HeidelbergCement reports preliminary figures for Q4 and the whole of 2018
Q4 2018: Significant revenue growth
- Increase in sales volumes of cement, aggregates, and ready-mixed concrete
- Group revenue up by 10% to €4.7 billion (previous year: 4.3)
2018: Record year in terms of sales volumes and revenue
- Sales volumes and revenue reach new record figures in the history of HeidelbergCement
- Slight decline in result from current operations on a comparable basis
- Action plan on track: Disposals ahead of original plan at about €600 million; net debt reduced to below €8.4 billion
Initial outlook for 2019:
- Positive macroeconomic development despite slight weakening in economic growth
- Global risks remain high: trade conflicts, Brexit, and geopolitical tensions
- Further increase in worldwide cement demand anticipated
- Focus on action plan: accelerated portfolio optimisation, efficiency programme, and commercial excellence initiative as well as increase in cash flow
Today, HeidelbergCement presented its preliminary, unaudited figures for sales volumes, revenue, and result from current operations before and after depreciation and amortisation for the fourth quarter and the whole of 2018.
In 2018, HeidelbergCement further increased its sales volumes and revenue as forecast in the Annual Report 2017. The result from current operations before depreciation and amortisation (RCOBD) declined slightly, in line with the outlook, which was partially adjusted in October. These developments were largely due to the solid demand for building materials in numerous countries and successfully implemented price increases, although these were unable to completely offset the cost inflation, which was considerably higher than expected. In addition, exchange rate effects had a negative impact on the development of revenue and results.
“In 2018, we achieved new record values in sales volumes and revenue,” says Dr. Bernd Scheifele, Chairman of the Managing Board. “In operational terms, we were almost able to offset the impact of adverse weather conditions, particularly in the USA, and the higher than expected cost inflation through growth in sales volumes and price increases. Our action plan is also producing its first results: thanks to the accelerated portfolio optimisation and expenditure discipline, we were able to reduce net debt at year end to below €8.4 billion.”
Preliminary Group figures
| Key financial figures | January-December | Q4 | ||||||
|---|---|---|---|---|---|---|---|---|
| €m | 2017 | 2018 | Vari-ance | Like-for-like1) | 2017 | 2018 | Vari-ance | Like-for-like1) |
| Sales volumes | ||||||||
| Cement (Mt) | 125.7 | 129.9 | 3.4% | 3.8% | 32.2 | 32.9 | 2.4% | 3.5% |
| Aggregates (Mt) | 305.3 | 309.4 | 1.4% | 0.6% | 76.3 | 76.5 | 0.2% | -0.8% |
| Ready-mixed concrete (Mm3) | 47.2 | 49.0 | 3.7% | 3.9% | 12.2 | 13.2 | 8.1% | 5.7% |
| Asphalt (Mt) | 9.6 | 10.3 | 7.1% | 0.3% | 2.5 | 2.5 | -2.5% | -8.7% |
| Income statement | ||||||||
| Revenue | 17,266 | 18,075 | 4.7% | 8.0% | 4,262 | 4,700 | 10.3% | 9.6% |
| Result from current operations before depreciation and amortisation (RCOBD) | 3,297 | 3,074 | -6.8% | -2.3% | 892 | 847 | -5.0% | -4.0% |
| in % of revenue | 19.1% | 17.0% | 20.9% | 18.0% | ||||
| Result from current operations (RCO) | 2,188 | 1,984 | -9.4% | -3.6% | 610 | 573 | -6.1% | -4.1% |
1) Adjusted for currency and consolidation effects.
In 2018, the cement and clinker sales volumes of the Group increased moderately by 3% compared with the previous year to 130 million tonnes (previous year: 126). Deliveries of aggregates rose slightly by 1% to 309 million tonnes (previous year: 305). Deliveries of ready-mixed concrete increased by 4% to 49 million cubic metres (previous year: 47).
As a result of the increase in sales volumes in all business lines and successful price increases, Group revenue rose by 5% to €18.1 (previous year: 17.3) billion. Currency effects of around €592 million had an adverse impact on the development of revenue. After adjustment for currency and positive consolidation effects, the revenue growth was as high as 8%. In contrast, RCOBD fell by 7% to €3.1 billion (previous year: 3.3). Negative currency and consolidation effects impaired the development of results by €153 million. In addition, the non-recurring income of €79 million generated in Q4 of the previous year from the sale of an exhausted quarry was not repeated. Adjusted for currency and consolidation effects, the result from current operations decreased slightly by 2%. Moreover, after adjustment for the sale of the quarry in the previous year, the development of results was stable. The cost inflation before currency effects was almost offset by higher sales volumes, price increases, and consistent cost management, particularly in view of the increased energy costs.
