- Cement maker now expects $326 million of savings from purchase
- Profit increase of 7.7% in line with analysts' expectations
HeidelbergCement AG almost doubled its forecast for savings from the acquisition of Italcementi SpA as financing costs for the deal fell and the German cement maker reduced the amount that needs to be invested in the new company.
“The acquisition of Italcementi is making good progress and we significantly increased the synergy target” to 300 million euros ($326 million), Chief Executive Officer Bernd Scheifele said in a statement on Thursday. The bridge financing was reduced by 25 percent to 3.3 billion euros, while the investment target was cut to 900 million euros from 1.2 billion euros, the company said.
HeidelbergCement agreed to buy Bergamo, Italy-based Italcementi in July for 3.7 billion euros as it seeks to compete with LafargeHolcim SA, created by the merger of its two larger peers. It said at the time it expected synergies of about 175 million euros annually by 2018. The acquisition expands the German company’s presence in both Southern Europe and Africa, adding new emerging markets to South-East Asian countries such as Indonesia.
The shares gained 2.6 percent to 70.04 euros as of 10 a.m. in Frankfurt, the highest since Aug. 20. That values the company at 13 billion euros.
“Investors have finally realized the clever acquisition move” by HeidelbergCement, Baader-Helvea analysts said in a note to clients.
Third-quarter operating income before depreciation rose 7.7 percent to 865 million euros, the Heidelberg, Germany-based company said in a statement. That was in line with the average estimate of eight analysts in a Bloomberg survey. Revenue rose 3.3 percent to 3.61 billion euros, lower than an estimate of 3.77 billion euros.
The sales were “significantly” below expectations while margins and net income were better, the Baader-Helvea analysts said.