HeidelbergCement Profit Misses Estimates as Euro Offsets Savings

HeidelbergCement AG (HEI), the world’s third-largest maker of cement, posted fourth-quarter profit that missed analyst estimates as the strengthening euro outweighed the impact of a profit improvement program.

Operating income before depreciation dropped 5.3 percent to 661 million euros ($893 million), the Heidelberg, Germany-based company said today in a statement. That missed the 681 million-euro average estimate of nine analysts surveyed by Bloomberg. Sales slipped 0.3 percent to 3.49 billion euros.

“The decline in exchange rates in the second half of 2013 will also impair our revenue and results, particularly in the first half of 2014,” Chief Executive Officer Bernd Scheifele said in the statement. “We will once again work on further improving our margins by means of our ongoing programs.”

Last year, the euro strengthened 4.2 percent versus the dollar even after the European Central Bank cut rates twice. The currency’s gains defied the median prediction of strategists surveyed by Bloomberg, who foresaw a drop to $1.27, from $1.3193 at the end of 2012.

Scheifele had said in November he still expected full-year revenue and operating income to increase, the latter “significantly,” even as he warned that lower energy and raw material costs as well as price increases couldn’t compensate for the negative currency effects. Both sales and profit were little changed in the end.

A three-year efficiency program, dubbed “FOX 2013”, realized 1.2 billion euros in savings, exceeding the 1.01 billion-euro boost expected in July. Two further projects are expected to lift profit by 350 million euros by 2015.

To contact the reporter on this story: Alex Webb in Munich at awebb25@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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