Heidelberg Materials Ag · XETR:HEI
Heidelberg Materials — HeidelbergCement — Q3 2018 Earnings Presentation
34 slides from Heidelberg Materials's earnings presentation, Nov 8, 2018
Slide 1: 2018 Third Quarter Results
HeidelbergCement 2018 Third Quarter Results 08 November 2018 Dr. Bernd Scheifele, CEO and Dr. Lorenz Näger, CFO Alex Fraser Laverton Recycling Plant / Australia Slide 1 – 2018 Third Quarter Results – 08 November 2018
Slide 2: Contents
Contents Page Overview and key figures 3 Group Areas 12 Financial Report 20 Outlook 27 Appendix 30 Slide 2 – 2018 Third Quarter Results – 08 November 2018
Slide 3: Market and financial overview Q3 2018
Market and financial overview Q3 2018 Organic growth achieved despite cost pressure and harsh weather impacts Volume increase in all business lines and positive pricing lead to +10% organic revenue growth. Operating EBITDA +2%; Operating Income +2% in LfL basis. Group share of profit in Q3 up
Slide 4: Key operational and financial figures
Key operational and financial figures Operational performance: m€ Sep 17 Sep 18 Change % LfL % Q3 17 Q3 18 Change % LfL % Cement volume (‘000 t) 93,537 97,010 3,473 3.7 % 3.9 % 33,446 35,145 1,699 5.1 % 5.9 % Aggregate volume (‘000 t) 228,950 232,913 3,963 1.7 % 1.1 % 86,646 87,741 1,095 1.3 % 1.3 %
Slide 5: Q3 2018 Operating EBITDA Bridge (m€)
Q3 2018 Operating EBITDA Bridge (m€) +2.2% 78 -165 1,058 -29 109 -19 1,032 7 1,039 1,010 Q3 2017 Currency Decons. Q3 2017 Price Net volume Costs & Q3 2018 Scope Q3 2018 Reported LfL EBITDA others LfL EBITDA Reported EBITDA EBITDA Organic growth continues despite significant cost pressure Slide 5 – 2
Slide 6: Overview of current year; drivers behind Outlook downgrade
Overview of current year; drivers behind Outlook downgrade Q1 Q2 Q3 Q4 • Solid order backlog • Robust volume growth • Volume increase in all BL + Indonesia expected • Strong growth in Africa • Solid pricing • Solid pricing continues to deliver positive • Positive organic growth • Indonesia result tu
Slide 7: Unprecedented Q3 weather in NAM prevented full recovery of Q1 shortfall
Unprecedented Q3 weather in NAM prevented full recovery of Q1 shortfall One of the harshest starts for the year in Weakest September since financial crisis as history impacted the market until mid April a result of rainfalls, floods and hurricanes September 2018 vs. September 2017 Edmonton Monthly C
Slide 8: Significant increase in power cost in Europe
Significant increase in power cost in Europe Electricity cost inflation Q3 18 vs. Q3 17 Clinker Power consumption (kwh/t clinker) 54% Total Group 2017 2018 53% -2% -1% -1% 40% 34% 30% Q1 Q2 Q3 20% Total Europe 2017 2018 17% -3% 0% 0% BENE FRA GER UK NOR SWE POL Q1 Q2 Q3 Significant cost inflation pa
Slide 9: Action plan initiated focusing on 3 major levers
Action plan initiated focusing on 3 major levers Accelerated disposal policy Portfolio optimization • Step-up of currently announced divestment program • Additional non-core/underperforming assets under review Operational excellence Margin improvement • Launch of new program focusing on SG&A with 10
Slide 10: Q3 marks a clear turnaround in Indonesia
Q3 marks a clear turnaround in Indonesia Operating EBITDA vs. prior year same month Local currency mIDR 14 Driven by demand growth and price increases, positive EBITDA growth achieved first time since almost 3 years. Trend expected to accelerate in Q4 and in 2019 with further price increases alrea
