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MarketScreener Homepage  >  Equities  >  Xetra  >  HeidelbergCement AG    HEI   DE0006047004

HEIDELBERGCEMENT AG

(HEI)
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HeidelbergCement : Q3 2020 Presentation

11/05/2020 | 06:07am EST

Q3 2020 Trading Update

5 November 2020

Dr. Dominik von Achten - Group CEO Dr. Lorenz Näger - Group CFO

Key Messages Q3 2020

  • Strong operational performance -

LfL EBITDA increases by 17% with nearly flat revenue, leading to significant margin improvement.

  • COPE cash savings plan clearly pays back -

721 million EUR cash savings achieved in the first 9 months.

  • Excellent financial performance -

LTM FCF up by almost 50% to 2.3b billion EUR.

Net debt reduced by 1.8 bn€ year over year.

  • Outlook -

Full year 2020 EBITDA expected to be above previous year. Year-end 2020 leverage ratio expected at ≤ 2.0x.

Q 3 2 0 2 0 O V E R V I E W

Significant margin improvement with nearly flat revenue

Revenue (m€)

Operating EBITDA (m€)

Operating EBITDA Margin

Operating EBIT (RCO) (m€)

Lfl: -7%

Lfl: +6%

Lfl: +10%

-8%

+5%

+398 bps

+249 bps

Lfl: +25%

+8%

14.273

2.612 2.731

27.2%

1.715

13.140

Lfl: 17%

23.2%

20.8%

+21%

1.583

Lfl: -1%

+13%

-3%

18.3%

1.005

1.174 1.328

829

5.061 4.886

Q3

9M

Q3

9M

Q3

9M

Q3

9M

2019 2020

3

Q3 2020 Trading Update | 5 November 2020

Q 3 2 0 2 0 O V E R V I E W

Demand coming back after a very difficult Q2

Volumes

Q3 19

Q3 20

Change

LfL

Cement sales volume (mt)

33.5

33.8

0.2

0.7%

Aggregates sales volume (mt)

87.7

86.1

-1.6

-0.9%

Ready mix sales volume (mt)

13.6

12.7

-0.8

-5.7%

Revenue (mEUR)

Q3 19

Q3 20

Change

LfL

North America

1,487

1,377

-110

-4.1%

Western & Southern Europe

1,312

1,375

63

4.9%

North & Eastern Europe - C.A.

796

792

-4

2.9%

Asia Pacific

867

793

-74

-4.3%

Africa - Eastern Med. Basin

424

455

31

12.8%

Operating EBITDA (mEUR)

Q3 19

Q3 20

Change

LfL

North America

408

415

8

4.8%

Western & Southern Europe

251

332

81

31.9%

North & Eastern Europe - C.A.

230

246

16

11.4%

Asia Pacific

191

211

20

16.1%

Africa - Eastern Med. Basin

106

130

24

29.2%

North America

  • EBITDA growth and margin improvement achieved despite continuing pressure on demand.
  • NAM specific action plan delivers the first positive results.

Europe

  • Solid pricing and saving initiatives lead to significant margin improvement in the quarter.
  • Demand coming back in key markets.

Asia-Pacific

  • Margin improvement through COPE savings and tailwind from energy cost inflation despite volumes being under pressure in key markets.

Africa - Eastern Mediterranean

  • Solid demand and pricing supported further with cost savings lead to another strong quarterly result.