Q4 2018
In the fourth quarter, we increased the sales volumes of cement and ready-mixed concrete compared with the same quarter of the previous year. Cement and clinker sales volumes rose by 2% to 33 million tonnes (previous year: 32), driven by solid growth in Europe and Asia. Deliveries of aggregates remained stable at 76 million tonnes (previous year: 76). The growth in North America and in Western and Southern Europe offset declines in the other Group areas. Sales volumes of ready-mixed concrete increased by 8% to 13 million tonnes (previous year: 12).
Group revenue rose considerably by 10% to €4.7 billion (previous year: 4.3). Currency and consolidation effects had barely any impact on the development of revenue. Result from current operations before depreciation and amortisation declined by 5% to €847 million (previous year: 892). Adjusted for the sale of the exhausted quarry in the USA in the previous year, the figure increased slightly.
North America
Key financial figures | January-December | Q4 | ||||||
|---|---|---|---|---|---|---|---|---|
| €m | 2017 | 2018 | Vari-ance | Like-for-like1) | 2017 | 2018 | Vari-ance | Like-for-like1) |
| Sales volumes | ||||||||
| Cement (Mt) | 16.4 | 16.2 | -1.5% | 0.6% | 4.1 | 4.1 | -0.9% | 1.7% |
| Aggregates (Mt) | 120.8 | 123.4 | 2.2% | 0.9% | 30.2 | 30.2 | 0.1% | 0.1% |
| Ready-mixed concrete (Mm3) | 6.8 | 7.1 | 5.3% | 2.1% | 1.7 | 1.8 | 4.2% | 2.1% |
| Asphalt (Mt) | 4.0 | 4.1 | 2.8% | 0.3% | 1.0 | 0.9 | -9.3% | -9.3% |
| Income statement | ||||||||
| Revenue | 4,345 | 4,262 | -1.9% | 3.1% | 1,040 | 1,083 | 4.1% | 3.7% |
| Result from current operations before depreciation and amortisation (RCOBD) | 1,160 | 988 | -14.9% | -10.0% | 358 | 261 | -27.1% | -26.7% |
| in % of revenue | 26.7% | 23.2% | 34.4% | 24.1% | ||||
| Result from current operations (RCO) | 863 | 694 | -19.6% | -14.4% | 284 | 184 | -35.3% | -34.5% |
1) Adjusted for currency and consolidation effects
In North America, demand for building materials increased further, particularly as a result of sustained economic growth and falling unemployment figures. However, construction activity was hampered by the long winter in the north and heavy rainfall, particularly in the north and southwest of the USA. Like-for-like, we achieved a slight increase in sales volumes of cement, aggregates, and ready-mixed concrete in 2018, despite adverse weather conditions both over the year as a whole and in the fourth quarter.
Development of revenue was impaired by negative currency effects. Like-for-like, revenue rose by 3% over the full year and by 4% in the fourth quarter. In contrast, the result from current operations in 2018 was below the previous year. Non-recurring income of €79 million from the sale of an exhausted quarry in the fourth quarter of 2017 was not available in 2018. In addition, the development of results was negatively impacted by a considerable increase in costs, including fuel costs.
Western and Southern Europe
Key financial figures | January-December | Q4 | ||||||
|---|---|---|---|---|---|---|---|---|
| €m | 2017 | 2018 | Vari-ance | Like-for-like1) | 2017 | 2018 | Vari-ance | Like-for-like1) |
| Sales volumes | ||||||||
| Cement (Mt) | 28.9 | 30.8 | 6.5% | 1.2% | 7.1 | 7.8 | 9.3% | 4.1% |
| Aggregates (Mt) | 78.5 | 81.3 | 3.5% | 2.5% | 18.9 | 20.9 | 10.8% | 6.5% |
| Ready-mixed concrete (Mm3) | 17.3 | 17.5 | 1.0% | 1.0% | 4.3 | 4.6 | 6.5% | 6.5% |
| Asphalt (Mt) | 3.3 | 3.6 | 9.4% | 9.4% | 0.8 | 0.9 | 4.7% | 4.7% |
| Income statement | ||||||||
| Revenue | 4,701 | 4,936 | 5.0% | 4.6% | 1,146 | 1,258 | 9.7% | 8.6% |
| Result from current operations before depreciation and amortisation (RCOBD) | 613 | 590 | -3.8% | 1.1% | 154 | 196 | 27.3% | 28.7% |
| in % of revenue | 13.0% | 11.9% | 13.4% | 15.5% | ||||
| Result from current operations (RCO) | 294 | 260 | -11.7% | 2.0% | 68 | 113 | 67.5% | 76.8% |
1) Adjusted for currency and consolidation effects
While construction activity in the eurozone developed positively in 2018, the United Kingdom suffered from uncertainty connected with the Brexit vote. In Germany, construction investments increased thanks to strong demand in residential construction. France recorded growth in all construction sectors. In Italy, construction activity was hampered by weak economic development but exceeded the previous year. In the United Kingdom, construction activity declined as a result of weak commercial and non-residential construction.
