Heidelberg Materials Ag · XETR:HEI
Heidelberg Materials — HeidelbergCement — FY2019 Earnings Presentation
45 slides from Heidelberg Materials's earnings presentation, Mar 19, 2020
Slide 1: 2019 Full Year Results
2019 Full Year Results 19 March 2020 Dr. Dominik von Achten – Group CEO Dr. Lorenz Näger – Group CFO
Slide 2: Key Messages
Key Messages Solid performance and improvement in most key financial metrics in 2019 Good business start into 2020 Significant liquidity headroom Determined to take all necessary measures to fight impacts from the coronavirus General assembly postponed due to legal restrictions Good prog
Slide 3: Results 2019, Current Business Update, Sustainability
Results 2019 Current Business Update Sustainability Key takeaways Appendix
Slide 4: Solid performance and improvement in most key financial metrics in 2019
RESULTS 2019 Solid performance and improvement in most key financial metrics in 2019 Operations LfL revenue increases by +2.1%; Operating EBITDA increases by +2.5% EPS Adjusted EPS increases by +23% to 6.4 EUR* Costs 134 m€ SG&A savings vs. initial plan of 100 m€ Portfolio 622 m€ disposals without m
Slide 5: We continue to create value and earn a premium on our cost of capital
RESULTS 2019 We continue to create value and earn a premium on our cost of capital WACC ROIC post IFRS 16 ROIC pre IFRS 16 ‒ Net debt reduction and operational result 7.2 increase compensated the negative impact 7.0 6.9 7.1 from IFRS 16 (-0.2% vs. 2018) 6.7 6.9 6.6 ‒ ROIC continues to benefit from t
Slide 6: HC proposes dividend increase for the 10th time in a row to 2.20 € per share
RESULTS 2019 HC proposes dividend increase for the 10th time in a row to 2.20 € per share Annual General Meeting postponed +5% ‒ Due to the spread of the coronavirus, HeidelbergCement will not hold its AGM as CAGR 2.20 scheduled on 7 May 2020 2.10 +34% p.a. 1.90 ‒ The authorities of Baden-Württember
Slide 7: Adjusted earning per share increased significantly
RESULTS 2019 Adjusted earning per share increased significantly m€ 2018 1) 2019 Delta ‒ LFL revenue +2% above prior year Revenue 18,075 18,851 4% ‒ LFL RCO increases by +5% RCOBD 3,100 3,580 16% ‒ Net income impacted by -143 m€ non-cash in % of revenue 17.2% 19.0% effect from disposal of Ukraine, wh
Slide 8: Income statement December 2019
RESULTS 2019 Income statement December 2019 m€ 2018 1) 2019 Delta Additional ordinary result: Revenue 18,075 18,851 777 ‒ Sharp decrease in AOR driven by negative non-cash currency effect from the sale of Ukraine business in RCOBD (Operating EBITDA) 3,100 3,580 480 2019 (-143 m€) Depreciation and am
Slide 9: Strong free cash flow generation and significant net debt reduction
RESULTS 2019 Strong free cash flow generation and significant net debt reduction Free cash flow generation (m€) * Net debt development (m€) Cash conversion rate: 45% -1,199 3,250 8,323 1,286 8,410 76 -353 -294 586 -192 7,124 1,468 -1,468 -125 -911 -300 2019 Interest Tax Change in Sustaining Other FC
Slide 10: Results 2019, Current Business Update, Sustainability
Results 2019 Current Business Update Sustainability Key takeaways Appendix
Slide 11: Good start into the year – Current demand above prior year
CURRENT BUSINESS UPDATE Good start into the year – Current demand above prior year Solid start to the year (January + February volumes) Update on key markets up until March 18, 2020: US: Cement volume (mt) ‒ Volumes up in all regions so far ‒ Some construction projects being put on hold recently (Bo
Slide 12: Determined to take all necessary measures
CURRENT BUSINESS UPDATE Determined to take all necessary measures Current Most plants are still running with the exception HC Started to take action very early in February. business of three plants in Lombardy. reaction situation Crisis teams established in every country and on Most countries do not
