Heidelberg Materials Ag · XETR:HEI
Heidelberg Materials — FY2020 Earnings Presentation
37 slides from Heidelberg Materials's earnings presentation, Mar 18, 2021
Slide 1: 2020 Full Year Results
2020 Full Year Results 18 March 2021 Dr. Dominik von Achten – Group CEO Dr. Lorenz Näger – Group CFO
Slide 2: Key Messages
Key Messages ▪ ROIC at 7.9%; well on track to reach our Beyond 2020 target of “clearly above 8%” ▪ Adjusted EPS increases by 0.48 EUR to 6.88 EUR ▪ Faster than expected return to progressive dividend policy with dividend proposal of 2.20 EUR per share ▪ Step change in net debt reduction brings lever
Slide 3: We bring people together.
We bring people together. 2020 Overview Financial Result Sustainability Outlook & Key Takeaways Appendix Terminal 3 Frankfurt Airport, Germany
Slide 4: 2020 achievements vs. 2025 targets
2020 achievements vs. 2025 targets EBITDA margin ROIC Leverage ratio Clearly +300 bps >8% 1.5-2.0x vs 2019 Sustainability Digital transformation CO2 reduction <525 kg target accelerated by 5 years: >75% of global sales CO2/t cementitious -30% vs 1990 volumes covered by HConnect
Slide 5: EBITDA margins strongly improved in all regions in 2020
2020 OVERVIEW EBITDA margins strongly improved in all regions in 2020 North America Western & Southern Europe North & Eastern Europe – Central Asia +24 bps +207 bps +172 bps 21.8% 22.1% 17.3% 23.5% 25.2% 15.2% FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 Asia Pacific Africa-Eastern Mediterranean
Slide 6: Step change in debt reduction driven by record high FCF generation
2020 OVERVIEW Step change in debt reduction driven by record high FCF generation Record high FCF generation (m€) Significant Net Debt reduction (m€) Leverage within strategic target of <2.0x +470 -1,517 (+28%) -0.49 x (-18%) 2,172 8,410 2.35 x 1,702 6,893 1.86 x 2019 2020 2019 2020 2019 2020 6 2020
Slide 7: ROIC at 7.9%; well on track to reach our Beyond 2020 target
2020 OVERVIEW ROIC at 7.9%; well on track to reach our Beyond 2020 target of “clearly above 8%” ROIC in % and Invested Capital (m€) 7.92% 7.11% 7.15% 5.89% 6.51% 26,215 26,471 24,216 24,674 21,174 2016 2017 2018 20192) 2020 Invested Capital at year-end ROIC 1) (new definition as reported) 1) ROIC: A
Slide 8: Continuously reducing our CO2 emissions based on detailed roadmap
2020 OVERVIEW Continuously reducing our CO2 emissions based on detailed roadmap Specific net CO2 emissions Reduction of CO2 emissions (status 2020): [kg CO2/t cementitious material] ‒ -2.3% net CO2 emissions reduction compared to 2019* (-23% compared to 1990) 750 -23 % -30 % > -33 % ‒ 26% share of a
Slide 9: Faster than expected return to progressive dividend policy
2020 OVERVIEW Faster than expected return to progressive dividend policy Dividend per share (€) +5% 2.20 CAGR 2.10 +30% p.a. 1.90 1.60 1.30 0.75 0.60 0.60 0.47 0.35 0.25 0.12 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 proposed 9 2020 Full Year Results | 18.03.2021
Slide 10: Initiatives with good progress along our three digital pillars in 2020
2020 OVERVIEW Initiatives with good progress along our three digital pillars in 2020 Progress 2020: Progress 2020: Progress 2020: ✓ Increased Group sales ✓ 4 Cement focused digital ✓ Centralized accounts coverage to >30% tools launched payables mgmt. launched ✓ >7,000 monthly active users ✓ Cement m
Slide 11: We foster great new ideas.
We foster great new ideas. 2020 Overview Financial Result Sustainability Outlook & Key Takeaways Appendix 3D-House, Beckum, Germany
Slide 12: Group Share of Profit adjusted increases by 8% vs. PY
GROUP FINANCIALS | INCOME STATEMENT Group Share of Profit adjusted increases by 8% vs. PY Income statement (m€) 2019 2020 Delta − Revaluation of the asset portfolio leads to an Gross Sales 18,851 17,606 -1,245 impairment of ~3.4 bn€ booked in the additional RCOBD 3,580 3,707 127 ordinary result (AOR
Slide 13: Free cash flow at record level leading to significant reduction in net debt
FINANCIAL RESULT Free cash flow at record level leading to significant reduction in net debt 2019 2020 − Free Cash Flow of 2.2 bn€ at 1,702 173 2,172 record level with high Cash Conversion of 59%: 1,289 417 169 124 1,725 119 204 strong operating cashflow and strict implementation of COPE Free Cash F
Slide 14: We care for our environment.
