Heidelberg Materials Ag · XETR:HEI
Heidelberg Materials — Q3 2021 Earnings Presentation
24 slides from Heidelberg Materials's earnings presentation, Nov 4, 2021
Slide 1: Q3 2021 Trading Update
Q3 2021 Trading Update 4 November 2021 Dr. Dominik von Achten – Group CEO René Aldach – Group CFO House of Astronomy, Germany
Slide 2: Key Messages
Key Messages ▪ 9M result significantly above prior year – Q3 result impacted by extraordinary high comparison base and unprecedented energy cost inflation ▪ New business excellence program launched – mitigating cost inflation by at least 500 m€ in 2022 ▪ Net debt level further reduced – solid free c
Slide 3: Solid Q3 performance despite headwinds from cost inflation
OPERATIONAL PERFORMANCE Solid Q3 performance despite headwinds from cost inflation Revenue (m€) Operating EBITDA (m€) Operating EBITDA Margin Operating EBIT (RCO) (m€) -0.1% +0.2% +4.8% LfL: +2.7% LfL: +3.8% LfL: +8.8% +3.5% -11.4% +5 bps -13.6% LfL: +3.7% LfL: -10.7% LfL: -12.6% -393 bps 5,061 4,88
Slide 4: 9M operating EBITDA and EBIT significantly above prior year
OPERATIONAL PERFORMANCE 9M operating EBITDA and EBIT significantly above prior year Revenue (m€) Operating EBITDA (m€) Operating EBITDA Margin Operating EBIT (RCO) (m€) -1.9% +10.9% +23.4% LfL: +0.8% LfL: +14.5% LfL: +27.7% +6.0% +239 bps +13.9% +6.5% LfL: +8.5% LfL: +8.2% LfL: +16.1% -9 bps 14,273
Slide 5: Demand continues to be solid across all regions
OPERATIONAL PERFORMANCE Demand continues to be solid across all regions ’21 vs. ‘20 Significant increase in energy costs and high comparison base put short term Volumes pressure on margins in all regions Q3 19 Q3 20 Q3 21 LfL Cement sales volume (mt) 33.5 33.9 33.9 0.8% North America Aggregates sale
Slide 6: Q3 operating EBITDA bridge
OPERATIONAL PERFORMANCE Q3 operating EBITDA bridge (m€) -10.7% 37 -178 1,328 -10 1,318 1,177 -1 1,176 Q3 2020 EBITDA Currency Q3 2020 Net volume Price over cost Q3 2021 Scope Q3 2021 EBITDA LfL EBITDA LfL EBITDA 6 Q3 2021 Trading Update | 4 November 2021
Slide 7: 9M operating EBITDA bridge
OPERATIONAL PERFORMANCE 9M operating EBITDA bridge (m€) +8.2% 376 -157 2,900 -4 2,896 2,731 -50 2,681 9M 2020 EBITDA Currency 9M 2020 Net volume Price over cost 9M 2021 Scope 9M 2021 EBITDA LfL EBITDA LfL EBITDA 7 Q3 2021 Trading Update | 4 November 2021
Slide 8: Q3 EBITDA margins impacted by unprecedented cost inflation
OPERATIONAL PERFORMANCE Q3 EBITDA margins impacted by unprecedented cost inflation North America Western & Southern Europe North & Eastern Europe – Central Asia -106 bps -20 bps 0 bps -384 bps -522 bps -223 bps 27.4% 30.2% 26.3% 24.2% 28.9% 31.1% 28.9% 19.2% 19.0% Q3 2019 Q3 2020 Q3 2021 Q3 2019 Q3
Slide 9: 9M EBITDA margins are above 2019 levels in almost all the markets
OPERATIONAL PERFORMANCE 9M EBITDA margins are above 2019 levels in almost all the markets North America Western & Southern Europe North & Eastern Europe – Central Asia +149 bps +179 bps +226 bps +75 bps -71 bps -43 bps 20.8% 21.5% 22.2% 14.9% 17.4% 16.7% 22.5% 25.2% 24.8% 9M 2019 9M 2020 9M 2021 9M
Slide 10: Portfolio optimization continues
PORTFOLIO MANAGEMENT Portfolio optimization continues Spain Italy Disposal of AGG & RMC Greece Acquisition of 6 RMC US West Coast business in 4 clusters plants in Northern Italy Disposal of AGG & RMC business Disposal of CEM, AGG and RMC assets Australia Acquisition of Placecrete (RMC) Acquisitions
Slide 11: Key Financial Messages Q3
Key Financial Messages Q3 ▪ FCF comes back to normalized level of 1.7 bn€ (LTM) after backswing in working capital and tax payments following the completion of the COPE action plan in Dec 2020 ▪ Strong focus on shareholder value – first tranche of 1 bn€ share buyback program well on track ▪ Comforta
Slide 12: New business excellence program to mitigate cost inflation
BUSINESS EXCELLENCE PROGRAM New business excellence program to mitigate cost inflation Challenges already visible for upcoming year Operational Excellence ▪ Energy cost inflation (especially in H1) Most efficient use of asset base ▪ High inflation rates around the globe ▪ Increase kiln efficiency Ta
Slide 13: We target up to 10mt of CO2 reduction with our current CCU/S projects until 2030
SUSTAINABILITY We target up to 10mt* of CO2 reduction with our current CCU/S projects until 2030 ▪ CCU/S is a key cornerstone in our carbon reduction roadmap Capacity: 400kt CO2 p.a. Start: 2024 ▪ In 2024, first industrial scale project in Brevik operational (0.4mt CO2 p.a.) Capacity: 800kt CO2 p.a.
