HeidelbergCement – preliminary overview Q4 and full year 2010
- Positive overall volume trend continued in Q4 despite early and extreme winter start in Europe: like-for-like sales volumes of cement, aggregates, and ready-mixed concrete increased in comparison with Q4 2009
- 2010 turnover reaches EUR 11.8 billion (+5.8% from 2009)
- 2010 operating income increases by 8.6% to EUR 1.43 billion
- Cost saving programme “FitnessPlus 2010” saves EUR 300 million
- For 2011, sustained growth in Asia-Pacific and Africa-Mediterranean Basin and continuation of recovery in North America and Europe expected
- Focus on deleveraging and cement capacity expansion in growth markets remains – aim to compensate rising input cost with operational excellence and price increases
Today, HeidelbergCement presented its preliminary and unaudited figures for sales volumes, turnover, operating income before depreciation (OIBD) and operating income (OI) for the fourth quarter and full year 2010. The financial figures increased in 2010 compared to prior year, reflecting continued growth in HeidelbergCement’s emerging markets and the start of recovery of mature markets in North America and Europe after having reached the bottom of the crisis in 2010. Turnover and operating income in the mature markets of North America continued to improve in the fourth quarter 2010 compared to prior year, mainly driven by infrastructure spending and due to our strict cost saving measures. An early and extreme winter start in the fourth quarter led to declining sales volumes and turnover in Western and Northern Europe and also in several countries in Eastern Europe. Cement volumes in key markets like the UK, Germany, Benelux and Poland fell between 28% and 46% in December 2010 compared to December 2009. Our emerging markets in Asia and Africa, on the other hand, continued on their growth path.
“We are pleased with our Q4 results, which we realized despite an extremely early and harsh winter start in our European core markets,” said Dr. Bernd Scheifele, CEO of HeidelbergCement. “We have successfully completed our “FitnessPlus 2010” cost saving programme generating EUR 300 million savings in 2010. With our advantageous geographical positioning in growth markets and the successful continuation of our efficiency and cost-saving programmes we are one of the first building materials companies to leave the crisis behind us and achieve increasing turnover and operating income.”
Preliminary Group Financials
| January - December | October - December | % l-f-l | |||||||
| EURm | 2009 | 2010 | % | % l-f-l | 2009 | 2010 | % | w/o CO₂ | |
| Turnover | 11,117 | 11,764 | 5.8% | -0.5% | 2,726 | 2,887 | 5.9% | 3.2% | |
| Operating income before depreciation (OIBD) | 2,102 | 2,239 | 6.5% | -0.3% | 496 | 598 | 20.6% | -5.2% | |
| in % of turnover | 18.9% | 19.0% | 18.2% | 20.7% | |||||
| Operating income | 1.317 | 1,430 | 8.6% | 0.6% | 290 | 383 | 32.4% | -7.3% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 79.3 | 78.4 | -1.2% | -0.4% | 20.1 | 19.6 | -2.7% | 0.5% | |
| Aggregates (Mt) | 239.5 | 239.7 | 0.1% | -0.1% | 60.8 | 58.5 | -3.9% | 2.9% | |
| Rmc (Mm³) | 35.0 | 35.0 | 0.0% | 0.7% | 8.8 | 8.8 | -0.4% | 0.2% | |
| Asphalt (Mt) | 10.0 | 9.1 | -9.4% | -6.2% | 2.4 | 2.3 | -4.2% | -3.9% | |
Full year as well as fourth quarter 2010 turnover and results were positively influenced by currency effects, in particular by the strengthening of Asian currencies, the US dollar and several European currencies compared to the euro. Adjusted for currency and consolidation effects, full year 2010 Group turnover and OIBD declined slightly by 0.5% and 0.3% respectively while operating income increased by 0.6% compared to 2009. The full year 2010 OIBD included a positive result from emission rights of EUR 147 million compared to EUR 116 million in 2009. In 2010, the majority of the result from emission rights was generated in Q4 compared to Q3 in 2009. Adjusted for currency, consolidation effects and timing differences of results from emission rights, OIBD and OI declined by 5.2% and 7.3 % respectively in Q4, reflecting the impact of the early and extreme winter start in European core markets.
Supported by a solid development in Asia, Africa and North America, turnover and sales volumes continued to improve in the fourth quarter 2010. Adjusted for consolidation effects, cement, aggregates and ready-mixed concrete sales volumes increased by 0.5%, 2.9% and 0.2%; asphalt volumes declined by 3.9% as increasing volumes in North America, driven by infrastructure projects, could not offset weaker developments in other Group Areas.
