Heidelberg Materials Ag · XETR:HEI
Heidelberg Materials — Q3 2024 Earnings Presentation
56 slides from Heidelberg Materials's earnings presentation, November 2024
Slide 1: Investor Presentation Q3 2024
Investor Presentation Q3 2024 Investor presentation | Heidelberg Materials Q3 2024
Slide 2: Content
Content 1. About Heidelberg Materials 2. Our concrete promises 3. Current trading update 4. Capital allocation policy 5. Corporate Governance 2 Q3 2024 Investor presentation | Heidelberg Materials
Slide 3: About Heidelberg Materials
1 About Heidelberg Materials
Slide 4: Heidelberg Materials as an attractive investment
Heidelberg Materials as an attractive investment 1. Profitable growth – Our growth is underpinned by a value over volume focus with added benefits from a balanced presence in mature and emerging markets. 2. Strong financial performance – We are on track to achieve our medium and long-term financial
Slide 5: One of the world's largest building materials companies
About Heidelberg Materials Heidelberg Materials is one of the world’s largest building materials companies 51,000 3,000 Leading positions in cement, aggregates, and ready-mixed employees on 5 continents locations worldwide concrete 5 Q3 2024 Investor presentation | Heidelberg Materials
Slide 6: A balanced geographic footprint with strong focus on Heavy Building Materials
About Heidelberg Materials A balanced geographic footprint with strong focus on Heavy Building Materials Revenue by Group areas Revenue by business lines (FY 2023) (FY 2023) Africa-Mediterranean-Western Asia Aggregates 11% 22% Asia - Pacific 18% 46% Europe 51% Cement 27% 25% Ready Mix & Asphalt Nort
Slide 7: Solid asset base which provides strong growth potential
About Heidelberg Materials Solid asset base which provides strong growth potential North Africa–Med.- America Europe Asia–Pacific Western Asia Total Cement 16 mt 63 mt 54 mt 37 mt 170 mt capacity Aggregates re- serves & 12 bn tonnes 4 bn tonnes 3 bn tonnes 0.1 bn tonnes 19 bn tonnes resources Ready
Slide 8: In FY 2023 we hit historically best levels in all KPIs
Key figures In FY 2023 we hit historically best levels in all KPIs Revenue RCO EPS ROIC Free Shareholder CO2 21.2 €bn 3.0 €bn 10.4 € 10.3% cash flow return 534 kg/tCM - +4% LfL1) +29% LfL1) +23% (PY: 9.1%) 2.2 €bn ~1 €bn 3% vs. PY Strong pricing Record high Solid Record ROIC, Significant Third year
Slide 9: ROIC at historically high level
Financial highlights ROIC at historically high level Average Invested Capital (€m) ROIC 10.3% 9.3% 9.1% 7.9% 6.5% 26,228 23,822 23,023 21,257 22,078 2019 2020 2021 2022 2023 9 Q3 2024 Investor presentation | Heidelberg Materials
Slide 10: Leverage at a very comfortable level
Financial highlights Leverage at a very comfortable level Net debt (€m) Leverage 2.35x 8.410 1.86x 1.48x 6.893 1.29x 1.24x 5.532 5.294 4.999 2019 2020 2021 2022 2023 10 Q3 2024 Investor presentation | Heidelberg Materials
Slide 11: Continuous EPS improvement with impressive 15% CAGR
Financial highlights Continuous EPS improvement with impressive 15% CAGR Clean EPS (€)1 10,4 9,5 +15% 7,9 6,9 6,4 5,2 2018 2019 2020 2021 2022 2023 1 Clean EPS: Figures adjusted for additional ordinary result. In 2020 one-off deferred tax income related to impairments and for 2021 US West assets dis
Slide 12: Our concrete promises
2 Our concrete promises
Slide 13: Our concrete promises
Our concrete promises 1. We focus on heavy building materials. 2. We commit to generate 50% of our revenue from sustainable products by 2030. 3. We commit to reduce CO2 emissions by almost 50% to 400 kg CO2/t CEM by 2030. 4. We will make this transition a successful business case: on growth, margins
Slide 14: Ambitious targets for 2025 & 2030
Our concrete promises We set ourselves ambitious targets for 2025 & 2030 By 2025 5% p.a. 20 – 22% >10 >45% 1.5x – 2.0x Revenue EBITDA ROIC Cash Leverage Growth margin conversion rate ratio By 2030 400 kg/t CEM 50% 50% CO2 emissions Sustainable products Circular concrete1 1 Offer circular alternative
Slide 15: Our industry-leading carbon reduction targets
Our concrete promises Our industry-leading carbon reduction targets 400 kg CO2/t cementitious material as average across the whole portfolio in 20301 10 mt 47% emission reduction2 across the cementitious cumulative CO2 reduction materials portfolio by 2030 through CCUS by 2030 50% of our revenue wil
