HeidelbergCement concludes the 2019 business year successfully
Revenue up by 4% to €18.9 billion; result from current operations before depreciation and amortisation increases by around 16% to €3.6 billion
Earnings per share excluding non-recurring effects rise by 23% to €6.40
Net debt significantly reduced by €1.2 billion to €7.1 billion
Premium on cost of capital earned
Dividend per share is to increase by 5% to €2.20
Annual General Meeting 2020 postponed
HeidelbergCement concluded the 2019 business year successfully: Group revenue, result from current operations before and after depreciation and amortisation, as well as earnings per share excluding non-recurring effects achieved new records. Thanks to the very good free cash flow, we reduced net debt significantly. In 2019, we were again able to earn a premium on our cost of capital.
“Although the environment was again challenging, we were able to improve numerous important key figures in the 2019 financial year. Especially our good profit for the financial year before non-recurring effects and the strong cash flow exceeded our expectations,” said Dr. Dominik von Achten, Chairman of the Managing Board of HeidelbergCement. “We made also good progress in the important area of climate protection. We are on a good way to reach our reduction targets for CO2 emissions by 2030.”
Results increased – premium on our cost of capital earned
In 2019, group revenue rose by 4.3% in comparison with the previous year to €18.9 (previous year: 18.1) billion (like-for-like +2.1%). The result from current operations before depreciation and amortisation increased by 15.5% to €3,580 (previous year: 3,100) million (like-for-like +2.5%). The result from current operations rose by 8.8% to €2,186 (previous year: 2,010) million (like-for-like +4.7%). Overall, the profit for the financial year amounted to €1,242 million (previous year: 1,286).
The profit relating to non-controlling interests rose by €8 million to €151 million (previous year:143). The Group share of profit therefore amounted to €1,091 million (previous year: 1,143). Earnings per share before non-recurring effects increased by 23% to €6.40 (previous year: 5.21).
ROIC (Return on Invested Capital) of the company was 6.9% for 2019 (previous year: 6.9%) and remained once more above the weighted average cost of capital (WACC) that are relevant for evaluating capital efficiency. WACC amounted to 6.6% in 2019 (previous year: 6.3). In 2019, HeidelbergCement earned once again a premium on its cost of capital.
Strong cash flow – net debt significantly reduced
In the 2019 business year, cash inflow from operating activities of continuing operations increased significantly by €695 million to €2,664 million (previous year: 1,969). “We have mainly used the generated liquidity to reduce net debt,” said Dr. Lorenz Näger, Chief Financial Officer of HeidelbergCement. Before accounting of lease liabilities amounting to around €1.3 billion, net debt declined by approximately €1.2 billion to €7.1 billion compared to the previous year. Dynamic gearing ratio declined to 2.3x. “At year-end, we had cash and cash equivalents as well as long-term approved credit lines of €6.5 billion. Even in times of crises, this ensures that we have a comfortable liquidity position, also after the repayment of bonds and liabilities maturing in 2020 in the amount of €2.2 billion,” said Dr. Lorenz Näger.
Increase in dividend to €2.20 per share proposed – Annual General Meeting 2020 postponed
In view of the positive development of our business and the growth of profit for the financial year before non-recurring effects, the Managing Board and Supervisory Board will propose to the Annual General Meeting an increase in the dividend from €2.10 per share to €2.20 per share. This corresponds to a rise of around 5%, i.e. a payout ratio of 40.0% of the Group share of profit. With the tenth consecutive dividend increase, the company continues its progressive dividend policy.
Due to the spread of the coronavirus, HeidelbergCement will not hold its ordinary Annual General Meeting as scheduled on 7 May 2020, but postpone it to a later date in 2020. The competent authorities of Baden-Württemberg have forbidden all events until 15 June 2020. The protection of the health of our shareholders and employees has highest priority for HeidelbergCement.
Climate protection and sustainability
In 2019, the company drove forward the implementation of its Sustainability Commitments 2030. The efforts focused on climate protection. By 2030, specific net CO2 emissions per tonne of cement shall be reduced by 30% compared with 1990. The reduction achieved in comparison with 1990 was around 20% in 2018 and was already around 22% in 2019. HeidelbergCement’s vision is to offer a CO2-neutral concrete by 2050 at the latest.
Outlook 2020
HeidelbergCement is globally well positioned for sustainable and profitable growth. However, there is significant uncertainty regarding the actual extent of the economic development. At the beginning of the year, the company expected a further rise in construction activity in 2020. The global development of sales volumes was positive in the first two months of the year. On this basis, the Group expected so far a slight increase in revenue and result from current operations in comparison with the previous year.
Meanwhile, frame conditions have changed rapidly due to the fast spread of the coronavirus. “The extensive measures to contain the spread of the virus require continuous adaption in the operational control of our business,” said Dr. Dominik von Achten. “We have to assess the situation day by day. At the moment, we are not able to predict how long the precautionary measures will last, and which impact is to be expected on the construction activities in each country. Against this background, a valid outlook on the 2020 business year is not possible at the moment.”
Group financial figures
Key financial figures | January-December | Q4 | ||||||
|---|---|---|---|---|---|---|---|---|
| €m | 2018 | 2019 | Vari-ance | Like-for- like1) | 2018 | 2019 | Vari-ance | Like-for- like1) |
| Sales volumes | ||||||||
| Cement (Mt) | 130 | 126 | -3% | -2% | 33 | 31 | -4% | -3% |
| Aggregates (Mt) | 309 | 308 | 0% | -1% | 76 | 75 | -2% | -3% |
| Ready-mixed concrete (Mm3) | 49 | 51 | 3% | 1% | 13 | 13 | -3% | -5% |
| Asphalt (Mt) | 10 | 11 | 10% | 0% | 2 | 3 | 18% | 8% |
| Income statement | ||||||||
| Revenue | 18,075 | 18,851 | 4% | 2% | 4,700 | 4,578 | -3% | -5% |
| Result from current operations before depreciation and amortisation (RCOBD)2) | 3,100 | 3,580 | 15% | 2% | 858 | 968 | 13% | 0% |
| in % of revenue | 17.2% | 19.0% | 18.3% | 21.2% | ||||
| Result from current operations (RCO)2) | 2,010 | 2,186 | 9% | 5% | 584 | 603 | 3% | -1% |
| Profit for the financial year | 1,286 | 1,242 | -3% | 270 | 376 | 39% | ||
| Group share of profit | 1,143 | 1,091 | -5% | 228 | 339 | 48% | ||
| Earnings per share in € (IAS 33) 3) | 5.76 | 5.50 | -5% | 1.15 | 1.71 | 48% | ||
| Dividend payment 4) | 2.10 | 2.20 | 5% | |||||
| Statement of cash flows and balance sheet | ||||||||
| Cash flow from operating activities | 1,968 | 2,664 | 695 | 1,475 | 1,682 | 207 | ||
| Cash flow from investing activities | -1,134 | -906 | 228 | -287 | -398 | -111 | ||
| Net debt | 8,323 | 8,410 | 87 | |||||
| Gearing | 49.5% | 45.5% | ||||||
1) Adjusted for currency and consolidation effects as well as adjustments for IFRS 16 Leases
2) 2018 amounts were restated
3) Attributable to the shareholders of HeidelbergCement AG
4) Recommendation to the Annual General Meeting