Slide 1: HeidelbergCement 2018 Full Year Results
HeidelbergCement 2018 Full Year Results 21 March 2019 Dr. Bernd Scheifele, CEO and Dr. Lorenz Näger, CFO International Congress Centre. Katowice, Poland Slide 1 – 2018 Full Year Results – 21 March 2019
Slide 2: Contents
Contents Page 2018 Overview 3 Results by Group areas 13 Financial tables 21 Outlook 2019 34 Appendix 37 Slide 2 – 2018 Full Year Results – 21 March 2019
Slide 3: Operational and Financial Overview
Operational and Financial Overview Revenues reach record high level of 18 billion EUR Volumes increase in all business lines Solid price increase almost in all markets Stable EBITDA despite significant unexpected headwinds Volume and price increases compensate exceptionally high cost inflation
Slide 4: Key operational and financial figures
Key operational and financial figures m€ Dec 17 Dec 18 Change % LfL % Q4 17 Q4 18 Change % LfL % Cement volume (‘000 t) 125,694 129,932 4,238 3.4 % 3.8 % 32,156 32,922 765 2.4 % 3.5 % Aggregate volume (‘000 t) 305,256 309,400 4,143 1.4 % 0.6 % 76,306 76,486 180 0.2 % -0.8 % Ready Mix volume (‘000 m
Slide 5: Full Year Operating EBITDA Bridge (m€)
Full Year Operating EBITDA Bridge (m€) Solid volume and price developments compensate cost inflation 183 3,297 -130 -570 378 -53 3,114 -61 30 3,074 3,044 Lower asset sale gains (Q4 2017 included 79m€ gain from Carroll Canyon sale) 2017 Currency Decons. 2017 LfL Price Net volume Costs Other 2018 LfL
Slide 6: Continuous improvement in key financial metrics
Continuous improvement in key financial metrics Revenue: EPS: Net Debt: We continue to grow.... We continue to deliver.... We continue to improve.... m€ € m€ +5% +25% -304 18,075 5,8 8,999 +36% +1% -328 4,6 17,266 8,695 17,084 3,4 8,367 2016 2017 2018 2016 2017 2018 2016 2017 2018 Significant increa
Slide 7: Free Cash Flow Generation
Free Cash Flow Generation Cash conversion rate: 42% 3.074 -107 -401 -261 -680 -329 1.296 2018 EBITDA Working Capital Net Interest Taxes Maintenance Other * FCF Generation CapEx * Includes mainly the transfer of “results from asset disposals” from EBITDA to investments (-140m€) and changes in provisi
Slide 8: Return on Invested Capital
Return on Invested Capital WACC 6.9% 6.3% ROIC 26.029 25.509 Invested 21.559 23.595 21.063 20.086 20.849 capital (€m) 2012 2013 2014 2015 2016 2017 2018 We continue to create value and earn premium on cost of capital Slide 8 – 2018 Full Year Results – 21 March 2019
Slide 9: Focus on key drivers with initiated action plan
Focus on key drivers with initiated action plan Pulling all levers to improve margin, cash flow and support solid IG rating Cost Margin Cash Cash management improvement generation management Accelerated Aggressive New SG&A disposal policy Limit growth commercial program with to reach high CapEx with
Slide 10: SG&A initiative launched with 100m€ savings target
SG&A initiative launched with 100m€ savings target Define Evaluate Verify Launch Internal analysis of Detailed analysis per Bottom-up analysis developments in cost type and cost to define further recent years center potentials Peer benchmarks Define saving Agreement with cost potential centers Targe
Slide 11: Portfolio optimization goes full-speed; disposals close to 600 m€ in 2018
Portfolio optimization goes full-speed; disposals close to 600 m€ in 2018 Focusing on 3 main categories, targeting 1.5 billion EUR disposals in 3 years Non-core businesses Weak market positions Idle assets • Business activities outside of • Market positions in countries • Depleted quarries and land
Slide 12: Contents
Contents Page 2018 Overview 3 Results by Group areas 13 Financial tables 21 Outlook 2019 34 Appendix 37 Slide 12 – 2018 Full Year Results – 21 March 2019
Slide 13: Overview of Group Areas
Overview of Group Areas REVENUES Operating EBITDA Mio EUR 2018 LfL % Q4 18 LfL% 2018 LfL % Q4 18 LfL% North America 4,262 3.1 % 1,083 3.7 % 988 -10.0 %* 261 -26.7 %* Western & 4,936 4.6 % 1,258 8.6 % 590 1.1 % 196 28.7 % Southern Europe Northern & Eastern 2,916 9.6 % 753 12.4 % 575 11.4 % 156 18.2 %
Slide 14: North America
North America 2017 2018 Q4 Market overview Operational result (m€) Revenues EBITDA* Operating Income* Volume and revenue improve over prior year despite continued weather issues in some key markets. LfL +3.1% LfL +3.7% LfL -10.0% LfL -26.7% LfL -14.4% LfL -34.5% Western Canada and the Pacific No
