October - December | ||||||||
| €m | 2010 | 2011 | % | % l-f-l | 2010 | 2011 | % | % l-f-l | |
| Revenue | 3,033 | 3,035 | 0.1% | 5.1% | 715 | 774 | 8.3% | 7.2% | |
| Operating income before depreciation (OIBD) | 448 | 473 | 5.7% | 10.9% | 86 | 160 | 86.5% | 81.5% | |
| in % of turnover | 14.8% | 15.6% | 12.0% | 20.7% | |||||
| Operating income | 188 | 230 | 22.6% | 28.7% | 24 | 100 | 307.9% | 280.7% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 10.0 | 10.6 | 6.4% | 6.4% | 2.4 | 2.7 | 12.4% | 12.4% | |
| Aggregates (Mt) | 105.0 | 105.8 | 0.7% | 0.7% | 24.9 | 26.3 | 5.7% | 5.7% | |
| Rmc (Mm³) | 5.4 | 5.7 | 5.2% | 5.2% | 1.3 | 1.4 | 4.0% | 4.0% | |
| Asphalt (Mt) | 3.7 | 3.5 | -5.8% | -5.8% | 0.9 | 0.9 | -2.7% | -2.7% | |
Our North America Group area continued its recovery in 2011. After a slow start due to adverse weather conditions in the first half of the year, especially in Canada, cement, aggregates and ready-mixed concrete sales volumes showed solid growth in the second half. During 2011, HeidelbergCement benefited from its balanced geographical exposure in North America, especially from the demand driven by the commodity industry in Western Canada and Texas. Asphalt volumes, however, declined for the full year and in the fourth quarter compared to the same periods in 2010. Results improved significantly due to the strong focus on cost cutting and efficiency improvements and the change in pension schemes in the fourth quarter. Excluding the pension effect, OIBD in the fourth quarter increased by 37.7% and OIBD margin improved by 3.3 percentage points.
Asia-Pacific
| January - December | October - December | ||||||||
| €m | 2010 | 2011 | % | % l-f-l | 2010 | 2011 | % | % l-f-l | |
| Revenue | 2,609 | 2,957 | 13.4% | 11.5% | 691 | 824 | 19.3% | 18.3% | |
| Operating income before depreciation (OIBD) | 718 | 711 | -1.0% | -1.9% | 176 | 193 | 9.7% | 8.0% | |
| in % of turnover | 27.5% | 24.0% | 25.5% | 23.4% | |||||
| Operating income | 586 | 568 | -3.1% | -3.6% | 146 | 157 | 7.8% | 6.1% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 26.6 | 28.8 | 8.4% | 8.4% | 7.0 | 8.1 | 15.6% | 15.6% | |
| Aggregates (Mt) | 33.4 | 37.1 | 11.4% | 9.7% | 9.1 | 9.4 | 2.9% | 1.4% | |
| Rmc (Mm³) | 8.9 | 9.9 | 10.8% | 10.6% | 2.4 | 2.7 | 12.5% | 12.5% | |
| Asphalt (Mt) | 1.6 | 1.9 | 16.4% | 14.6% | 0.5 | 0.5 | -8.1% | -8.1% | |
Demand for all our products remained very strong in Asia-Pacific as the economic growth in the region continued to fuel construction activities. As a consequence, revenue in the region showed double-digit growth for the full year and the fourth quarter. OIBD, OI, and margins contracted in 2011, mainly due to a quarry accident in China in the first half of the year but also due to a significant increase in energy costs in the region that could not be fully compensated for by price increases. OIBD and OI rose in the fourth quarter, mainly driven by continued growth in demand for our products in Indonesia.
Africa – Mediterranean Basin
| January - December | October - December | ||||||||
| €m | 2010 | 2011 | % | % l-f-l | 2010 | 2011 | % | % l-f-l | |
| Revenue | 938 | 1,023 | 9.0% | 11.5% | 244 | 255 | 4.5% | 11.0% | |
| Operating income before depreciation (OIBD) | 156 | 164 | 5.3% | 11.2% | 36 | 34 | -3.9% | 5.7% | |
| in % of turnover | 16.6% | 16.0% | 14.6% | 13.4% | |||||
| Operating income | 121 | 128 | 6.4% | 14.8% | 26 | 25 | -3.6% | 6.4% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 8.2 | 9.1 | 10.9% | 7.0% | 2.1 | 2.2 | 6.1% | 6.1% | |
| Aggregates (Mt) | 14.3 | 14.2 | -0.6% | -0.6% | 3.6 | 3.4 | -6.0% | -6.0% | |
| Rmc (Mm³) | 5.0 | 51 | 1.4% | 1.4% | 1.3 | 1.3 | -3.8% | -3.8% | |
| Asphalt (Mt) | 0.4 | 0.5 | 35.4% | 35.4% | 0.1 | 0.2 | 37.6% | 37.6% | |
Cement shipments and revenue in Africa increased by a double-digit percentage in 2011 and results further improved while Spain continued to suffer from volume and price declines. In the fourth quarter of 2011, OIBD and OI were negatively impacted by a further weakening of results in Spain.
The complete annual accounts of HeidelbergCement will be published on 15 March 2012.
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