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HeidelbergCement Profit Beats Estimate on Rising Sales

HeidelbergCement AG, the world’s third-largest maker of cement, reported third-quarter profit that beat analyst estimates as sales grew faster than anticipated in markets like Indonesia.

Operating income fell 2 percent to 562 million euros ($770 million), the Heidelberg, Germany-based company said in a statement today. That beat the average estimate of 546.6 million euros in a Bloomberg survey of analysts. Sales rose for a sixth consecutive quarter, advancing 7 percent to 3.62 billion euros, exceeding an estimate of 3.52 billion euros.

“Due to our advantageous geographical footprint, we were able to achieve a stable operating income despite significantly increased energy and raw-materials costs,” Chief Executive Officer Bernd Scheifele said in a statement.

Scheifele is fighting higher fuel costs that are weighing on industry profits, while sales benefited from markets growing at above-average pace. Cement shipments in Germany rose 5 percent in the third quarter, industry group BDZ said. The company reiterated a forecast to increase sales and operating profit this year.

The cement maker added 0.9 percent to 32.7 euros as of 9:33 a.m. in Frankfurt, outperforming rivals including Lafarge SA.

Debt Reduction

The pace at which the company reduced debt slowed, falling short of its targets. Net debt fell to 8.5 billion euros at the end of the quarter, from 8.65 billion euros last year.

HeidelbergCement will “press ahead” with disposals of non-core assets, it said today, reiterating earlier comments.

HeidelbergCement in 2009 said it may sell as much as 2 billion euros in assets, including operations in Israel, Liberia and Ghana, to help ease its debt burden inflated by the 9.25-billion-pound acquisition of Hanson Plc in 2007. The company has never revised that goal since.

Cement sales volumes in the quarter grew 12 percent. Aggregates volumes rose 4 percent, while ready-mix concrete volumes grew 9 percent, the company said. Net income fell 17 percent to 268 million euros.

Net debt fell to 8.5 billion euros at the end of the quarter, from 8.65 billion euros last year. The company aims to cut debt to about 7.5 billion euros over the medium term.

Scheifele said he will continue to cut costs and raise prices, particularly next year, to counter cost inflation. The company today said it achieved savings of 251 million euros in the first nine months, ahead of a target for 200 million euros for 2011.

Lafarge, the world’s largest cement maker, will report earnings on Nov. 4, with Holcim Ltd. reporting Nov. 9.

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