Slide 15: Western and Southern Europe
Western and Southern Europe 2017 2018 Q4 Market overview Operational result (m€) Revenues EBITDA Operating Income Strong volumes in all business lines although uncertainty in the UK market continues due to Brexit discussions. LfL +4.6% LfL +8.6% LfL +1.1% LfL +28.7% LfL +2.0% LfL +76.8% Continua
Slide 16: Northern and Eastern Europe - Central Asia
Northern and Eastern Europe - Central Asia 2017 2018 Q4 Market overview Operational result (m€) Revenues EBITDA Operating Income Strong earnings growth and margin improvement in all business lines, despite high energy cost inflation. LfL +9.6% LfL +12.4% LfL +11.4% LfL +18.2% LfL +18.0% LfL +26.6%
Slide 17: Asia Pacific
Asia Pacific 2017 2018 Q4 Market overview Operational result (m€) Revenues EBITDA Operating Income Indonesia: EBITDA growth turns positive in Q4 driven by solid sales volumes and price increases. LfL +5.8% LfL +5.5% LfL -4.4% LfL +1.6% LfL -5.3% LfL +7.7% India showing strong volume growth and i
Slide 18: Africa - Eastern Mediterranean Basin
Africa - Eastern Mediterranean Basin 2017 2018 Q4 Market overview Operational result (m€) Revenues EBITDA Operating Income Solid revenue growth and operational results on the back of cement margin improvement, supported by the LfL +10.1% LfL +3.1% LfL +4.7% LfL +0.8% LfL +3.7% LfL -0.1% implementa
Slide 19: Group Services
Group Services 2017 2018 Q4 Market overview Operational result (m€) Revenues EBITDA Operating Income The total trade volume of HC Trading increased in the reporting year by 22.1% to a historic peak of 30.9 million LfL +35.4% LfL +58.6% LfL +1.8% LfL -0.7% LfL +1.9% LfL -1.4% tons and remarkably ou
Slide 20: Contents
Contents Page 2018 Overview 3 Results by Group areas 13 Financial tables 21 Outlook 2019 34 Appendix 37 Slide 20 – 2018 Full Year Results – 21 March 2019
Slide 21: Key financial messages 2018
Key financial messages 2018 Group share of profit increases by 25% from 918 m€ to 1,143 m€ in 2018 Decrease in “result from current operations” overcompensated by improvements in additional ordinary result, financial result and income taxes. Additional ordinary result improved by 241 m€ vs. 20
Slide 22: Income Statement December 2018
Income Statement December 2018 m€ 2017 2018 Change Q4 17 Q4 18 Change Revenue 17,266 18,075 5% 4,262 4,670 10% Result from joint ventures 204 204 0% 64 53 -17% Result from current operations before 3,297 3,074 -7% 892 847 -5% depreciation and amortization (RCOBD) Depreciation and amortization -1,109
Slide 23: "Additional Ordinary Result" improves significantly
“Additional Ordinary Result” improves significantly Additional ordinary income (m€) 2017 2018 Change Gains from disposal of business units and repayment of capital 12 125 113 Other non-recurring income 86 115 29 Total additional ordinary income 98 240 142 Additional ordinary expense (m€) 2017 2018 C
Slide 24: Improvement in "Financial Result" continues
Improvement in “Financial Result” continues Mio € Development of Net Financial Result -367 +4 +14 -418 +41 -7 Financial Interest Interest FX rate differences Other financial Financial result 2017 income expense result result 2018 Improved refinancing conditions and IG Rating lead to a further reduct
Slide 25: Continuous improvement in "Cash Tax Ratio"
Continuous improvement in “Cash Tax Ratio” Cash Tax Ratio HeidelbergCement Cash Tax 2007 2008 2009 2010 2011 2012 20132) 2014 2015 20163) 20174) 2018 Ratio1) Annual 18.6% 26.1% 59.0% 26.0% 39.8% 48.8% 40.0% 40.8% 31.9% 34.7% 25.3% 17.1% 3Y average 23.8% 23.2% 25.0% 31.6% 39.3% 38.8% 42.4% 42.7% 37.4
Slide 26: Cash flow statement December 2018
Cash flow statement December 2018 m€ 2017 2018 Change Q4 17 Q4 18 Change Cash flow 2,370 2,399 30 617 684 66 Changes in working capital 7 -107 -113 791 874 83 Decrease in provisions through cash payments -335 -324 11 -74 -83 -8 Cash flow from operating activities – disc. operations -4 -1 3 0 0 0 Cas
Slide 27: Strong FCF generation: Net Debt reduced by 328 m€ in 2018
Strong FCF generation: Net Debt reduced by 328 m€ in 2018 Usage of free cash flow (m€) 2016 2017 2018 1,273 1,403 1,296 339 596 244 93 291 583 317 212 501 231 377 188 FCF 1) Growth CapEx Debt Payback Dividends HCAG Dividend to minorities 4.167 -328 142 8,999 279 8,695 8,367 596 583 231 97 5,286 Net
Slide 28: Group balance sheet