4

Q3 2020 Trading Update | 5 November 2020

Q 3 2 0 2 0 O V E R V I E W

Significant growth driven by positive pricing and cost savings

Q3 Operating EBITDA Bridge (m€)

+16.5%

188

1,328

0

1,328

1,174

-34

1,140

0

Q3 2019 EBITDA

Currency

Q3 2019

Net volume

Price over cost 1)

Q3 2020

Scope

Q3 2020 EBITDA

LfL EBITDA

LfL EBITDA

1) Includes COPE cost savings of 101m€

5

Q3 2020 Trading Update | 5 November 2020

Q 3 2 0 2 0 O V E R V I E W

Strong Q3 drives good year to date performance

9M Operating EBITDA Bridge (m€)

+6.1%

392

2,727

5

2,731

2,612

-41

2,570

-236

9M 2019 EBITDA

Currency

9M 2019

Net volume

Price over cost 1)

9M 2020

Scope

9M 2020 EBITDA

LfL EBITDA

LfL EBITDA

1) Includes COPE cost savings of 283m€

6

Q3 2020 Trading Update | 5 November 2020

Q 3 2 0 2 0 O V E R V I E W

COPE action plan on track despite much higher revenue than anticipated

COPE cash savings as of September 2020 (m€)

1,000

126

721

312

283

Fixed cost

CapEx

Other cash

Total cash 2020 Target

savings

saving

7

Q3 2020 Trading Update | 5 November 2020

Proactive and successfully implimented action plan

  • Cope action plan already initiated in February
  • Minimization of all non-essential expenses and reduction of staff costs clearly visible on results
  • Maintenance CapEx only for business critical projects
  • Suspension of tax prepayments and strict receivables policy

Q 3 2 0 2 0 O V E R V I E W

Significant EBITDA margin improvement in all regions

North America

Western & Southern Europe

North & Eastern Europe - Central Asia

+277 bps

27.4%

30.2%

Q3 2019

Q3 2020

+502 bps

19.2%

24.2%

Q3 2019

Q3 2020

+222 bps

28.9%

31.1%

Q3 2019

Q3 2020

Asia Pacific

Africa-Eastern Mediterranean Basin

+456 bps

22.0%

26.5%

Q3 2019

Q3 2020

+361 bps

25.0%

28.6%

Q3 2019

Q3 2020

8

Q3 2020 Trading Update | 5 November 2020

Q 3 2 0 2 0 O V E R V I E W

Covid-19 impact clearly mitigated by COPE action plan and well-balanced portfolio

%

Year to date LfL EBITDA growth in % (vs. prior year)

Monthly LfL EBITDA growth in % (vs. prior year)

Q1

+2.4%

H1

-2.2%

9M

+6.1%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

9

Q3 2020 Trading Update | 5 November 2020

Key Financial Messages September 2020

  • 2.3 bn€ free cash flow over the last twelve months,
    up by 0.8 bn€ (cash conversion rate 63%)
  • Strong cash generation shows ability of the company to manage costs & spending very flexibly and react quickly to external shocks
  • Net debt reduced by 1.8 bn€ year over year: year-end 2020 leverage ratio expected at ≤ 2.0x
  • S&P upgraded rating outlook to BBB- positive
  • Early repayment of Jan '21 bond (750 m EUR) in
    Q4

F I N A N C I A L R E S U L T

Strong free cashflow generation continues

Free cash flow1) generation (m€)

Cash conversion rate: 63%

3,700

322

-290

-338

-842

2,315

-237

+758

(49%)

1,557

Sep 2020

Interest

Tax

Change in

CapEx Net

Other

FCF

FCF Generation

EBITDA

payment

payment

working

Generation

2019 Sep LTM

capital

LTM

2020 Sep LTM

  1. Free cash flow before repayment of lease liabilities (292 m€ LTM September 2020; 202 m€ LTM September 2019) = operating cash flow minus Capex Net. FCF definition based on new calculation method as communicated during CMD.

11 Q3 2020 Trading Update | 5 November 2020

F I N A N C I A L R E S U L T

Significant net debt reduction driven by strong cash generation and disciplined CapEx

Net debt development (m€)

-1,804 m€

9,695

299

198

7,891

14

-2,315

Net debt

FCF

Net growth

Dividends

Currency / other

Net debt

Sep 2019

CapEx1)

Sep 2020

1) Net growth capex incl. capital decrease in non-controlling interests.