Slide 13: Coronavirus contingency plan: Swift actions taken with immediate effect
CURRENT BUSINESS UPDATE Coronavirus contingency plan: Swift actions taken with immediate effect PEOPLE BUSINESS CASH Adopt “Smart Working” wherever Review energy demand under possible worst case scenario Cash conservation as first priority Freeze hiring, limit 3rd party Selective approach with regar
Slide 14: Sufficient liquidity and ample headroom in covenants for credit lines
HIGHLIGHTS 2019 Sufficient liquidity and ample headroom in covenants for credit lines Significant liquidity headroom and well balanced maturity profile Free credit line* Debt Instruments m€ Cash position Bond 6,489 2,872 2,157 3,617 357 1,310 1,216 1,262 60 1,152 1,021 1,012 12 216 785 21 12 761 1,8
Slide 15: Results 2019, Current Business Update, Sustainability
Results 2019 Current Business Update Sustainability Key takeaways Appendix
Slide 16: We made good progress in further reducing our global CO2 emissions in 2019
SUSTAINABILITY UPDATE We made good progress in further reducing our global CO2 emissions in 2019 Reduction of CO2 emissions (status 2019): 749 750 22% less specific net CO2 emissions compared to 1990 -22% -30% (from 20% in 2018) 700 24% share of alternative fuels 650 74.5% Clinker-/Cement fact
Slide 17: Innovative CO2 reduction technologies in all parts of the world
SUSTAINABILITY UPDATE Innovative CO2 reduction technologies in all parts of the world HeidelbergCement has intensified its R&D efforts on CCU/S across the globe 17 2019 Full Year Results | 19.03.2020
Slide 18: LEILAC – Upscaling direct CO2 capture technology to large-scale industrial size
SUSTAINABILITY UPDATE LEILAC – Upscaling direct CO2 capture technology to large-scale industrial size Promising first phase of the LEILAC (Low Emissions Intensity Lime And Cement) research project LEILAC focuses on direct CO2 capture during the decarbonisation process of the limestone through indire
Slide 19: Results 2019, Current Business Update, Sustainability Update
Results 2019 Current Business Update Sustainability Update Key takeaways Appendix
Slide 20: Our focus areas in 2020
KEY TAKEAWAYS Our focus areas in 2020 Operational Coronavirus Sustainable Cash Generation Strategy Excellence mitigation Growth and Allocation Update € A global strategy review Price driven top line Swift actions with Continuous focus on Further reduce our based on internal & growth immedi
Slide 21: Key Takeaways
Key Takeaways We generate strong cash flow and have significant liquidity headroom Determined to take all necessary measures to fight impacts from the coronavirus General assembly postponed due to legal restrictions We will continue the successful path of further reducing our carbon footprin
Slide 22: Results 2019, Current Business Update, Sustainability Update
Results 2019 Current Business Update Sustainability Update Key takeaways Appendix
Slide 23: North America
APPENDIX North America Q418 Q419 Sales volumes Lfl: -5% Lfl: -1% Lfl: +6% -196 +25 +136 4,051 30,207 1,912 3,855 30,181 1,775 Cement (kt) Aggregates (kt) Ready mix (km3) Q4 Market overview Operational highlights Lfl: -126 bps ‒ Successful price increases in all business lines lead to revenue increas
Slide 24: Western & Southern Europe
APPENDIX Western & Southern Europe Q418 Q419 Sales volumes Lfl: -5% Lfl: -6% Lfl: -6% -585 -930 -157 7,792 20,925 4,602 7,206 19,994 4,445 Cement (kt) Aggregates (kt) Ready mix (km3) Q4 Market overview Operational highlights Lfl: -203 bps ‒ Difficult market environment due to very strong comparison
Slide 25: Northern & Eastern Europe – Central Asia