We care for our environment. 2020 Overview Financial Result Sustainability Outlook & Key Takeaways Appendix MO.S.E.-Project, Venice, Italy
Slide 15: Pace increased in ESG agenda in 2020 – More projects in the pipeline
SUSTAINABILITY Pace increased in ESG agenda in 2020 – More projects in the pipeline First 3D printed residential building in CO2 capture and Brevik CCS: Germany Pilot project CI4C storage (CCS) Brevik CCS: Norwegian Signing with Using captured government Edmonton, Canada Joining HyNet partner CO2 as
Slide 16: Well on track to achieve our 2030 targets for all key metrics
SUSTAINABILITY Well on track to achieve our 2030 targets for all key metrics Change 2020 1990 … 2019 2020 vs. 1990 … 2030 Global specific net emissions (kg CO2/t CEM) 750 589* 576 -23% <500 Clinker 82.0% 74.5% incorporation factor 74.3% -770 bps 70% 25.7% +2,280 bps 43% Alternative 2.9% 24.0% fuels
Slide 17: Top ESG ratings confirm our ambitious work and engagement on sustainability
SUSTAINABILITY . Top ESG ratings confirm our ambitious work and engagement on sustainability CDP MSCI Sustainalytics ISS-oekom Top grade A AA 29.3 Medium Risk Prime Label “Climate Change A-List” Stable rating for the 4th Rel. performance in time in a row construction materials industry: 21 out of 11
Slide 18: We are advancing projects on carbon capture technologies around the world
SUSTAINABILITY We are advancing projects on carbon capture technologies around the world 18 2020 Full Year Results | 18.03.2021
Slide 19: CO2 target embedded in compensation scheme
SUSTAINABILITY CO2 target embedded in compensation scheme – Clear link to strategy ‘Beyond 2020’ CO2 reduction target reflects importance of sustainability Factoring CO2 reduction target allows harmonization of targets − Compensation for management and all bonus eligible employees worldwide will be
Slide 20: Material to build our future.
Material to build our future. 2020 Overview Financial Result Sustainability Outlook & Key Takeaways Appendix HeidelbergCement headquarters, Heidelberg Built with TioCem that actively reduces the pullutant content in the air
Slide 21: Clear focus on pricing and cost efficiency in all markets will drive further growth
OUTLOOK & KEY TAKEAWAYS Clear focus on pricing and cost efficiency in all markets will drive further growth Market outlook for selected countries: 2021 Guidance US: Positive outlook, further recovery in construction activity driven Slight increase in LfL by recent leading indicators and large govern
Slide 22: “Beyond 2020” – Our commitments
“Beyond 2020” – Our commitments 1. We prioritize the improvement of ROIC and margins over growing the top-line 2. We work on our portfolio: Focus is the strengthening of core markets while keeping a balanced global footprint 3. We ensure strict capital discipline: CapEx spending with focus on asset
Slide 23: Key Messages
Key Messages ▪ ROIC at 7.9%; well on track to reach our Beyond 2020 target of “clearly above 8%” ▪ Adjusted EPS increases by 0.48 EUR to 6.88 EUR ▪ Faster than expected return to progressive dividend policy with dividend proposal of 2.20 EUR per share ▪ Step change in net debt reduction brings lever
Slide 24: Appendix
2020 Overview Financial Result Sustainability Outlook & Key Takeaways Appendix
Slide 25: Record EBITDA and significant margin improvement despite lower demand
APPENDIX Record EBITDA and significant margin improvement despite lower demand Revenue (m€) Operating EBITDA (m€) Operating EBITDA Margin Operating EBIT (RCO) (m€) Lfl: +6% Lfl: +11% Lfl: -5% +4% +70 bps +206 bps +8% -7% 18,851 3,580 3,707 21.2% 21.8% 21.1% 2,363 17,606 2,186 19.0% Lfl: +6% Lfl: +13
Slide 26: Q4 earnings driven by Western & Southern Europe and Africa regions
