HeidelbergCement brought the 2014 financial year to a successful close despite a challenging environment. The decisive factors in this achievement were the group’s geographical positioning in countries experiencing solid economic development in North America, Europe, Asia and Africa; successful price increases in major markets; and the successful implementation of the margin improvement programs.
“HeidelbergCement is in the best shape of the last 15 years,” said Dr. Bernd Scheifele, chairman of the managing board of HeidelbergCement. “Revenue and operating income are experiencing a definite growth trend. With the sale of the building products business, we have successfully repositioned the company toward our core products cement and aggregates as well as ready-mixed concrete and asphalt. Taking into account the selling proceeds, we have reduced net debt by almost 9 billion euors since the end of 2007 to noticeably less than 6 billion euros, thereby clearly falling below the goal of 6.5 billion euros we communicated to the capital market.”
Operating income rose significantly by 12.9 percent before exchange rate and consolidation effects. Besides the price increases and the successful implementation of the margin improvement programs, stable energy costs also made a contribution to the positive development of results. Although the operating income was impaired by negative exchange rate effects of 118 million euros, it rose to 1.595 million euros compared to 1.519 million the previous year.
For 2015, HeidelbergCement anticipates a significant decrease in financing costs because of the noticeable decline in net debt due to cash flow from operating activities and the sale of the building products business. On the basis of these assumptions, the Managing Board has set the goal of significantly increasing revenue, operating income, and profit for the financial year in 2015. Additionally, HeidelbergCement should earn its cost of capital in 2015.
“Our strategic points of focus remain unchanged in 2015,” explained Scheifele. “These are: cost leadership through continuous efficiency improvements, reduction of debt in order to regain our investment grade rating, and targeted investment in cement capacities in growth markets as well as in raw material deposits to strengthen our global market leadership in aggregates. We will continue to exercise strict expenditure discipline in 2015.”
HeidelbergCement expects to make investments of around 1.2 billion euros to upgrade and expand capacities in 2015. New capacities of more than 5 million tonnes are set to be commissioned in 2015, primarily in Indonesia and the countries south of the Sahara. Furthermore, investments are planned for modernization measures and increasing efficiency, as well as environmental protection, particularly in the U.S. and Germany.
“We are confident about 2015”, continued Scheifele. “The outlook for the global economy is positive, but there are still macroeconomic and especially geopolitical risks. We will continue to benefit from the positive development in North America, the United Kingdom, Germany, and Northern Europe. These countries generate almost 50 percent of our revenue. The considerable drop in the oil price and the weaker euro will provide us with additional tailwind. The results of the first two months in 2015 confirm our outlook. In view of our strong positioning in raw material reserves, our production sites in attractive locations, our outstanding vertical integration, and our excellent product portfolio, we are well-equipped to achieve our goals.”