12 Q3 2020 Trading Update | 5 November 2020

SUSTAINABILITY

  • Strong commitment to ESG HeidelbergCement maintains an AA rating (category of Leader) in the MSCI ESG Rating
  • Continued progress in leveraging our sustainable/ low-carbon product portfolio i.tech® 3D: HeidelbergCement's Innovative concrete for Germany's first printed residential house
  • CCS project in Norway as a major step towards our goal of carbon neutral concrete Norwegian Parliament expected to give the final approval to Norcem carbon capture project in December 2020

S U S T A I N A B I L T Y

HeidelbergCement with an AA MSCI ESG rating for the fifth time in a row

MSCI's ESG rating scorecard (as of September 21, 2020)

Industry average

HC Score

  • In September 2020, HeidelbergCement achieved an AA rating in the MSCI ESG Rating for the fifth time in a row
  • AA rating puts HeidelbergCement in the category of Leader in the area of ESG indicating resilience to disruptions arising from ESG events

Above average scoring in all ESG rating criteria

Our goal is to reach a AAA rating in the near term

Health & Safety

Labor Management

Carbon emissions

Toxic Emissions & Waste

Corporate governance

Biodiversity & Land Use

14 Q3 2020 Trading Update | 5 November 2020

S U S T A I N A B I L T Y

i.tech® 3D: Innovative concrete for Germany's first printed residential house

3D-printed Beckum house, Germany

Product description:

Innovative concrete i.tech® 3D developed for 3D extrusion

printing with rapid load-bearing capacity

Project details:

Construction of a 160m2 two-storey detached house in

Beckum, NRW, Germany; Project partners: PERI GmbH,

COBOD

Passed all official approval processes in recent weeks and

months!

Advantages:

Less concrete leading to less CO2 emissions/element

Higher rapidity, productivity & lower labor costs1)

Flexibility: usable for complex shapes & different 3D

printing technologies

15

Q3 2020 Trading Update | 5 November 2020

1) Compared to traditional construction

"Beyond 2020" Targets

EBITDA margin

+300 bps

vs 2019

Sustainability

<525 kg

CO2/t cementitious

ROIC

Clearly

Leverage ratio

>8%

1.5-2.0x

Digital transformation

CO2 reduction

>75% of global sales volumes

target accelerated

by 5 years:

covered by HConnect

-30% vs 1990

Key Messages Q3 2020

  • Strong operational performance -

LfL EBITDA increases by 17% with nearly flat revenue, leading to significant margin improvement.

  • COPE cash savings plan clearly pays back -

721 million EUR cash savings achieved in the first 9 months.

  • Excellent financial performance -

LTM FCF up by almost 50% to 2.3b billion EUR.

Net debt reduced by 1.8 bn€ year over year.

  • Outlook -

Full year 2020 EBITDA expected to be above previous year. Year-end 2020 leverage ratio expected at ≤ 2.0x.

Appendix

A P P E N D I X

Sales volumes

Sales Volumes

Cement ('000 t)

Aggregates ('000 t)

Ready Mix ('000 m3)

Asphalt ('000 t)

QUARTER

Q3 19

Q3 20

Change

LfL

Q3 19

Q3 20

Change

LfL

Q3 19

Q3 20

Change

LfL

Q3 19

Q3 20

Change

LfL

North America

4,786

4,505

-281

-5.9%

40,421

38,596

-1,824

-4.5%

2,253

2,261

8

-0.1%

1,910

1,913

4

-2.8%

West / South Europe

7,596

7,814

218

2.9%

21,222

21,148

-74

-0.3%

4,754

4,667

-88

-1.7%

950

1,053

103

10.9%

North / East Europe

7,041

6,989

-52

-0.7%

13,758

14,484

726

6.9%

1,872

1,592

-280

-12.9%

0

0

0

0.0%

Asia Pacific

9,099

8,801

-298

-3.9%

10,144

9,947

-197

3.8%

3,261

2,821

-440

-13.5%

571

707

136

23.7%

Africa / Med. Basin

4,831

5,518

687

15.3%

2,191

1,876

-315

-14.4%

1,301

1,331

29

2.2%

135

71

-65

-47.8%

Group Service

168

136

-32

-18.9%

0

0

0

0.0%

114

71

-43

-38.1%

0

0

0

0.0%

HC GROUP

33,521

33,764

243

0.7%

87,677

86,052

-1,625

-0.9%

13,556

12,742

-814

-5.7%

3,566

3,744

178

3.4%

Sales Volumes

Cement ('000 t)