Slide 11: Contents
Contents Page Overview and key figures 3 Group Areas 12 Financial Report 20 Outlook 27 Appendix 30 Slide 11 – 2018 Third Quarter Results – 08 November 2018
Slide 12: Overview of Group Areas
Overview of Group Areas REVENUES Operating EBITDA Mio EUR Sep 18 LfL % Q3 18 LfL% Sep 18 LfL % Q3 18 LfL% North America 3,179 2.9 % 1,307 4.3 % 727 -1.9 % 406 7.7 % Western & 3,678 3.4 % 1,289 8.0 % 394 -8.2 % 185 -3.5 % Southern Europe Northern & Eastern 2,163 8.7 % 819 10.0 % 418 9.1 % 215 12.7 %
Slide 13: North America
North America 2017 2018 Q3 Market overview Operational result (m€) Revenues EBITDA Operating Income Positive earnings growth in Q3 driven by AGG business line and Canada region LfL +2.9% LfL +4.3% LfL -1.9% LfL +7.7% LfL -3.7% LfL +9.4% Strong performance in Western Canada, Pacific Northwest, an
Slide 14: Western and Southern Europe
Western and Southern Europe 2017 2018 Q3 Market overview Operational result (m€) Revenues EBITDA Operating Income Solid demand and price increases in almost all markets lead to +8.0% LfL revenue growth . LfL +3.4% LfL +8.0% LfL -8.2% LfL -3.5% LfL -20.5% LfL -10.3% Strong increase in variable co
Slide 15: Northern and Eastern Europe - Central Asia
Northern and Eastern Europe - Central Asia 2017 2018 Q3 Market overview Operational result (m€) Revenues EBITDA Operating Income Strong earnings growth despite energy cost inflation headwinds. LfL +8.7% LfL +10.0% LfL +9.1% LfL +12.7% LfL +15.0% LfL +17.1% Double digit growth achieved in all ope
Slide 16: Asia Pacific
Asia Pacific 2017 2018 Q3 Market overview Operational result (m€) Revenues EBITDA Operating Income Strong volume development and price improvement leads to solid growth in revenue. LfL +6.0% LfL +7.3% LfL -6.6% LfL -0.9% LfL -9.8% LfL -2.1% Indonesia marks a clear turn around in September with 2
Slide 17: Africa - Eastern Mediterranean Basin
Africa - Eastern Mediterranean Basin 2017 2018 Q3 Market overview Operational result (m€) Revenues EBITDA Operating Income Strong revenue growth on the back of cement and RMC volumes, and also positive pricing. LfL +12.6% LfL +11.2% LfL +6.0% LfL -10.4% LfL +5.0% LfL -19.4% Cost pressure, driven
Slide 18: Group Services
Group Services 2017 2018 Q3 Market overview Operational result (m€) Revenues EBITDA Operating Income Strong growth in international sales volume in Q3; West Africa, Middle East, India and Americas are main LfL +28.2% LfL +38.7% LfL +3.1% LfL -10.2% LfL +3.6% LfL +7.0% destinations contributing to
Slide 19: Contents
Contents Page Overview and key figures 3 Group Areas 12 Financial Report 20 Outlook 27 Appendix 30 Slide 19 – 2018 Third Quarter Results – 08 November 2018
Slide 20: Continuation of strong financial performance
Continuation of strong financial performance Group share of profit up by 12% in Q3 2018; EPS increases from 2.42 € to 2.72 € Improved financial result and lower taxes overcompensate weaker-than-expected RCOBD. Financial result Q3 2018 improved by 12% vs. Q3 2017 (+12 m€). Taxes decreased sig
Slide 21: Income Statement September 2018
Income Statement September 2018 m€ Sep 17 Sep 18 Change Q3 17 Q3 18 Change Revenue 13.004 13.375 3% 4.610 4.943 7% Result from joint ventures 141 151 7% 62 63 1% Result from current operations before 2.405 2.227 -7 % 1.058 1.039 -2 % depreciation and amortization (RCOBD) Depreciation and amortizatio