APPENDIX Northern & Eastern Europe – Central Asia Q418 Q419 Sales volumes Lfl: -6% Lfl: +1% Lfl: -6% -650 +102 -138 6,320 12,680 1,886 5,670 12,577 1,748 Cement (kt) Aggregates (kt) Ready mix (km3) Q4 Market overview Operational highlights Lfl: +272 bps ‒ Solid pricing which partly compensates weak
Slide 26: Asia - Pacific
APPENDIX Asia - Pacific Q418 Q419 Sales volumes Lfl: 0% Lfl: -5% Lfl: -10% -576 -244 -9 9,621 10,550 3,355 9,613 9,975 3,111 Cement (kt) Aggregates (kt) Ready mix (km3) Q4 Market overview Operational highlights Lfl: +237 bps ‒ Continued recovery in Indonesia and Thailand more than offsets Lfl: -5% L
Slide 27: Africa – Eastern Mediterranean Basin
APPENDIX Africa – Eastern Mediterranean Basin Q418 Q419 Sales volumes Lfl: +1% Lfl: -3% Lfl: -3% +19 -67 -48 4,817 2,321 1,424 4,799 2,254 1,377 Cement (kt) Aggregates (kt) Ready mix (km3) Q4 Market overview Operational highlights Lfl: +174 bps ‒ Continuing strong result improvement in all Sub-Sahar
Slide 28: Group Services
APPENDIX Group Services Q418 Q419 Operational highlights Lfl: -180 bps Lfl: -40% Lfl: -102% -191 -147 bps -8 477 8 1.7% 286 1 0.3% Revenue (m€) Operating EBITDA (m€) Margin Q4 Market overview ‒ Revenues decline as a result of lower pricing in fuels and partly due to lower volumes as we decreased the
Slide 29: Operating EBITDA continues to grow
APPENDIX Operating EBITDA continues to grow Full Year Operating EBITDA Bridge (m€) 330 8 3,580 +2.5% 107 3,242 64 3,164 -29 3,100 2018 EBITDA Currency 2018 LfL Net volume Price over cost 2019 LfL Leasing Scope 2019 EBITDA EBITDA EBITDA Lfl: Excluding scope, currency and IFRS 16 leasing impacts. Prev
Slide 30: AOR in 2019 driven by negative currency differences from the sale of Ukraine
APPENDIX AOR in 2019 driven by negative currency differences from the sale of Ukraine Additional ordinary income (m€) 2018 2019 Change AOR in 2019 driven by negative currency effects from the sale of Ukraine business Gains from disposal of business units 125 86 -39 (-143 m€) Other non-recurring in
Slide 31: Net financial result driven by further reduction in interest expenses
APPENDIX Net financial result driven by further reduction in interest expenses 49 Investment grade rating and improved financing conditions lead to further reduction in interest expenses (+49 m€). -8 Accounting and FX effects negatively impact the financial result by -73 m€. -20 3 -353 -45 -375
Slide 32: Cash tax ratio still on historic low level
APPENDIX Cash tax ratio still on historic low level Cash Tax Ratio2) 2008 2009 2010 2011 2012 20131) 2014 2015 2016 2017 2018 2019 Annual 26.1% 59.0% 26.0% 39.8% 48.8% 40.0% 40.8% 31.9% 34.7% 25.3% 17.2% 21.9% 3Y Average 23.2% 25.0% 31.6% 39.3% 38.8% 42.4% 42.7% 37.4% 35.2% 29.9% 24.4% 21.4% 60 % 50
Slide 33: Portfolio optimization continues successfully
APPENDIX Portfolio optimization continues successfully Disposal proceeds 2018-2019 Disposal proceeds 2019 1,500 m€ 1,190 Decrease shares in subsidiaries Cement plants, Italy Land disposal, Everett 622 Ship disposals 622 White cement plant, Egypt Disposal Ukraine business Other non-core / idle assets
Slide 34: Balance sheet December 2019
APPENDIX Balance sheet December 2019 m€ 2018 2019 Change m€ 2018 2019 Change Intangible assets 11,820 12,184 364 3% Equity attributable to shareholders 15,430 16,987 1,558 10 % Property, plant and equipment 12,962 14,529 1,568 12 % Non-controlling interests 1,392 1,517 125 9% Financial assets 2,107
Slide 35: Cash flow statement December 2019
APPENDIX Cash flow statement December 2019 m€ 2018 2019 Change Cash flow from operating activities increases Cash flow 2,399 2,903 504 due to better operating result, high cash Changes in working capital -107 76 183 conversion and good management of Decrease in provisions through cash payments -32