Slide 16: Regulatory changes and sustainability focus will be a big opportunity
Our concrete promises Regulatory changes and sustainability focus will be a big opportunity for us Green procurement criteria create significant growth potential • Strong demand for sustainable products and solutions on the back of green procurement criteria • Sustainable products with price premium
Slide 17: Significant progress in all sustainability KPIs
Sustainability Significant progress in all sustainability KPIs Specific net CO2 emissions Alternative fuel rate [kg CO2/t cementitious material] +130 750 -1.7% 45.0% bps 538 534 529 29.9% 30.6% 29.3% 400 2.9% 1990 Jun 2023 Dec 2023 Jun 2024 2030 1990 Jun 2023 Dec 2023 Jun 2024 2030 Clinker incorpora
Slide 18: Closing the loop: First-of-its-kind recycling plant applying ReConcrete process
Sustainability Closing the loop: First-of-its-kind recycling plant applying patented ReConcrete process Katowice, Poland Innovative recycling plant for selective separation Proprietary crushing mechanism enabling sophisticated separation and sorting of demolished concrete Highest quality aggregates,
Slide 19: Driving CCUS with the most advanced project portfolio in the sector
Our concrete promises Driving CCUS with the most advanced project portfolio in the sector 2024 2025 2026 2027 2028 2029 2030 CCS CC CC CCUS CCS CCUS CCS Brevik, Norway Mergelstetten, Ennigerloh, Germany Edmonton, Canada Padeswood, UK Antoing, Belgium Slite, Sweden Capacity: 400 kt CO2 Germany LEILA
Slide 20: CCUS and ETS present a clear margin opportunity in Europe
Our concrete promises CCUS and ETS present a clear margin opportunity for us in Europe Margin opportunity Pricing in the sector will due to premium products reflect the average ETS balance Indicative chart €/t CEM Accelerated ETS driven cost increase starting Margin 2026 industry average Ø 18 Margin
Slide 21: Our new global evoBuild product range
Sustainability Our new global evoBuild® product range is setting a new global standard Low carbon cement 30% 30% less CO2 vs. CEM I in 20201 Low carbon concrete 30% 30% less CO2 vs. CEM I based concrete in 20201 Applies to all business lines: Cement, Concrete, Aggregates, Asphalt Circular products:
Slide 22: Introducing our evoZero products
Our concrete promises Introducing our evoZero® products Our customers will be able to choose between two evoZero products: Carbon Captured Brevik Carbon Captured evoZero Carbon Captured Brevik evoZero Carbon Captured is our mass-balanced product, produced in and can be delivered from any European pl
Slide 23: evoZero: The world's first carbon captured net-zero cement
Sustainability evoZero®: The world’s first carbon captured net-zero cement Applies to cement and concrete products • Globally unique product: CCS technology, applied for the first time at a large scale in Brevik, enables net- zero carbon footprint of evoZero® • Broadest product application combined
Slide 24: We will be the first worldwide to offer carbon captured net-zero cement
We will be the first worldwide to offer carbon captured net-zero cement and concrete at scale
Slide 25: Current trading update
4S Current trading update
Slide 26: Good performance in Q3 2024, Outlook upgraded
Good performance in Q3 2024, Outlook upgraded Result and margin improvement continues: - Revenue 0%; EBITDA +3%; RCO +3% 1 - EBITDA margin improves by +39 bps Continued strong performance in North America supported by good returns from recent highly accretive M&A deals “Transformation Accelerator” i
Slide 27: Q3 2024: Margin improvement continues
Operational result Q3 2024: Margin improvement continues Revenue [€m] Operating EBITDA [€m] Operating EBITDA Margin Operating EBIT (RCO) [€m] +146 €m +59 €m +45 €m +39 bps LfL: 0% LfL: +3% LfL: +3% 5,611 5,756 1,393 1,451 24.8% 25.2% 1,080 1,124 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 2023 Q3 2024 Q3 202
Slide 28: 9M 2024: Result improvement despite volume pressure
Operational result 9M 2024: Result improvement despite volume pressure Revenue [€m] Operating EBITDA [€m] Operating EBITDA Margin Operating EBIT (RCO) [€m] -333 €m +101 €m +58 €m +106 bps LfL: -3% LfL: +2% LfL: +2% 3.179 3.280 20.8% 2.269 2.327 16.083 19.8% 15.750 9M 2023 9M 2024 9M 2023 9M 2024 9M
Slide 29: Q3 2024: Operating EBIT (RCO) bridge
