HeidelbergCement AG, the world’s third-largest maker of cement, reported fourth-quarter profit and sales that beat analysts’ estimates as growth in North America, higher prices and cost cuts offset a slump in Europe.
Operating profit before depreciation rose 8.2 percent to 691 million euros ($934 million), the company said today. The average estimate of 11 analysts in a Bloomberg survey was 644 million euros. Sales jumped 6.5 percent to 3.5 billion euros, versus an estimated 3.42 billion euros. The stock surged to the highest level in more than 20 months.
HeidelbergCement, which dates back to 1873, has been pursuing 600 million euros in cost savings by the end of 2013 as the demand for building materials drops in parts of Europe. In the U.S., the Heidelberg, Germany-based cement maker benefited from an increase in residential construction, and higher prices in Indonesia boosted the Asian unit’s profitability.
“The higher savings are proof that they’ve got everything under control,” said Marc Gabriel, a Bielefeld, Germany-based Bankhaus Lampe analyst who recommends buying HeidelbergCement stock.
After beating its spending-cuts target of 200 million euros last year, making 384 million euros in efficiency savings, the company has now raised the 2013 goal to 1.01 billion euros.
To save costs, HeidelbergCement is slashing energy consumption and revamping its transport network. The cement maker said last year that one of its cost initiatives will combine material-flow systems across the three main business units and may save 150 million euros by 2014.
The company is also tackling a debt burden inflated by the 2007 takeover of Hanson for more than $18 billion.
Full-year operating profit before depreciation increased 6.7 percent to 2.5 billion euros, with revenue growing 8.7 percent to 14 billion euros.
“We are pleased that we achieved our goal of increasing revenue and operating income, despite the negative impact of the euro crisis on many countries in Europe,” Chief Executive Officer Bernd Scheifele said. “Due to the continuing strong economic growth in the emerging markets and the recovery in the U.S., we are cautiously confident for the future.”
The shares gained as much as 5.8 percent to 48.93 euros and were up 4.5 percent as of 9:32 a.m. in Frankfurt. Before today, the stock had gained 0.9 percent this year, valuing the company at 8.9 billion euros. That compares with a 0.4 percent decline at Germany’s DAX benchmark index of 30 stocks.
HeidelbergCement attributed the sales decline in western and northern Europe to lowered government spending on infrastructure. While operating profit declined 21 percent to 577 million euros in the region, it grew 22 percent to 577 million euros in North America, 25 percent to 887 million euros in the Asia-Pacific region and 24 percent to 203 million euros in the Africa and Mediterranean basin region.
New U.S. home sales increased by 8.9 percent in 2012, according to the Department of Commerce and the U.S. Department of Housing and Urban Development.
The company said today it will provide an outlook for 2013 when it publishes its full financial statement on March 14.
The world’s two biggest cement makers, Lafarge SA and Holcim Ltd., are set to release their fourth-quarter reports on Feb. 20 and Feb. 27 respectively.