Slide 36: Strong cash generation results in net debt reduction of 1.2 bn€
APPENDIX Strong cash generation results in net debt reduction of 1.2 bn€. 2017 2018 2019 1,403 1,296 1,468 125 291 583 317 212 501 231 377 188 1,007 417 169 FCF vor pre IFRS 16 1) Net Growth Capex Debt Payback Dividends HCAG Dividends to minorities m€ 8,999 8,688 -1,199 m€ -583 8,410 272 -231 8,323
Slide 37: Sales volumes, revenues, Operating EBITDA & Operating Income
APPENDIX Sales volumes, revenues, Operating EBITDA & Operating Income Q4 2019 FY 2019 Sales Volumes CEM AGG RMC ASP CEM AGG RMC ASP North America 3,855 30,207 1,912 1,226 16,114 128,143 7,737 5,046 West / South Europe 7,206 19,994 4,445 870 29,873 83,493 18,393 3,552 North / East Europe 5,670 12,680
Slide 38: Organic EBITDA growth bridge per region
APPENDIX Organic EBITDA growth bridge per region Operating EBITDA (Q4) Q4 2018 Currency Q4 2018 LfL Q4 2019 Leasing Scope Q4 2019 LfL LfL Growth North America 263 8 271 292 28 3 262 -3.4% West / South Europe 202 1 203 200 26 2 172 -15.1% North / East Europe 157 1 157 188 17 -3 175 10.9% Asia Pacific
Slide 39: Scope and currency impacts on volume and revenue
APPENDIX Scope and currency impacts on volume and revenue Scope & Currency Scope Impact on Volumes Revenue (Quarter) CEM AGG RMC ASP Scope Currency North America 0 212 24 242 25 33 West / South Europe -237 401 104 0 3 10 North / East Europe -283 -82 -20 0 -17 -6 Asia Pacific 9 0 89 0 4 29 Africa / M
Slide 40: Change in accounting (IFRS16-Leasing) & prior year restatements
APPENDIX Change in accounting (IFRS16-Leasing) & prior year restatements Fourth Quarter 2019 Full Year 2019 IFRS16 – Leasing (m€) EBITDA Depreciation Oper. Income EBITDA Depreciation Oper. Income North America 27.4 -20.7 6.7 70.5 -58.7 11.8 West / South Europe 26.3 -24.2 2.1 105.1 -94.3 10.8 North /
Slide 41: Change in accounting (IFRS16-Leasing) & prior year restatements
APPENDIX Change in accounting (IFRS16-Leasing) & prior year restatements Fourth Quarter 2019 Full Year 2019 IFRS16 – Leasing (m€) EBITDA Depreciation Oper. Income EBITDA Depreciation Oper. Income North America 27.4 -20.7 6.7 70.5 -58.7 11.8 West / South Europe 26.3 -24.2 2.1 105.1 -94.3 10.8 North /
Slide 42: HeidelbergCement is industry leader in ESG ratings
APPENDIX HeidelbergCement is industry leader in ESG ratings HeidelbergCement received numerous awards for its sustainability performance in 2019. In addition to financial criteria, we view many aspects in the areas of corporate governance, environmental protection and social responsibility as impo
Slide 43: We want concrete to become the most sustainable building material
APPENDIX We want concrete to become the most sustainable building material 2020 - 2030 2030 - 2050 Reduction of CO2 content in clinker Further improve energy efficiency Increase use of alternative fuels, raw materials, and new binder concepts Our vision 2050: Carbon-neutral Reduction of CO2 cont
Slide 44: Contact information and financial reporting calendar
APPENDIX Contact information and financial reporting calendar Date Event Contact Information 19 March 2020 Full Year Results Mr. Christoph Beumelburg Director Communication & IR 7 May 2020 First Quarter Results Phone: +49 (0) 6221 481 13249 30 July 2020 Half Year Results christoph.beumelburg@heidelb
Slide 45: Disclaimer
Disclaimer Unless otherwise indicated, the financial information provided herein has been prepared credit business and, in particular, additional uncertainties arising out of the subprime, under International Financial Reporting Standards (IFRS). financial market and liquidity crises; the outcome of