Price increases bolster HeidelbergCement profits in Q2

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Germany: Price increases and cost cutting at HeidelbergCement have halted a slide in cement margins and put the German cement producer on track to reach its 2012 targets.

HeidelbergCement's operating income before depreciation (OIBD) for the quarter ending 30 June 2012 rose by 7% to Euro698m from Euro651m in the same quarter in 2011. Its revenue rose by 11% to Euro3.78bn from Euro3.39bn. The company's efforts to chip away at its cost base, easing energy costs and price increases pushed through in 2012 have all helped HeidelbergCement post a 0.2% improvement in cement margins following steady declines in 2011 and early in 2012.

"We will do everything in our power to continue this positive trend in the second half of 2012," said chief executive Bernd Scheifele in a statement.

Demand for cement has remained robust in North America and Asia, prompting HeidelbergCement to affirm its outlook for a third consecutive year of growth in sales and operating profit. HeidelbergCement has also benefited from a slide of the euro against the US Dollar in the second quarter, which helped boost group revenue growth by 5 percentage points to 11.4%. Net profit was up by 16% to Euro184m.

Cement sales volumes benefited from strong demand in North America and Asia but sales declined in Europe due to decline in infrastructure spending. In western and northern Europe cement and clinker sales volumes fell by 5.1% in the first half of 2012 to 10.2Mt from 10.8Mt in 2011. In eastern Europe and central Asia cement and clinker sales volumes increased by 3.0% to 7.8Mt from 7.6Mt. In North America cement sales grew by 16.7% to 5.4Mt from 4.7Mt. In Asia-Pacific cement and clinker sales grew by 9.5% to 14.8Mt from 13.6Mt.

HeidelbergCement predicts that cement volumes in North America will rise by 8-11% in 2012, compared with a previous forecast of 4-7%. Sales in western and northern Europe could decline by as much as 2%. The company has slashed its global outlook for volumes to 4-6% growth, down from 6-9%, as its assessment of eastern Europe and Africa deteriorated.

"The growth in sales volumes, due to the additional capacities and a more or less significant increase in demand in Russia and central Asia, is being somewhat muted by the latest decline in demand in Poland and the Czech Republic," said HeidelbergCement.


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