Operational result Q3 2024: Operating EBIT (RCO) bridge [€m] +34 €m (+3%) 29 1,124 93 -3 1,095 1,080 -18 1,061 -57 Q3 2023 RCO Currency Q3 2023 LfL RCO Net volume Price over cost Depreciation Q3 2024 LfL RCO Scope Q3 2024 RCO & Amort. 29 Q3 2024 Investor presentation | Heidelberg Materials
Slide 30: 9M 2024: Operating EBIT (RCO) bridge
Operational result 9M 2024: Operating EBIT (RCO) bridge [€m] +54 €m (+2%) 429 48 2,327 -24 2,279 2,269 -44 2,225 -351 9M 2023 RCO Currency 9M 2023 LfL RCO Net volume Price over cost Depreciation 9M 2024 LfL RCO Scope 9M 2024 RCO & Amort. 30 Q3 2024 Investor presentation | Heidelberg Materials
Slide 31: Europe
Operational result Europe Q3 2023 Q3 2024 +77 €m -9 €m LfL: -2% LfL: -2% -91 bps 2,444 2,521 461 453 18.9% 18.0% Revenue [€m] RCO [€m] RCO Margin Demand recovery continues in Eastern Europe, declines begin to flatten out in certain key countries in Western Europe RCO continues at a high level, drive
Slide 32: North America
Operational result North America Q3 2023 Q3 2024 +50 €m +46 €m +214 bps LfL: +1% LfL: +11% 1,522 1,572 409 26.0% 363 23.9% Revenue [€m] RCO [€m] RCO Margin Favorable result development despite significant weather events and softer demand in Q3 2024 Margin improvement continues, driven by solid price
Slide 33: Asia – Pacific
Operational result Asia – Pacific Q3 2023 Q3 2024 -25 €m -2 €m LfL: -6% LfL: -15% +15 bps 949 924 118 116 12.4% 12.6% Revenue [€m] RCO [€m] RCO Margin Margin improvement despite challenging market environment which put pressure on demand and pricing Overall stable business development in Australia A
Slide 34: Africa – Mediterranean – Western Asia
Operational result Africa – Mediterranean – Western Asia Q3 2023 Q3 2024 +5 €m +6 €m LfL: +14% LfL: +9% +67 bps 601 606 143 148 23.8% 24.4% Revenue [€m] RCO [€m] RCO Margin Clear improvement in operational result in the quarter Positive pricing in local currencies and good cost management deliver ma
Slide 35: Transformation Accelerator: Taking the pole position for the future
Operational Excellence “Transformation Accelerator”: Taking the pole position for the future Pulling all levers to catalyse growth Addressing future opportunities and further improve operational excellence Cross-border Efficiencies Technical network across functions initiatives optimisation Each pil
Slide 36: Financial highlights
Financial highlights Adjusted EPS increases by 14% to 8.8 € 1 Last 12 months free cash flow at 2.0 €bn 2 Leverage at 1.5x, impacted by seasonality Second Green Bond is placed with an amount of 500 €m, following the first 700 €m placed in June First tranche of 1.2 €bn share buyback program with an am
Slide 37: Guidance upgraded
Business Outlook & Guidance Guidance upgraded Key steering KPIs 2024 Target RCO 3.10 to 3.30 €bn (previously: 3.00 to 3.30 €bn) ROIC At around 10% CO2 emission (kg CO2/t cementitious Slight reduction material) 37 Q3 2024 Investor presentation | Heidelberg Materials
Slide 38: Capital allocation policy
ZL Capital allocation policy
Slide 39: Cash allocation: Clear shift to shareholder return and growth
Capital allocation policy Cash allocation: Clear shift to shareholder return and growth Cash allocation 2018 – 2020 Cash allocation 2021 – 2023 Focus was mainly on debt payback Focus on shareholder return & growth Bolt-on & 21% growth CapEx1 30% 25% Shareholder return 39% 54% Debt payback 31% 2018 –
Slide 40: Dividends & Share buyback: A clear priority in capital allocation policy
Capital allocation policy Dividends & Share buyback: A clear priority in capital allocation policy Progressive dividend increase New share buyback program of €1.2 billion (2024 – 2026) will continue in the upcoming years 20% increase vs. previous program Dividend per share (€) Share buyback In €m Di
Slide 41: Continuous focus on portfolio optimisation – Simplify and Grow
Capital allocation policy Continuous focus on portfolio optimisation – Simplify and Grow Clearly defined M&A framework Simplify Right-size the business Strategic rationale Financial rationale ~2.5 €bn Reduce complexity disposal1 • Grow in focus markets • Synergy potential Improve profitability withi
Slide 42: Accelerating portfolio review and optimising cost structure
Strategy Accelerating portfolio review and optimising cost structure Portfolio optimisation – key projects Acquisitions Disposals Cost measures 2023 2023 2024 2023 Canada Germany UK Georgia Germany Acquisition of Green Drop Acquisition of Acquisition of Smiths Disposal of HM Georgia Shut-down clinke