Overall, we increased building materials deliveries in all business lines for the full year, but particularly in the fourth quarter. The takeover of Cementir Italia in January 2018 had a positive impact on the growth of cement sales volumes; cement deliveries also increased after adjustment for consolidation effects.
Revenue rose in line with the development of sales volumes. Like-for-like, result from current operations before depreciation and amortisation grew slightly despite significantly rising variable costs for electricity, fuels, and bitumen. A significant recovery in results was seen in the fourth quarter due to the positive development of sales volumes and improved efficiency.
Northern and Eastern Europe-Central Asia
Key financial figures | January-December | Q4 | ||||||
|---|---|---|---|---|---|---|---|---|
| €m | 2017 | 2018 | Vari-ance | Like-for-like1) | 2017 | 2018 | Vari-ance | Like-for-like1) |
| Sales volumes | ||||||||
| Cement (Mt) | 25.9 | 25.6 | -1.4% | 5.3% | 6.2 | 6.3 | 2.8% | 10.4% |
| Aggregates (Mt) | 52.3 | 51.3 | -1.8% | -1.4% | 13.2 | 12.6 | -4.7% | -4.4% |
| Ready-mixed concrete (Mm3) | 6.9 | 7.0 | 0.9% | 10.6% | 1.9 | 1.9 | 0.3% | 7.9% |
| Asphalt (Mt) | 0.0 | 0.0 | N/A | N/A | 0.0 | 0.0 | N/A | N/A |
| Income statement | ||||||||
| Revenue | 2,836 | 2,916 | 2.8% | 9.6% | 698 | 753 | 7.9% | 12.4% |
| Result from current operations before depreciation and amortisation (RCOBD) | 539 | 575 | 6.6% | 11.4% | 136 | 156 | 14.8% | 18.2% |
| in % of revenue | 19.0% | 19.7% | 19.5% | 20.8% | ||||
| Result from current operations (RCO) | 365 | 416 | 14.0% | 18.0% | 94 | 117 | 24.0% | 26.6% |
1) Adjusted for currency and consolidation effects
In the Northern and Eastern Europe-Central Asia Group area, the strong level of construction activity in the countries of Northern Europe continued. In Norway, infrastructure projects resulted in a further increase. In Sweden, private residential construction and infrastructure projects were the main drivers of demand. Construction activity also developed positively in Eastern Europe, with a double-digit increase in Poland and Hungary, boosted by residential and infrastructure construction. Czechia also recorded pleasing growth, supported by residential construction.
Cement sales volumes in the Group area declined slightly following the deconsolidation of the business activities in Georgia. Adjusted for consolidation effects, a moderate increase was recorded in sales volumes of cement, and a significant rise in ready-mixed concrete sales volumes. The positive development of sales volumes continued in the fourth quarter. The rise in revenue and results, adjusted for consolidation effects, reflects this positive development of sales volumes, successful price increases, and consistent cost management.
Asia-Pacific
Key financial figures | January-December | Q4 | ||||||
|---|---|---|---|---|---|---|---|---|
| €m | 2017 | 2018 | Vari-ance | Like-for- like1) | 2017 | 2018 | Vari-ance | Like-for- like1) |
| Sales volumes | ||||||||
| Cement (Mt) | 34.7 | 36.9 | 6.4% | 6.4% | 9.4 | 9.6 | 2.7% | 2.7% |
| Aggregates (Mt) | 41.5 | 43.4 | 4.6% | 4.6% | 10.8 | 10.6 | -2.6% | -2.6% |
| Ready-mixed concrete (Mm3) | 10.6 | 11.6 | 9.3% | 5.6% | 2.8 | 3.4 | 21.4% | 7.2% |
| Asphalt (Mt) | 1.8 | 2.1 | 19.0% | -12.6% | 0.5 | 0.6 | 6.7% | -22.5% |
| Income statement | ||||||||
| Revenue | 3,155 | 3,262 | 3.4% | 5.8% | 794 | 897 | 12.9% | 5.5% |
| Result from current operations before depreciation and amortisation (RCOBD) | 652 | 601 | -7.8% | -4.4% | 166 | 171 | 3.3% | 1.6% |
| in % of revenue | 20.7% | 18.4% | 20.8% | 19.1% | ||||
| Result from current operations (RCO) | 459 | 419 | -8.6% | -5.3% | 117 | 127 | 9.1% | 7.7% |
1) Adjusted for currency and consolidation effects
Economic growth in the Asia-Pacific Group area has stabilised. Demand for cement increased further in Indonesia, India, and Bangladesh. In Thailand, however, delays in infrastructure projects and weak private construction activity resulted in a decline in cement sales volumes. Australia recorded healthy growth in sales volumes as a result of strong infrastructure construction in the metropolitan regions of Sydney and Melbourne. Overall, sales volumes rose in all business lines.