Slide 14: Improved ESG ratings and state-of-the-art reporting standards
SUSTAINABILITY Improved ESG ratings and state-of-the-art reporting standards Ratings Clear improvement in 2021 MSCI Sustainalytics VigeoEiris CDP ISS ESG AA: Stable rating for the 28.6 Medium Risk 63 points up from 46 Top grade A Prime Status C+ 4th consecutive time improved from 29.3 (out of 100 po
Slide 15: Strong progress in HConnect adoption rate: 200% year-to-date growth
DIGITALIZATION Strong progress in HConnect adoption rate: 200% year-to-date growth ▪ >18,000 Monthly active users (+200%) in 12 countries ▪ 52% (+19%-pts) of global revenue coverage ▪ All basic functionality shipped ▪ Now: real-time order management w/o any labor being involved ▪ Great customer feed
Slide 16: Strategic relevance of RMC increases: digital revenue potential ahead
DIGITALIZATION Strategic relevance of RMC increases: digital revenue potential ahead 1 2 3 Industry challenges / trends: Opportunity: Starting point: Resilient RMC business key to our Digital enables resilience and HC as leading player in RMC industry’s sustained success opens-up recurring service r
Slide 17: Full year 2021 outlook partially raised
OUTLOOK Full year 2021 outlook partially raised KPI Full year 2021 outlook Outlook change Operational Strong increase in LfL operating EBITDA Confirmed Performance (RCOBD) and operating EBIT (RCO) CapEx Net * Below 1.2 billion EUR Confirmed ROIC Above 9% Raised from previously “clearly above 8%” Red
Slide 18: Key Messages
Key Messages ▪ 9M result significantly above prior year – Q3 result impacted by extraordinary high comparison base and unprecedented energy cost inflation ▪ New business excellence program launched – mitigating cost inflation by at least 500 m€ in 2022 ▪ Net debt level further reduced – solid free c
Slide 19: Appendix
Appendix Institute for Marine and Antarctic Studies, Australia
Slide 20: Sales volumes
APPENDIX Sales volumes Sales Volumes Cement (‘000 t) Aggregates (‘000 t) Ready Mix (‘000 m3) Asphalt (‘000 t) QUARTER Q3 20 Q3 21 Change LfL Q3 20 Q3 21 Change LfL Q3 20 Q3 21 Change LfL Q3 20 Q3 21 Change LfL North America 4,505 4,653 148 3.3% 38,596 39,346 749 1.9% 2,261 2,184 -77 -3.4% 1,913 1,82
Slide 21: Operating result
APPENDIX Operating result Operating Result Revenues (m€) Operating EBITDA (m€) Operating EBIT / RCO (m€) EBITDA Margin QUARTER Q3 20 Q3 21 Change LfL Q3 20 Q3 21 Change LfL Q3 20 Q3 21 Change LfL Q3 20 Q3 21 Change LfL North America 1,377 1,391 1.0% 1.9% 415 366 -11.8% -9.7% 329 291 -11.7% -8.8% 30.
Slide 22: Scope and currency impacts
APPENDIX Scope and currency impacts Scope & Currency Scope Impact on Volumes Revenue Operating EBITDA Operating EBIT (RCO) QUARTER CEM AGG RMC ASP Scope Currency Scope Currency Scope Currency North America 0 0 0 0 0 -12 0 -10 0 -11 West / South Europe 0 0 0 0 -6 17 -1 2 0 1 North / East Europe 0 0 0
Slide 23: Contact information and financial calendar
FINANCIAL CALENDAR Contact information and financial calendar Date Events Contact Information 9 November 2021 UBS European Virtual Conference Christoph Beumelburg 16 November 2021 Goldman Sachs Carbonomics Conference Director Group Communication & Investor Relations Phone: +49 (0) 6221 481 13249 30
Slide 24: Disclaimer
Disclaimer Unless otherwise indicated, the financial information provided herein has been prepared in particular, additional uncertainties arising out of the subprime, financial market and under International Financial Reporting Standards (IFRS). liquidity crises; the outcome of pending investigatio