Aggregates ('000 t)

Ready Mix ('000 m3)

Asphalt ('000 t)

YEAR TO DATE

Sep 19

Sep 20

Change

LfL

Sep 19

Sep 20

Change

LfL

Sep 19

Sep 20

Change

LfL

Sep 19

Sep 20

Change

LfL

North America

12,260

11,612

-647

-5.3%

97,936

94,821

-3,115

-3.2%

5,826

5,861

35

0.2%

3,820

3,729

-92

-5.4%

West / South Europe

22,667

20,705

-1,962

-7.4%

63,499

57,762

-5,737

-10.0%

13,948

12,577

-1,371

-10.5%

2,682

2,506

-177

-6.6%

North / East Europe

18,252

17,899

-353

-0.3%

35,565

36,379

814

3.5%

5,030

4,433

-596

-9.8%

0

0

0

0.0%

Asia Pacific

26,171

23,816

-2,354

-9.4%

29,806

26,461

-3,345

-5.2%

8,869

7,745

-1,124

-13.4%

1,555

1,584

29

1.8%

Africa / Med. Basin

14,678

15,665

987

7.9%

6,633

5,419

-1,214

-18.3%

3,903

3,592

-311

-8.0%

333

269

-65

-19.5%

Group Service

519

414

-105

-20.2%

0

0

0

0.0%

375

237

-138

-36.8%

0

0

0

0.0%

HC GROUP

94,546

90,112

-4,434

-4.0%

233,282

220,843

-12,439

-4.6%

37,951

34,446

-3,505

-9.5%

8,391

8,087

-305

-5.0%

19 Q3 2020 Trading Update | 5 November 2020

A P P E N D I X

Operating result

Operating Result

Revenues (m€)

Operating EBITDA (m€)

Operating EBIT / RCO (m€)

EBITDA Margin

QUARTER

Q3 19

Q3 20

Change

LfL

Q3 19

Q3 20

Change

LfL

Q3 19

Q3 20

Change

LfL

Q3 19

Q3 20

Change

LfL

North America

1,487

1,377

-7.4%

-4.1%

408

415

2.0%

4.8%

308

329

6.9%

9.2%

27.4%

30.2%

+277 bps

+257 bps

West / South Europe

1,312

1,375

4.8%

4.9%

251

332

32.3%

31.9%

151

236

56.7%

56.2%

19.2%

24.2%

+502 bps

+495 bps

North / East Europe

796

792

-0.5%

2.9%

230

246

7.1%

11.4%

180

199

10.1%

14.5%

28.9%

31.1%

+222 bps

+237 bps

Asia Pacific

867

793

-8.5%

-4.3%

191

211

10.4%

16.1%

130

152

17.1%

22.5%

22.0%

26.5%

+456 bps

+471 bps

Africa / Med. Basin

424

455

7.3%

12.8%

106

130

22.9%

29.2%

79

104

31.0%

38.4%

25.0%

28.6%

+361 bps

+362 bps

Group Service

308

260

-15.6%

-15.3%

1

10

617.2%

683.8%

0

9

4062.8%

5862.5%

0.4%

3.7%

+323 bps

+327 bps

HC GROUP

5,061

4,886

-3.5%

-0.7%

1,174

1,328

13.1%

16.5%

829

1,005

21.2%

24.7%

23.2%

27.2%

+398 bps

+402 bps

Operating Result

Revenues (m€)