Over the full year, moderate growth in revenue was recorded, while the result from current operations was below the previous year as a result of the still tense competition situation in Indonesia at the beginning of the year. The trough of the results development in Indonesia occurred during the third quarter; since then, the trend has been positive. This is reflected in the moderate increase in results in the fourth quarter.
Africa-Eastern Mediterranean Basin
Key financial figures | January-December | Q4 | ||||||
|---|---|---|---|---|---|---|---|---|
| €m | 2017 | 2018 | Vari-ance | Like-for-like1) | 2017 | 2018 | Vari-ance | Like-for-like1) |
| Sales volumes | ||||||||
| Cement (Mt) | 19.0 | 19.7 | 3.5% | 3.5% | 5.0 | 4.8 | -4.9% | -4.9% |
| Aggregates (Mt) | 12.4 | 10.1 | -18.0% | -18.0% | 3.3 | 2.3 | -29.7% | -29.7% |
| Ready-mixed concrete (Mm3) | 5.1 | 5.3 | 3.7% | 3.7% | 1.4 | 1.4 | 3.6% | 3.6% |
| Asphalt (Mt) | 0.6 | 0.5 | -11.6% | -11.6% | 0.2 | 0.1 | -26.7% | -26.7% |
| Income statement | ||||||||
| Revenue | 1,586 | 1,667 | 5.1% | 10.1% | 406 | 417 | 2.6% | 3.1% |
| Result from current operations before depreciation and amortisation (RCOBD) | 367 | 370 | 1.0% | 4.7% | 89 | 87 | -1.7% | 0.8% |
| in % of revenue | 23.1% | 22.2% | 21.8% | 20.9% | ||||
| Result from current operations (RCO) | 273 | 272 | -0.3% | 3.7% | 65 | 62 | -3.7% | -0.1% |
1) Adjusted for currency and consolidation effects
In Africa, overall demand for building materials remained positive in 2018. Cement sales volumes rose in most of the countries south of the Sahara – significantly in some cases. In contrast, sales volumes of aggregates declined in Israel as a result of expiring mining licences.
The positive development of sales volumes is reflected in revenue. Result from current operations increased slightly. Improvements in results in the countries south of the Sahara more than offset losses in Turkey and Israel. In the fourth quarter, cement sales volumes fell because of declining quantities in Egypt. However, revenue rose because of the sustained positive development in the countries south of the Sahara.
Initial outlook for 2019
In its forecast from January 2019, the International Monetary Fund (IMF) expects the global upturn to continue on a broad scale. Global economic growth will slightly weaken from 3.7% in 2018 to 3.5% in 2019 in connection with trade disputes between the USA and China and recently reduced dynamics in Europe. The risks that could continue to jeopardise growth include a further escalation of the trade disputes, high public and private debt, a disorderly Brexit, and a stronger than expected economic slowdown in China.
HeidelbergCement expects worldwide demand for cement to increase further in 2019. This applies in particular to Indonesia, India, Africa south of the Sahara, and North America.
“Considering the overall positive outlook for the global economy, we are confident about the future,” says Dr. Bernd Scheifele. “We assume that some of the factors that impaired our results in 2018 will not be present in 2019. In particular, this relates to the adverse weather conditions in the USA, energy price inflation that was stronger than expected, and the price collapse in Indonesia. In 2019, we will focus on our action plan in order to accelerate our portfolio optimisation and increase cash flow and margins. In addition, we will press ahead with the digitalisation of our entire value chain in order to further improve our operational excellence. In view of our strong positioning in raw material reserves and production sites in attractive locations, the unique vertical integration, our excellent product portfolio, and our industry-leading margin management, we believe we are well equipped for the opportunities and challenges of 2019.”
The complete consolidated financial statements of HeidelbergCement including the outlook will be published on 21 March 2019.
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