APPENDIX Q4 earnings driven by Western & Southern Europe and Africa regions Volumes Q4 19 Q4 20 Change LfL North America Cement sales volume (mt) 31.4 31.9 0.5 1.7% ▪ Revenue increase driven by solid pricing, growth in most US Aggregates sales volume (mt) 75.0 75.5 0.4 1.2% regions and in Canada Rea
Slide 27: Strong Q4 EBITDA growth on the back of higher demand and solid pricing
APPENDIX Strong Q4 EBITDA growth on the back of higher demand and solid pricing Q4 Operating EBITDA Bridge (m€) +6.0% 20 979 -4 976 968 -45 36 924 Q4 2019 EBITDA Currency Q4 2019 Net volume Price over cost Q4 2020 Scope Q4 2020 EBITDA LfL EBITDA LfL EBITDA 27 2020 Full Year Results | 18.03.2021
Slide 28: Outstanding EBITDA performance in a very challenging year
APPENDIX Outstanding EBITDA performance in a very challenging year Full Year Operating EBITDA Bridge (m€) +6.1% 412 3,706 1 3,707 3,580 -86 3,494 -200 2019 EBITDA Currency 2019 LfL EBITDA Net volume Price over cost 2020 LfL EBITDA Scope 2020 EBITDA 28 2020 Full Year Results | 18.03.2021
Slide 29: Cash flow: Clear improvement in operating cash flow & disciplined CapEx spend
GROUP FINANCIALS | CASH FLOW STATEMENT Cash flow: Clear improvement in operating cash flow & disciplined CapEx spend Cash flow (m€) Dec 2019 Dec 2020 Variance − Strong operating performance and strict working Cash flow 2,903 3,139 236 capital management drive the significant increase Changes in work
Slide 30: Balance Sheet: Development in 2020 characterized by impairment and deleveraging
GROUP FINANCIALS | BALANCE SHEET Balance Sheet: Development in 2020 characterized by impairment and deleveraging Assets (m€) Dec 2019 Dec 2020 Variance % Intangible assets 1) 12,155 8,950 -3,205 -26% Property, plant and equipment 14,529 12,813 -1,716 -12% Financial assets 2,128 1,992 -136 -6% Fixed
Slide 31: Record free cashflow generation
FINANCIAL RESULT Record free cashflow generation Free cash flow generation (m€) 1 Cash conversion rate: 59% 3,707 236 -265 -341 -855 2,172 -310 +470 (28%) 1,702 2020 EBITDA Interest Tax Change in CapEx Net Other FCF FCF payment payment working Generation Generation capital 2020 2019 1) Free cash flo
Slide 32: Significant net debt reduction driven by strong cash generation and disciplined CapEx
FINANCIAL RESULT Significant net debt reduction driven by strong cash generation and disciplined CapEx Net debt development (m€) -1,517 m€ 8,410 208 6,893 323 124 -2,172 Net debt FCF Net growth Dividends Currency / other Net debt 2019 CapEx1) 2020 1) Net growth capex incl. capital decrease in non-co
Slide 33: Sales volumes
APPENDIX Sales volumes Sales Volumes Cement (‘000 t) Aggregates (‘000 t) Ready Mix (‘000 m3) Asphalt (‘000 t) QUARTER Q4 19 Q4 20 Change LfL Q4 19 Q4 20 Change LfL Q4 19 Q4 20 Change LfL Q4 19 Q4 20 Change LfL North America 3,855 3,942 87 2.3% 30,207 31,103 897 3.0% 1,912 1,947 35 2.4% 1,226 1,222 -
Slide 34: Operating result
APPENDIX Operating result Operating Result Revenues (m€) Operating EBITDA (m€) Operating EBIT / RCO (m€) EBITDA Margin QUARTER Q4 19 Q4 20 Change LfL Q4 19 Q4 20 Change LfL Q4 19 Q4 20 Change LfL Q4 19 Q4 20 Change LfL North America 1,164 1,104 -5.1% 3.3% 292 263 -9.9% -3.7% 188 177 -5.6% 0.5% 25.1%
Slide 35: 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 -3 -11 -57 -8 -87 0 -19 1 -12 West / South Europe 0 0 0 0 -20 -15 -5 -2 -2 -1 North / East E
Slide 36: Contact information and financial reporting calendar
FINANCIAL CALENDAR Contact information and financial reporting calendar Date Event Contact Information 6 May 2021 AGM & First Quarter Results Christoph Beumelburg Director Group Communication & Investor Relations 29 July 2021 Half Year Results Phone: +49 (0) 6221 481 13249 christoph.beumelburg@heide
Slide 37: 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