HeidelbergCement Posts Quarterly Sales Increase as Recovery Revives Demand

HeidelbergCement AG, the world’s largest maker of aggregates used to produce concrete and asphalt, said sales rose for the first time in six quarters as a rebound in the global economy revived demand.

Sales in the quarter ended June 30 rose 9.5 percent to 3.3 billion euros ($4.3 billion), while operating profit rose 9.1 percent to 693 million euros, beating the mean estimates of 3.15 billion euros for sales and 673.8 million euros for profit in a Bloomberg survey.

“Demand for our building materials noticeably improved in the second quarter,” Chief Executive Officer Bernd Scheifele said in an e-mailed statement today. Sales volumes for its main products, cement, aggregates, and ready-mix concrete, all rose in the quarter.

Sales and operating income will rise this year, Scheifele said on a conference call, without giving details. The recovery’s strength and the impact of budget-deficit reduction on infrastructure spending are still unclear, the CEO said.

Rival Lafarge SA today cut its outlook for cement demand in the company’s markets in 2010. Cemex SAB of Mexico, the largest cement maker in the Americas, posted a loss on July 27 for a third straight quarter. Dublin-based CRH Plc’s first-half earnings missed its forecast amid a decline in the U.S.

Costs, Debt

Scheifele remains focused on cutting costs and debt, while completing a four-year, 20 million metric-ton expansion of production capacity in countries such as Poland and Russia by 2012. He widened his 2010 cost-cutting target by 50 percent to 300 million euros in February after financing and other costs slashed profit 98 percent last year. The company said today it achieved 124 million euros of the cost-cutting goal by June 30.

The company cut 3,239 jobs, or 5.7 percent of its workforce, in the 12 months through June, and is in the process of eliminating as many as 350 positions in North America.

Second-quarter net income for the Heidelberg, Germany-based company fell 64 percent to 120 million euros, as a year earlier it had a gain from selling a stake in Indonesia’s second-largest cement maker as well as a tax gain. Net income trailed the mean estimate of 207.7 million euros in the Bloomberg survey.

Net debt at June 30 was 9.07 billion euros, up from 8.96 billion euros on March 31. The company will fail to achieve credit metrics that would qualify it for investment-grade credit rating this year, Chief Financial Officer Lorenz Naeger said on the call.

HeidelbergCement shares ended a seven-day winning stretch, dropping 3.4 percent to 38.645 euros at market close in Frankfurt today. The stock has tumbled 20 percent this year, valuing the company at 7.2 billion euros.

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net.

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