Group balance sheet Dec 18 / Dec 17 m€ Dec 2017 Dec 2018 Variance (m€) Variance (%) Assets Intangible assets 11,471 11,820 349 3% Property, plant and equipment 12,814 12,962 148 1% Financial assets 2,181 2,107 -74 -3 % Fixed assets 26,466 26,889 423 2% Deferred taxes 518 314 -203 -39 % Receivables 3
Slide 29: Estimated impact of IFRS 16 (Leases)
Estimated impact of IFRS 16 (Leases)1) Income Statement Balance Sheet Cash flow Statement EBITDA Net Debt Sustaining CapEx increases by increases by increases by ~250 - 300 m€ ~1.0 to 1.2 bn€ ~260 - 320 m€ EBITDA increases due to Net Debt increases due to HC will switch from recognition of lease the
Slide 30: Pension provisions 2018
Pension provisions 2018 -2% -5% -3% 5,940 5,898 5,843 5,688 -5% 5,353 5,378 5,404 5,329 -5% 5,117 4,853 4,853 4,522 2013 2014 2015 2016 2017 2018 Defined benefit obligations Defined benefit obligations (constant discount rate)* *) Soure: Mercer calculations (February 2019) Continuous decrease in pen
Slide 31: We continue to create value and earn cost of capital
We continue to create value and earn cost of capital Before ITC acquisition After ITC acquisition 6.9% WACC 6.3% ROIC Invested 26.029 25.509 capital 21.559 23.595 21.063 20.086 20.849 (last 4 quarter average, €m) Jul-05 2013 2014 2015 2016 2017 2018 ROIC calculated as EBIT (L12M) minus income taxes
Slide 32: Dividend increases by 11% to 2.10 € per share
Dividend increases by 11% to 2.10 € per share Dividend per share +11% 2,20 2,10 2,00 1,90 CAGR 1,80 +37% p.a. 1,60 1,60 1,40 1,30 1,20 1,00 0,80 0,75 0,60 0,60 0,47 0,40 0,35 0,25 0,20 0,12 0,00 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 HC increases the dividend for the 9th time in a row and
Slide 33: Contents
Contents Page 2018 Overview 3 Results by Group areas 13 Financial tables 21 Outlook 2019 34 Appendix 37 Slide 33 – 2018 Full Year Results – 21 March 2019
Slide 34: Global cement demand outlook 2019
Global cement demand outlook 2019 North Europe: Russia Subdued demand Stagnant/Decline +1% -1% North America: +2% Europe: 0% Japan: Demand growth Slow-down in recovery 0% +5% Turkey: Subdued demand Stronger West-Coast +2% China: +3% Strong decline +10% +2% Saturated 0% +10% +2%-10% 0% North Africa:
Slide 35: 2019: Solid result improvement and debt reduction
2019: Solid result improvement and debt reduction Europe North America Solid EBITDA growth as Solid result driven by a result of continued price and demand recovery and price growth; new state increases. Asia Pacific infrastructure spending in most of the key states. Clear improvement in Africa earn
Slide 36: Contents
Contents Page 2018 Overview 3 Results by Group areas 13 Financial tables 21 Outlook 2019 34 Appendix 37 Slide 36 – 2018 Full Year Results – 21 March 2019
Slide 37: Volume and price development (Full year 2018 vs. 2017)
Volume and price development (Full year 2018 vs. 2017) Domestic gray cement Aggregates Ready Mix ++ = >2% Volume Price Volume Price Volume Price USA - + + + ++ + + = 0 to +2% Canada ++ ++ ++ ++ ++ + +/- = stable Benelux + ++ ++ + - ++ France ++ + ++ ++ ++ ++ - = -2% to 0 Germany + ++ ++ + - ++ -- =
Slide 38: Currency & Scope Impacts
Currency & Scope Impacts Cement Volume Full Year Q4 Revenues Full Year Q4 Cons. Decons. Curr. Cons. Decons. Curr. Cons. Decons. Curr. Cons. Decons. Curr. North America 117 -452 35 -139 North America 88 -109 -186 8 -31 28 West & South Europe 1,637 -102 391 -15 West & South Europe 106 -73 -12 32 -18 0
Slide 39: Vision: Carbon neutral concrete by 2050
Vision: Carbon neutral concrete by 2050 Levers Reduce CO2 content of clinker • Improve energy efficiencies of plants • Increase use of alternative fuels (biomass), raw materials and binder concepts Lower CO2 content of cement and concrete • Use low-CO2 clinker and secondary cementitious materials in
Slide 40: Contact information and event calendar
Contact information and event calendar Date Event Contact Information 09 May 2019 Q1 Results & AGM Investor Relations Mr. Ozan Kacar 30 July 2019 H1 Results Head of Investor Relations Phone: +49 (0) 6221 481 13925 7 November 2019 Q3 Results Mr. Piotr Jelitto Phone: +49 (0) 6221 481 39568 ir-info@hei
Slide 41: Disclaimer
Disclaimer Unless otherwise indicated, the financial information provided herein has been prepared under International Financial Reporting Standards (IFRS). This presentation contains forward-looking statements and information. Forward-looking statements and information are statements that are not h