HeidelbergCement Quarterly Profit Falls 7% on Weak CurrencySheenagh Matthews
HeidelbergCement AG, the world’s third-largest maker of cement, said third-quarter profit fell 7 percent hurt by weaker currencies in emerging markets.
Operating income before depreciation was 811 million euros ($1.1 billion) in the quarter compared with 872 million euros a year earlier, the Heidelberg, Germany-based company said today in a statement. Sales fell 1.3 percent to 3.89 billion euros.
While Chief Executive Officer Bernd Scheifele reiterated a full-year forecast for revenue and operating income to gain with pretax profit to rise “significantly,” he said that the goal had become “more challenging.” Lower energy and raw material costs as well as price increases couldn’t compensate for the negative currency effects, the company said.
“We had to face growing headwind in revenue and operating income in the third quarter due to the significant strengthening of the euro,” the company said in the statement.
The shares dropped as much as 4.5 percent to 56.47 euros in Frankfurt trading and were trading down 3.3 percent at 57.17 euros as of 10 a.m. local time. The stock has gained 25 percent this year, boosting the company’s market value to 10.8 billion euros. The Merckle family holds 25 percent of the company’s stock, according to data compiled by Bloomberg.
Net income more than doubled to 580 million euros. Earnings were boosted by a book gain as the company unwound an obsolete corporate structure of its U.K. unit Hanson.
The company, which dates back to 1873, said today that a cost-cutting program dubbed FOX 2013 already exceeded a full-year target of 240 million euros, generating cash savings of 253 million euros. Two other projects designed to improve profitability are progressing according to plan.
Holcim Ltd. and Lafarge SA, the two biggest cement makers, both said earlier this week that they are pushing ahead with cost-cutting measures to boost profitability amid lackluster demand and higher energy costs. Holcim cut its sales forecast for the year on disappointing shipments in India, Mexico and Canada, it said.