The FINANCIAL — HeidelbergCement has brought the 2013 financial year to a successful close despite a very challenging environment, particularly in the second half of the year, according to HeidelbergCement.
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, in addition to successfully implemented price increases in major markets and the surpassing of saving goals from the “FOX 2013” programme.
“In 2013, we generated our best results since the financial crisis”, said Dr. Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “This was mainly due to the successful implementation of our “FOX 2013” programme, price increases in major markets, reduced financing costs, and lower non-recurring charges. Consequently, we were able to improve revenue, OI, and operating margins in all our business lines on a comparable basis. At the same time, we clearly achieved our target of noticeably increasing profit for the financial year and earnings per share,” he added.
Cement sales volumes rose slightly year on year, driven by the positive development of sales volumes in the North America, Asia-Pacific, and Africa-Mediterranean Basin Group areas, which more than offset the decline in demand, especially in Eastern Europe. Sales of aggregates were marginally below the previous year. Adjusted for exchange rate effects, a moderate increase was achieved in revenue, which was largely due to successfully implemented price increases in important markets as well as growth in sales volumes of cement. The depreciation of several currencies against the euro impaired revenue by €664 million in 2013, resulting in a slight decrease to €13,936 million (previous year: 14,020), according to HeidelbergCement.
Operating income rose moderately by 5.2% before exchange rate and consolidation effects. Besides price increases, the positive development of results can also be attributed to the successful “FOX 2013” savings programme. It significantly exceeded expectations and led to cash-relevant savings of €391 million in 2013. Although operating income was impaired by negative exchange rate effects of €115 million, it increased slightly to €1,607 million (previous year: 1,604).
Thanks to the price increases and cost reductions, we were able to improve our operating margin in all four business lines – cement, aggregates, building products, and concrete-service-other – on a comparable basis.
The financial result increased by €79 million, which reflects lower interest expenses and the elimination of burdens in the other financial result, according to HeidelbergCement.
Profit for the financial year rose by 79% to €945 million and earnings per share have more than doubled to €3.98. Besides the improvement in the financial result, this was mainly due to an increase of €411 million in the additional ordinary result to €1.6 million (previous year: -409.0). Profits from the divestment of a non-controlling interest in a precast concrete producer in Saudi Arabia, as well as a non-cash relevant gain from the liquidation of a company structure owned by Hanson in the United Kingdom that was no longer required, had a particularly favourable impact on this development. These positive factors were able to offset non-cash relevant impairment of goodwill and other fixed assets amounting to €195 million as well as restructuring expenses of €47 million, which were predominantly incurred in the fourth quarter.
In view of the positive business development and the considerable increase in profit for the financial year, the Managing Board and Supervisory Board will propose to the Annual General Meeting on 7 May 2014 an increase of 28% in the dividend to €0.60 (previous year: 0.47) per share. The Group is thus continuing the dividend’s moderate and steady upward trend of the past few years. In the medium term, HeidelbergCement remains on course to reach its goal of a payout ratio of 30%–35%.
Contrary to the strategic objective, net debt increased by just under €500 million to €7.5 billion in 2013. This was particularly due to negative exchange rate effects, the payment of the German cartel fine amounting to €161 million and a higher investment activity. In the first half of the 2013 financial year, HeidelbergCement made three strategically sound and low-risk acquisitions, increasing its participation in the Australian cement company Cement Australia from 25% to 50%, acquiring the remaining 50% of the British aggregates and asphalt company Midland Quarry Products as well as increasing the holding in the Russian cement company CJSC “Construction Materials”, Sterlitamak to 100%. As a result, investments exceeded the target value of €1.1 billion by around €300 million.
The debt-to-equity ratio (gearing) rose to 59.7% (previous year: 51.3) and the ratio of net debt to OIBD to 3.1x. The liquidity reserve totalled €4.2 billion at the end of 2013, according to HeidelbergCement.
In 2013, HeidelbergCement improved its financing structure and financial result despite a higher level of net debt at the end of the year. The refinancing of the US$750 million bond under more favourable terms in the spring played a substantial role. In the fourth quarter, the Company also issued two bonds of €300 million and €500 million with terms of seven and eight years and a coupon of just 3.25%. In addition, the Commercial Paper Programme was expanded and the margins of the €3 billion syndicated credit facility were reduced further.
In 2013, HeidelbergCement remained consistent and disciplined in pursuing the targeted expansion of its market position in the cement business line in growth countries. Cement facilities with a total capacity of over 5 million tonnes commenced production or test runs. In central India, the expansion of capacities by 2.9 million tonnes was completed in February 2013. In June 2013, a new cement mill with a capacity of 0.5 million tonnes was commissioned in the Liberian capital of Monrovia. At the end of the year, test runs were launched for the new grinding installation in the Citeureup plant in Indonesia as well as the new cement plant in Kazakhstan. In 2014, additional capacities of over 5 million tonnes are planned to start operations, including around 3.5 million tonnes in Africa alone. By doing so, HeidelbergCement is gradually creating new potential for further growth, according to HeidelbergCement.
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