HeidelbergCement Raises Outlook as Profit Beats Estimatesby
3rd-largest cement company sees moderate rise in 2016 revenue
2016 operating income to rise by high-single-to-double digits
HeidelbergCement AG raised its outlook for profit in 2016 as the world’s third-largest cement-maker reported first-quarter earnings that beat analyst estimates amid improved demand in North America, Europe and Asia.
Excluding currency and consolidation effects, the Heidelberg, Germany-based company expects a “high single to double digit increase” in operating income and profit before non-recurring items for 2016, HeidelbergCement said in a statement on Wednesday. Revenue will probably increase moderately, it said.
HeidelbergCement shares rose 2.5 percent to 79.3 euros as of 9:27 a.m. in Frankfurt. That extended gains to 4.9 percent since the start of the year, valuing the company at 14.9 billion euros ($17.1 billion).
“We are confident about 2016,” Chief Executive Officer Bernd Scheifele said in the statement. “HeidelbergCement will benefit from the good and stable economic development in the industrial countries, above all in the U.S., the U.K., Germany, Northern Europe, and Australia.”
The improved outlook comes as cement companies benefit from an economic recovery in developed markets in North America and Europe, while a 19 percent fall in the price of oil in the year through March has helped contain energy and transportation costs. In Asia, HeidelbergCement predicts a general upturn in demand, although Chinese sales will probably continue to decline, the company said. In March, it forecast moderate profit growth for this year.
Operating income before depreciation rose 7.2 percent to 321 million euros in the three months through March, the company said. The average of nine analyst estimates compiled by Bloomberg was for 306.2 million euros. Revenue was little changed at 2.8 billion euros. The group’s cement and clinker sales volumes rose by 4.5 percent to 17.6 million tons, while deliveries of aggregates increased 6.5 percent.
“The continued recovery in our mature markets and the improved demand situation in Asia-Pacific, especially in Indonesia, made a significant contribution” in the quarter, Scheifele said.
HeidelbergCement is working to complete the acquisition of an initial 45 percent stake in Bergamo, Italy-based Italcementi SpA for 3.7 billion euros to counter the creation of larger competitor LafargeHolcim Ltd. and expand in southern Europe and Africa. The company said it’s hired banks to assist with asset sales in the U.S. and Europe as it seeks antitrust approval for the purchase and expects decisions from both regulators by early June.