Completion of a $4 billion merger with Italcementi S.p.A., improved financials and credit ratings, plus declining energy costs, allowed HeidelbergCement to close the 2016 financial year on a successful note. “2016 was an exceptional year for HeidelbergCement,” affirmed Dr. Bernd Scheifele, HeidelbergCement chairman. “With the successful takeover of Italcementi, we have accelerated our growth and are now in an excellent strategic position.”
“In our core business lines of aggregates, cement and ready mixed concrete, we occupy first, second and third place globally,” Dr. Scheifele continued. “We have also achieved a major milestone with the investment grade classification by the rating agencies S&P Global Ratings, Moody’s Investors Service and Fitch Ratings. Thanks to strong operational development and an improved financial result, we have been able to considerably increase our profit for the financial year before non-recurring effects. Our strategic priorities of ‘shareholder returns’ and ‘continuous growth’ are reflected in our figures as well as in the significantly raised dividend proposal.”
In North America, HeidelbergCement, in conformity with the International Monetary Fund, expects a stronger economic recovery and consequently a further increase in demand for building materials in 2017. In view of the overall positive development of global demand, HeidelbergCement projects an increase in the sales volumes of its core products: cement, aggregates and ready mixed concrete.
The company will further focus on the continuous improvement of efficiency and margins. In 2017, the producer will institute the enterprise-wide “Competence Center Readymix” (CCR), optimizing logistics and concrete mix designs with an eye toward $130 million in savings through 2019. CCR follows 2015 and 2016 continuous improvement programs covering cement and aggregates business lines, respectively, each executed with a goal comparable to or exceeding the CCR target over a three-year window.
“Operationally, we concentrate on five areas: an increase in customer satisfaction, high operating leverage, cost leadership, vertical integration, and optimized geographical positioning. As a result, we will increase our efficiency and the satisfaction of our customers, especially in the world’s rapidly growing metropolitan areas,” Dr. Scheifele observed.
In 2017, HeidelbergCement anticipates a significant decrease in financing costs due to its disciplined cash flow management and the refinancing of maturities at more favorable terms. On the basis of these assumptions, the managing board set a goal for 2017 of a moderate increase in revenue and a mid-single to double-digit percentage increase from current operations on a pro forma basis, as well as a significant rise in profit for the financial year before non-recurring effects.
“We remain cautiously optimistic about 2017,” said Dr. Scheifele. “While the overall outlook for the global economy is positive, the major macroeconomic and particularly geopolitical risks have increased at the same time. HeidelbergCement will benefit from the good and stable economic development in the industrial countries, above all in the USA, Canada, the United Kingdom, Germany, the northern European countries and Australia. These countries generate approximately 60 percent of our revenue. With the acquisition of Italcementi and its rapid integration, we have impressively demonstrated our high business potential and strong momentum. From a global perspective, we are well positioned to achieve our strategic goals – continuous growth and sustainable increase in shareholder returns.”