Operating EBITDA (m€)

Operating EBIT / RCO (m€)

EBITDA Margin

YEAR TO DATE

Sep 19

Sep 20

Change

LfL

Sep 19

Sep 20

Change

LfL

Sep 19

Sep 20

Change

LfL

Sep 19

Sep 20

Change

LfL

North America

3,614

3,513

-2.8%

-2.9%

750

755

0.7%

1.2%

476

476

-0.1%

0.7%

20.8%

21.5%

+74 bps

+87 bps

West / South Europe

3,878

3,662

-5.6%

-5.5%

579

638

10.2%

9.2%

268

340

26.6%

24.7%

14.9%

17.4%

+249 bps

+233 bps

North / East Europe

2,170

2,141

-1.3%

2.6%

489

540

10.5%

13.3%

338

396

17.0%

19.9%

22.5%

25.2%

+269 bps

+236 bps

Asia Pacific

2,486

2,197

-11.6%

-9.2%

539

490

-9.0%

-5.7%

351

302

-14.0%

-10.7%

21.7%

22.3%

+65 bps

+83 bps

Africa / Med. Basin

1,261

1,308

3.8%

4.5%

290

322

11.2%

14.1%

207

241

16.0%

20.7%

23.0%

24.6%

+164 bps

+206 bps

Group Service

1,325

759

-42.7%

-42.7%

18

19

8.6%

8.9%

14

16

11.9%

12.0%

1.3%

2.5%

+119 bps

+120 bps

HC GROUP

14,273

13,140

-7.9%

-6.9%

2,612

2,731

4.6%

6.1%

1,583

1,715

8.4%

10.3%

18.3%

20.8%

+249 bps

+253 bps

20 Q3 2020 Trading Update | 5 November 2020

A P P E N D I X

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

-60

0

-11

-1

-6

West / South Europe

0

0

-7

0

0

-1

1

0

1

0

North / East Europe

0

-223

-39

0

-1

-26

0

-9

0

-7

Asia Pacific

53

-582

0

0

9

-48

1

-10

1

-6

Africa / Med. Basin

-52

0

0

0

-4

-17

-1

-4

-1

-3

Group Service

0

0

0

0

0

-1

0

0

0

0

HC GROUP

1

-803

-35

57

12

-152

0

-34

0

-23

Scope & Currency

Scope Impact on Volumes

Revenue

Operating EBITDA

Operating EBIT (RCO)

YEAR TO DATE

CEM

AGG

RMC

ASP

Scope

Currency

Scope

Currency

Scope

Currency

North America

0

6

21

115

16

-14

-1

-3

-2

-2

West / South Europe

-294

596

96

0

-2

-2

6

0

5

0

North / East Europe

-299

-424

-102

0

-22

-61

4

-16

4

-11

Asia Pacific

111

-1,785

68

0

18

-87

0

-19

-1

-12

Africa / Med. Basin

-168

0

0

0

-15

5

-4

-4

-3

-5

Group Service

0

0

0

0

0

0

0

0

0

0

HC GROUP

-651

-1,607

84

115

-4

-159

5

-41

3

-31

21 Q3 2020 Trading Update | 5 November 2020

F I N A N C I A L C A L E N D A R

Contact information and financial reporting calendar

Date

Event

18

March 2021

Full Year Results

6 May 2021

AGM & First Quarter Results

29

July 2021

Half Year Results

4 November 2021

Third Quarter Results

Contact Information

Christoph Beumelburg

Director Group Communication & IR

Phone: +49 (0) 6221 481 13249

christoph.beumelburg@heidelbergcement.com

Ozan Kacar

Head of Investor Relations

Phone: +49 (0) 6221 481 13925

ozan.kacar@heidelbergcement.com

Samuel Jacob

IR Manager

Phone: +49 (0) 6221 481 39670

samuel.jacob@heidelbergcement.com

22 Q3 2020 Trading Update | 5 November 2020

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 historical facts, related to future, not past, events. They include statements about our believes and expectations and the assumptions underlying them. These statements and information are based on plans, estimates, projections as they are currently available to the management of HeidelbergCement. Forward-looking statements and information therefore speak only as of the date they are made, and we undertake no obligation to update publicly any of them in light of new information or future events.