At the end of December 2010, the number of employees in HeidelbergCement’s continuing operations was 53,437 (previous year 53,302). The increase of 135 employees results essentially from two opposing developments: location optimisations and capacity adjustments linked with job cuts, particularly in North America and the United Kingdom, and the increase in staff in Russia, due to the expansion of capacities, and in Africa because of the first-time consolidation of the cement activities in the Democratic Republic of the Congo
Western and Northern Europe
| January - December | October - December | % l-f-l | |||||||
| EURm | 2009 | 2010 | % | % l-f-l | 2009 | 2010 | % | w/o CO₂ | |
| Turnover | 3,848 | 3,811 | -1.0% | -3.9% | 977 | 906 | -7.2% | -2.6% | |
| Operating income before depreciation (OIBD) | 687 | 683 | -0.6% | -3.0% | 168 | 225 | 34.4% | -9.4% | |
| in % of turnover | 17.9% | 17.9% | 17.2% | 24.9% | |||||
| Operating income | 435 | 407 | -6.4% | -8.7% | 97 | 151 | 54.8% | -20.7% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 21.0 | 19.7 | -6.3% | -6.3% | 5.1 | 4.7 | -7.9% | -7.9% | |
| Aggregates (Mt) | 69.6 | 68.8 | -1.1% | -1.1% | 20.4 | 16.1 | -20.9% | 0.4% | |
| Rmc (Mm³) | 12.2 | 11.7 | -3.4% | -3.4% | 3.1 | 2.8 | -9.9% | -9.9% | |
| Asphalt (Mt) | 3.6 | 3.4 | -4.6% | -4.6% | 0.9 | 0.8 | -15.7% | -12.9% | |
Turnover and operating income in Western and Northern Europe benefited from improving exchange rates for currencies outside the Euro-zone. Full year turnover, OIBD and operating income declined by 3.9%, 3.0% and 8.7%, respectively, when adjusted for currency fluctuations. Adjusted for currency, consolidation effects and timing differences of results from emission rights, OIBD and OI declined by 9.4 % and 20.7 % respectively in Q4, reflecting the impact of the early and extreme winter start.
In Q4 2010, the early winter start negatively impacted cement, aggregates and ready-mixed concrete shipments in Western and Northern Europe and thereby prevented a stronger volume recovery after the weak Q1 2010. Aggregates volumes for the full year declined only slightly as improving volumes in the UK, Sweden and the Baltics almost offset declines in the other countries.
Without consolidation effects, aggregates volumes increased by 0.4% and asphalt declined by 12.9% in the fourth quarter 2010 compared to the prior year.
Eastern Europe-Central Asia
| January - December | October - December | % l-f-l | |||||||
| EURm | 2009 | 2010 | % | % l-f-l | 2009 | 2010 | % | w/o CO₂ | |
| Turnover | 1,282 | 1,138 | -11.2% | -11.8% | 274 | 274 | 0.0% | -3.8% | |
| Operating income before depreciation (OIBD) | 361 | 299 | -17.3% | -16.4% | 58 | 84 | 45.3% | -27.4% | |
| in % of turnover | 28.2% | 26.3% | 21.0% | 30.5% | |||||
| Operating income | 263 | 203 | -23.1% | -23.0% | 31 | 57 | 84.9% | -48.2% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 15.7 | 14.2 | -9.8% | -5.5% | 3.3 | 3.4 | 2.3% | 1.6% | |
| Aggregates (Mt) | 21.3 | 20.1 | -5.7% | -5.8% | 5.3 | 5.2 | -1.8% | -1.6% | |
| Rmc (Mm³) | 4.0 | 3.9 | -4.5% | 2.3% | 1.0 | 1.0 | -1.3% | 5.6% | |
| Asphalt (Mt) | 0.0 | 0.0 | 0.0 | 0.0 | |||||
Turnover, OIBD and operating income in Eastern Europe-Central Asia only benefited slightly from currency effects. Adjusted for currency and consolidation effects, turnover declined by 11.8% for the year and 3.8% for the fourth quarter. Adjusted for currency, consolidation effects and timing differences of results from emission rights, OIBD and OI declined by 27.4 % and 48.2 % respectively in Q4, reflecting the impact of the early and extreme winter start.