Slide 22: Cash flow statement September 2018
Cash flow statement September 2018 m€ Sep 17 Sep 18 Q3 17 Q3 18 Comments Cash flow 1,752 1,716 982 934 High level of business activity Changes in working capital -784 -980 -56 -126 reflected in the negative change Decrease in provisions through cash payments -261 -241 -90 -86 in Working Capital Ca
Slide 23: Free Cash Flow stable at roughly 1.2 bn€
Free Cash Flow stable at roughly 1.2 bn€ Usage of free cash flow (m€) L12M Sep 2016 1) L12M Sep 2017 L12M Sep 2018 1,131 1,174 1,166 410 391 86 244 347 297 317 213 544 59 377 186 FCF 2) Borrowing Growth CapEx Debt Payback Dividends HCAG Dividend to minorities -135 m€ 974 108 9.653 9.518 3.193 96 8.8
Slide 24: Group balance sheet
Group balance sheet Sep. 18 / Sep.17 m€ Sep. 17 Dec 17 (*) Sep. 18 Variance (m€) Variance (%) Assets Intangible assets 11,631 11,471 11,759 128 1% Property, plant and equipment 12,986 12,814 12,804 -181 -1 % Financial assets 2,264 2,181 2,229 -35 -2 % Fixed assets 26,880 26,466 26,793 -87 0% Deferre
Slide 25: We continue to earn a premium on cost of capital
We continue to earn a premium on cost of capital ROIC Development Comments 7.2% Risk-free interest rate 7.1% 7.1% 7.0% Q3 2018: 1.115% 7.0% Q3 2017: 1.348% 6.7% 6.6% 6.3% Risk premium HC Q3 2018: 5.5% Q3 2017: 5.5% 26,064 25,452 21,559 23,595 Tax rate Q3 2018: 25.9% Q3 2017: 27.4% 2015 2
Slide 26: Contents
Contents Page Overview and key figures 3 Group Areas 12 Financial Report 20 Outlook 27 Appendix 30 Slide 26 – 2018 Third Quarter Results – 08 November 2018
Slide 27: Revised Outlook 2018
Revised Outlook 2018 Metric Revised Outlook 2018 Increase in all business Volumes lines Low to mid single digit Operating EBITDA decline Net CapEx €bn 1.3 Maintenance €m 600 Expansion €m 700 High single to low double Energy cost per tonne of cement produced digit Slide 27 – 2018 Third Quarter Result
Slide 28: CO2 will increasingly influence production & investment decisions
CO2 will increasingly influence production & investment decisions 25 CO2 prices significantly increased since EU CO2 Emission last year driven by new regulations and 20 emissions trading schemes Allowances Price (€/t) 15 10 Consolidation in the markets Capacity closure, increased utilization 5
Slide 29: Contents
Contents Page Overview and key figures 3 Group Areas 12 Financial Report 20 Outlook 27 Appendix 30 Slide 29 – 2018 Third Quarter Results – 08 November 2018
Slide 30: Currency & Scope Impacts
Currency & Scope Impacts Cement Volume September Year to Date Q3 Revenues September Year to Date Q3 Cons. Decons. Curr. Cons. Decons. Curr. Cons. Decons. Curr. Cons. Decons. Curr. North America 82 -313 42 -151 0 North America 80 -78 -214 14 -37 -15 West & South Europe 1,246 -87 311 -24 0 West & Sout
Slide 31: Volume and price development (September YTD 2018 vs. 2017)
Volume and price development (September YTD 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 32: 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 33: Contact information and event calendar
Contact information and event calendar Date Event Contact Information 21 March 2019 Full Year Results Investor Relations Mr. Ozan Kacar 09 May 2019 Q1 Results & AGM Head of Investor Relations Phone: +49 (0) 6221 481 13925 30 July 2019 H1 Results 7 November 2019 Q3 Results Mr. Piotr Jelitto Phone: +4
Slide 34: 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