By their very nature, forward-looking statements and information are subject to certain risks and uncertainties. A variety of factors, many of which are beyond HeidelbergCement's control, could cause actual results to defer materially from those that may be expressed or implied by such forward-looking statement or information. For HeidelbergCement particular uncertainties arise, among others, from changes in general economic and business conditions in Germany, in Europe, in the United States and elsewhere from which we derive a substantial portion of our revenues and in which we hold a substantial portion of our assets; the possibility that prices will decline as result of continued adverse market conditions to a greater extent than currently anticipated by HeidelbergCement's management; developments in the financial markets, including fluctuations in interest and exchange rates, commodity and equity prices, debt prices (credit spreads) and financial assets generally; continued volatility and a further deterioration of capital markets; a worsening in the conditions of the

credit business and, in particular, additional uncertainties arising out of the subprime, financial market and liquidity crises; the outcome of pending investigations and legal proceedings and actions resulting from the findings of these investigations; as well as various other factors.

More detailed information about certain of the risk factors affecting HeidelbergCement is contained throughout this presentation and in

HeidelbergCement's financial reports, which are available on the HeidelbergCement

website, www.heidelbergcement.com. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement or information as expected, anticipated, intended, planned, believed, sought, estimated or projected.

In addition to figures prepared in accordance with IFRS, HeidelbergCement also presents alternative performance measures, including, among others Operating EBITDA, EBITDA margin, Adjusted EPS, free cash flow and net debt. These alternative performance measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with IFRS. Alternative performance measures are not subject to IFRS or any other generally accepted accounting principles. Other companies may define these terms in different ways.

"Operating EBITDA" definition included in this presentation represents "Result from current operations before depreciation and amortization (RCOBD)" and "Operating Income" represents "Result from current operations (RCO)" lines in the annual and interim reports.

Disclaimer

HeidelbergCement AG published this content on 05 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 November 2020 11:06:03 UTC


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2020MARKET CHATTER : Germany's HeidelbergCement Plans to Sell $1.5 Billion Worth of ..
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2020HEIDELBERGCEMENT AG : Receives a Buy rating from Jefferies
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2020HEIDELBERGCEMENT : to install the world's first full-scale CCS facility in a cem..
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2020HEIDELBERGCEMENT AG : Credit Suisse reiterates its Neutral rating
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Financials
Sales 2020 17 567 M 21 212 M 21 212 M
Net income 2020 -2 153 M -2 600 M -2 600 M
Net Debt 2020 6 997 M 8 448 M 8 448 M
P/E ratio 2020 -6,21x
Yield 2020 2,66%
Capitalization 13 250 M 16 020 M 16 000 M
EV / Sales 2020 1,15x
EV / Sales 2021 1,07x
Nbr of Employees 53 882
Free-Float 74,5%
Chart HEIDELBERGCEMENT AG
Duration : Period :
HeidelbergCement AG Technical Analysis Chart | HEI | DE0006047004 | MarketScreener
Technical analysis trends HEIDELBERGCEMENT AG
Short TermMid-TermLong Term
TrendsBullishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 24
Average target price 71,51 €
Last Close Price 66,78 €
Spread / Highest target 27,3%
Spread / Average Target 7,09%
Spread / Lowest Target -17,6%
EPS Revisions
Managers and Directors
NameTitle
Ralph Dominik von Achten Chairman-Management Board
Fritz-Jürgen Heckmann Chairman-Supervisory Board
Lorenz Näger CFO, Deputy Chairman-Management Board
Dennis Lentz Director-Group Information Technology
Wolfgang Dienemann Director-Global Research & Development
Sector and Competitors