The Group Area Eastern Europe-Central Asia was the last to enter the crisis and consequently also the last to see volumes recover in 2010. Driven by improving demand in Ukraine, Georgia and Kazakhstan, cement volumes increased in Q4 2010 compared to prior year, more than offsetting volume declines due to the early and extreme winter start in Eastern European countries. Volume declines in aggregates continued to slow down in Q4 2010 as well. Without consolidation effects, cement and ready-mixed concrete volumes improved by 1.6% and 5.6% respectively and aggregates volumes declined by 1.6% in Q4.
North America
| January - December | October - December | ||||||||
| EURm | 2009 | 2010 | % | % l-f-l | 2009 | 2010 | % | % l-f-l | |
| Turnover | 2,892 | 3,033 | 4.9% | -0.2% | 614 | 715 | 16.3% | 5.9% | |
| Operating income before depreciation (OIBD) | 340 | 448 | 31.6% | 25.2% | 54 | 86 | 59.9% | 43.0% | |
| in % of turnover | 11.5% | 14.8% | 8.7% | 12.0% | |||||
| Operating income | 86 | 188 | 119.4% | 108.7% | -2 | 24 | N/A | N/A | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 10.1 | 10.0 | -1.1% | -1.1% | 2.3 | 2.4 | 5.2% | 5.2% | |
| Aggregates (Mt) | 102.1 | 105.0 | 2.9% | 2.9% | 23.9 | 24.9 | 4.3% | 4.3% | |
| Rmc (Mm³) | 5.7 | 5.4 | -4.2% | -4.2% | 1.2 | 1.3 | 6.1% | 6.1% | |
| Asphalt (Mt) | 3.5 | 3.7 | 5.0% | 5.0% | 0.9 | 0.9 | 1.2% | 1.2% | |
Our Group Area North America led the recovery of the mature markets in 2010. Starting with Q2 2010, volumes for cement and aggregates increased compared with the prior year. This trend also continued in Q4 2010. During 2010, HeidelbergCement benefited from its balanced geographical exposure in North America, especially from the resource driven demand in Western Canada. Cement and ready-mixed concrete volumes improved in the last three quarters compared to prior year but could not compensate the volume loss due to bad weather in the first quarter. Aggregates and asphalt volumes increased for the full year and in Q4 compared to the same periods in 2009 backed by increasing demand from infrastructure projects. Operating income improved significantly due to the strong focus on cost cutting and efficiency improvements.
Asia-Pacific
| January - December | October - December | ||||||||
| EURm | 2009 | 2010 | % | % l-f-l | 2009 | 2010 | % | % l-f-l | |
| Turnover | 2,211 | 2,609 | 18.0% | 1.9% | 662 | 691 | 4.3% | 4.0% | |
| Operating income before depreciation (OIBD) | 612 | 718 | 17.4% | 0.1% | 185 | 176 | -5.0% | -6.8% | |
| in % of turnover | 27.7% | 27.5% | 28.0% | 25.5% | |||||
| Operating income | 498 | 586 | 17.6% | 0.6% | 152 | 146 | -3.6% | -6.3% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 25.5 | 26.6 | 4.3% | 4.3% | 7.7 | 7.0 | -8.5% | 2.0% | |
| Aggregates (Mt) | 33.5 | 33.4 | -0.3% | -1.7% | 8.3 | 9.1 | 9.7% | 7.4% | |
| Rmc (Mm³) | 8.5 | 8.9 | 4.9% | 4.5% | 2.4 | 2.4 | 6.4% | 5.9% | |
| Asphalt (Mt) | 2.3 | 1.6 | -31.2% | -19.8% | 0.5 | 0.5 | 7.7% | 4.2% | |
Turnover, OIBD and operating income in Asia-Pacific benefited from the increasing value of Asian currencies against the euro. Adjusted for currency and consolidation effects, turnover increased by 1.9%, OIBD by 0.1% and operating income by 0.6% compared to 2009.
Continuously growing demand led to increased shipments of cement and ready-mixed concrete in Asia-Pacific. OIBD, operating income and margins contracted somewhat in Q4 2010, mainly driven by fuel cost increases compared to prior year. Price increases are being implemented to compensate for rising input costs.
Adjusted for consolidation effects, cement, aggregates, ready-mixed concrete and asphalt shipments increased by 2.0%, 7.4%, 5.9% and 4.2% respectively in the fourth quarter.