Slide 43: Debt maturity profile
Capital allocation policy Debt maturity profile Debt maturity profile as of September 30, 2024 in €m Debt Instruments Bonds Sust.-Linked Bond Green Bond 1,263 1,104 13 1,044 1,019 104 19 761 394 750 750 11 700 1,250 500 1,000 1,000 750 750 750 700 650 500 22 2024 2025 2026 2027 2028 2029 2031 2032 2
Slide 44: Credit ratings
Capital allocation policy Credit ratings Rating agency Long-term rating Outlook Short-term rating Moody’s Baa2 Stable P-2 S&P Global BBB Stable A-2 Total bonds volume Equity ratio Average coupon 7.35 €bn 52.0%1 2.5%2 Heidelberg Materials continues to target a solid investment grade rating. 1 Equity
Slide 45: Corporate Governance
5 Corporate Governance - Supervisory Board - Remuneration
Slide 46: Well-balanced profile of shareholder representatives
Supervisory Board Well-balanced profile of shareholder representatives Dr Bernd Scheifele - Chairman Luka Mucic Margret Suckale Ext. mandates1 as member of the Chief Financial Officer of Vodafone Ext. mandates1 as member of the Supervisory Board of Group Supervisory Board of • PHOENIX Pharma SE and
Slide 47: Diversified and highly qualified profile of skills
Supervisory Board Diversified and highly qualified profile of skills Scheifele Groebler Merckle Mucic Suckale Sury Gender M M M M W W Age 66 52 59 53 68 50 Committee membership 2 1 4 2 3 3 Skills & competencies Industry knowledge ✓ * ✓ - - - International Leadership ✓ * - ✓ ✓ ✓ Personnel competence
Slide 48: Topics of Supervisory Board meetings & committees
Supervisory Board Topics of Supervisory Board meetings & committees Supervisory Board meetings • Annual Financial Statements, including non-financial reporting • Further development and implementation of the sustainability and digitalisation strategy - including the role of recycling and alternative
Slide 49: New committee structure reflects importance of sustainability
Supervisory Board New committee structure reflects importance of sustainability Personnel Committee Audit Committee Sustainability & Nomination Committee Mediation Committee Innovation Committee Ludwig Merckle Luka Mucic Dr Sopna Sury Ludwig Merckle Margret Suckale (chairman) (chairman) (chairwoman)
Slide 50: Remuneration system
Remuneration system 25% 25% 25% 25% EBIT ROIC EBIT ROIC Performance Metrics 50% 25% 25% Relative TSR (vs. DAX and MSCI) ESG Relative TSR (vs. Peer Group) Payout 100% 50%: Cash- 50%: Share- Bundling of the 2 components into one plan: Plan type based on based (MC1) based (CMC1) 100% via Performance Sh
Slide 51: Remuneration system: performance share units
Remuneration system 125% of base ¼ EBIT Share price % achieve- # awarded One- # final Final share ¼ ROIC ment PSUs PSUs (120) price (e.g. 120%) (= 100) year # awarded # final PSUs holding Pay-out PSUs ¼ ESG (= 120) period amount (e.g. 100) ¼ Relative TSR vs. Peer Group Determination of % achievement
Slide 52: High number of individual targets per Managing Board member
Remuneration system Group Performance Individual / Strategic Targets Group Group/Area Health & Group Up to 5 CO2- Sustainable 1 individual CO2- Share of Free Cash Safety Share of individual Multiplier Revenue target Multiplier Profit Flow Group Profit goals (MBOs) 40% ±10% 20% ±10% 20% ±10% 20% ±10%
Slide 53: Maximum remuneration
Remuneration system Maximum New maximum remuneration: ▪ Percentage of total remuneration remuneration ▪ Managing Board member: 6m € / 6.5m $1 Defined as a percentage of base salary2 ▪ CEO: 30.000 shares ▪ CEO: 180% of base salary Share Ownership ▪ Managing Board member: 15.000 ▪ Managing Board membe
Slide 54: Financial Calendar & IR Contacts
Financial Calendar & IR Contacts Upcoming events: • 25.02.2025: Full Year Results • 08.05.2025: Q1 Trading Update • 15.05.2025: Annual General Meeting • 31.07.2025: Half Year Results • 06.11.2025: Q3 Trading Update Contact: Investor Relations: ir-info@heidelbergmaterials.com +49 6221 481 13227 54 Q
Slide 55: Disclaimer
Disclaimer • Unless otherwise indicated, the financial information provided herein has been prepared under International Financial Reporting Standards (IFRS). All the figures included in this presentation are preliminary, unaudited and subject to revision upon completion of the Company's closing and
Slide 56: Heidelberg
Heidelberg Materials