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HEIDELBERG (dpa-AFX) – Despite a significant drop in revenues in the first quarter, the HeidelbergCement building materials group is confident about this year. “The first quarter was not easy for Heidelbergcement,” Dominik von Acht, chairman of the board, said Wednesday, as announced after the stock market close. Even though uncertainty about the availability of energy and raw materials and costs remains high, the company still sees good demand for its products in all regions. The company confirmed its forecast for the entire year.
However, after the decline in profits on the stock exchange, skepticism towards forecasts prevailed. The shares lost more than seven percent to € 50.74 on Thursday morning, making it one of the biggest losers in the leading Dax index. Cement maker reaffirmed its annual targets, wrote analyst Elodie Rall of US bank JPMorgan. However, the weak first quarter raises doubts as to whether the company will be able to achieve these goals. According to analyst Pierre de Fraguier of the US investment bank Goldman Sachs, the group’s price and cost trends carry risks for confirmed earnings prospects.
In the first quarter, sales rose by 11.8 percent year-on-year to EUR 4.4 billion. Adjusted profit after tax, interest, depreciation and amortization – the so-called RCOBD – fell by almost 27 percent. up to EUR 394 million. Heidelbergcement explained the decline in revenue primarily by a significant increase in energy and transportation costs. Despite the increase in sales prices, the group was only able to partially compensate for this. Initially, the group did not disclose any information about its financial results.
In terms of sales and operating profits, Heidelberg has exceeded analysts’ estimates. The operating result (EBITDA) is eight percent above its assumptions, analyst Glynis Johnson of investment house Jefferies wrote. However, market expectations for the cement producer’s data have risen in recent weeks.
To get through the corona crisis well, Heidelbergcement established austerity program two years ago. In addition, the head of the company sells eight less profitable parts of the group. In 2021, the group sold, among others its business in the western United States for USD 2.3 billion (then EUR 1.9 billion). At the same time, the group develops its activities through acquisitions. The company recently acquired Meriwether Ready Mix, a leading manufacturer of ready-mixed concrete in the Greater Atlanta area.
Heidelbergcement continues to expect significant sales growth and a slight increase in operating profit this year. In 2021, adjusted earnings before interest, taxes, depreciation and amortization were almost 3.9 billion euros and sales were 18.7 billion euros. Forecasts exclude currency effects and the purchase and sale of a part of the enterprise.
Heidelbergcement is one of the world’s largest companies producing building materials and, according to its own statements, the market leader in cement and ready-mix concrete as well as sand and gravel. Cement is used as a binder in the production of concrete for the construction of houses or bridges. The company with 51,000 employees wants to produce climate-neutral concrete by 2050.
The environmental association Nabu criticizes that 8% of the world’s carbon dioxide emissions are due to cement production, which has quadrupled since 1990. This is equivalent to about four times the total annual greenhouse gas emissions in Germany.
Heidelbergcement wants to take countermeasures through a minority stake in Canadian technology company Giatec Scientific in the low single-digit million range. Together with a new partner, Heidelbergcement wants to develop sensor technology and artificial intelligence-driven software to reduce the CO2 footprint of concrete and optimize processes for its ready-mixed concrete customers. By using smart sensors, cement can be saved by up to 20 percent, company./mne/jug/jha/mis/stk reported on Tuesday
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