Africa – Mediterranean Basin
| January - December | October - December | ||||||||
| EURm | 2009 | 2010 | % | % l-f-l | 2009 | 2010 | % | % l-f-l | |
| Turnover | 837 | 940 | 12.3% | 4.2% | 197 | 246 | 25.0% | 7.9% | |
| Operating income before depreciation (OIBD) | 157 | 155 | -1.0% | -4.7% | 38 | 35 | -6.5% | -17.2% | |
| in % of turnover | 18.7% | 16.5% | 19.3% | 14.4% | |||||
| Operating income | 126 | 120 | -4.2% | -6.7% | 29 | 26 | -12.0% | -19.5% | |
| Sales volumes | |||||||||
| Cement/clinker/GGBS (Mt) | 7.3 | 8.3 | 13.5% | 11.7% | 1.8 | 2.1 | 15.2% | 7.8% | |
| Aggregates (Mt) | 15.2 | 14.3 | -5.8% | -5.8% | 3.6 | 3.6 | 2.4% | 2.4% | |
| Rmc (Mm³) | 4.6 | 5.0 | 8.9% | 8.9% | 1.2 | 1.3 | 5.5% | 5.5% | |
| Asphalt (Mt) | 0.6 | 0.4 | -36.8% | -36.8% | 0.1 | 0.1 | -6.8% | -6.8% | |
Turnover, OIBD and operating income in the Group Area Africa – Mediterranean Basin only benefited slightly from stronger currencies. Adjusted for currency and consolidation effects, turnover improved by 4.2% for the year and 7.9% for the fourth quarter. OIBD and operating income of the fourth quarter include contributions from the newly consolidated capacities in the Democratic Republic of the Congo.
Turnover and OIBD in Africa improved by a double-digit percentage in 2010 while Spain continued to suffer from volume and price declines. In Q4 2010, OIBD in Africa was negatively affected by repair costs and higher costs for imported clinker. Cement volumes increased by a double digit percentage, driven by continuing strong demand.
The complete annual accounts of HeidelbergCement will be published on 17 March 2011.
Outlook for 2011
The economic development in 2010 was overall better than expected. In 2011, development dynamics of economic growth still clearly differ from region to region. In Asia and Africa, the positive trend is expected to continue. An improvement of economic output is also anticipated for North America and Europe. Uncertainties still remain regarding the strength and timescale of the economic recovery because of the high level of unemployment and national debt in individual countries.
For Asia, HeidelbergCement expects sustained strong growth in China, Indonesia, India and Bangladesh. In Australia, an overall stable development is anticipated. Above-average growth in comparison with the average development in the region south of the Sahara is expected for our African core markets in Tanzania, Gabon, Ghana, and the Democratic Republic of the Congo.
In North America, on the basis of the sustained expenditure on road construction in the US, we expect slight growth for cement and aggregates. For both core products price increases are targeted in order to offset margin erosion in 2010, rising input costs and capital expenditures for NESHAP. The extent and speed of the US recovery still depend on spending behaviour in the US states. A reduction of the unemployment figures remains a crucial factor for an upturn in private residential construction in the US. In Canada, demand from the resource driven industry in Alberta, Saskatchewan and Manitoba is expected to continue to generate demand for building materials.
In Western Europe, we anticipate a significant recovery of Northern Europe and Germany, driven by the strong economic development in Germany as well as other factors. In the UK, major transportation projects will be continued and are expected to lead to an overall stable development. Because of declining construction activities in Belgium and a weak Dutch construction market, further price pressure is anticipated in this region.
The recovery in Eastern Europe and Central Asia has taken the longest time to arrive. Construction activity in Poland is currently gathering pace again and growth rates are expected to increase towards pre-crisis levels. While demand in the Czech Republic should stabilise and improve in the second half of 2011, we anticipate a continuation of the weak development in Hungary and Romania. In the countries in the eastern part of Eastern Europe and in Central Asia, further increasing cement volumes and a price recovery are expected.
“The construction industry in mature markets is slowly recovering and, at the same time, input cost pressure, predominantly for energy, is increasing especially in faster growing emerging markets. Therefore, we will focus on energy cost savings as well as efficiency improvements and aim to compensate higher input costs with price increases,” explains Dr. Bernd Scheifele. “We will continue to concentrate on deleveraging, cash generation and operational excellence with our new FOX 2013 programme in order to further improve our financial metrics. At the same time we will proceed with our focused cement capacity expansion plans in attractive growth markets.”
With improved cost structures, operational strength, and leading market positions in attractive growth markets, HeidelbergCement believes it is well-equipped to benefit to an above average degree from an economic upturn in the course of this year and the next.
12,448 characters
