HeidelbergCement Profit Rises on U.S. Growth, Cost CutsAlex Webb
HeidelbergCement AG, the world’s third-largest maker of cement, said first-quarter earnings rose 3.3 percent as North American growth and job cuts helped offset harsh winter conditions that impeded building in Europe.
Operating profit before depreciation rose to 219 million euros ($287 million) from 212 million euros a year earlier, the Heidelberg, Germany-based company said today in a statement. Earnings were in line with the average analyst estimate of 221 million euros. The stock headed toward a five-week high.
“The results were significantly helped by an improved result in North America and resilience in Asia-Pacific, the strength of selling prices across both cement and aggregates and by reduced input costs,” Robert Gardiner, an analyst at Davy Stockbrokers, said today in a report.
The company, which dates back to 1873, is pursuing 1.01 billion euros in cost savings by the end of 2013 as demand for building materials drops in parts of Europe amid recessions in the region. Cuts of 767 million euros have already been realized, HeidelbergCement said today. Revenue slipped 1.4 percent to 2.76 billion euros in the first quarter.
HeidelbergCement rose as much as 2.1 percent and at 2:54 p.m. in Frankfurt was trading up 1.2 percent at 56.71 euros, the highest price on a closing basis since April 3. The stock has gained 24 percent this year, beating gains of 9.7 percent at French competitor Lafarge SA and 13 percent at Swiss rival Holcim Ltd.
“The improved operating income in the first quarter, despite declining sales volumes and revenue, shows that we are on the right track,” Chief Executive Officer Bernd Scheifele said in the statement. “The efficiency-improvement programs are going according to plan.”
Lafarge reported yesterday that first-quarter earnings before interest, taxes, depreciation and amortization declined 26 percent to 380 million euros, restricted by cold weather in Europe, North Africa and the U.S. The Paris-based company is midway through a savings program that’s intended to boost Ebitda by 1.75 billion euros by 2014.
Volume at HeidelbergCement’s four segments of cement, aggregates, ready mix and asphalt fell at least 10 percent in Europe in the quarter as extended cold weather limited the construction industry’s ability to work, the company said. Drops were offset by growth in other regions, limiting the global decrease in cement sales to 0.7 percent for a total volume of 18.1 million tons. Aggregates, concrete and asphalt tonnages dropped 11 percent, 2.1 percent and 8.6 percent respectively.
Ebitda in North America was 37 million euros compared to a 5 million-euro loss a year earlier, while earnings jumped 9.8 percent to 190 million euros in the Asia-Pacific region, the company said in an online presentation. European operations posted a 23 million-euro loss versus a 24 million-euro profit in the 2012 period.
The net loss widened to 184 million euros from 159 million euros a year earlier. The loss was narrower than the 188 million-euro average predicted by nine analysts in a Bloomberg survey. The company booked 32 million euros in provisions relating to a cartel fine imposed by a German court.
Disposals of building-product businesses in the U.S. are proceeding more slowly than planned, CEO Scheifele told shareholders at the annual meeting in Heidelberg today. Units up for sale generate revenue of as much as 350 million euros, Norbert Kretlow, an analyst at Commerzbank AG, estimated in September.
HeidelbergCement cut 1,800 jobs in the quarter in North America, the U.K., Spain and eastern Europe, while adding 900 positions in India and Indonesia, and 250 in Australia after raising its stake in Cement Australia in March. The net decrease was 617 employees.