HeidelbergCement saw its share price rise sharply after the world’s third-largest cement maker almost doubled its net profit in the third quarter.
A mixture of higher demand from the US, Western Europe and Asia as well as ongoing cost cuts lifted net profits at the German producer of cement, aggregates and concrete 81 per cent higher year-on-year to €386m ($550m) from July to September.
The results by far exceeded the €262m estimates of analysts polled by Reuters and sent the group’s share price up by almost 7 per cent to €40.12 in midday trading.
HeidelbergCement had a bad start to the year with a loss in the first three months, but it returned to profit in the second quarter.
Its results came only a week after Cemex, its Mexican rival, posted a quarterly loss on the back of weak cement and concrete revenues in the US and Europe.
But HeidelbergCement said its profits had been buoyed by stronger than expected aggregates demand from state-sponsored infrastructure projects in the US and Western Europe, as well as continued demand growth for cement in Asia and Africa.
The German group, which is the world’s number one in aggregate and number three in cement behind France’s Lafarge and Swiss Holcim, has been pushing to reduce its dependence on the developed markets of the US and Europe in the past two years.
Around a quarter of the group’s overall revenues come from the US and Canada, and another third from Western Europe.
It said it was aiming to lift the share of its cement production capacity in emerging markets from currently 58 per cent to 67 per cent in the long term.
HeidelbergCement’s revenues grew by 12.6 per cent to €3.4bn in the third quarter.
Bernd Scheifele, chief executive, said the company aimed to profit to an “above-average degree” from the economic upturn this year and in 2011.
But he warned that there were still risk factors such as the high unemployment rate in the US and austerity measures in several countries.
“This is why we … adhere to our target to save €300m in costs in the year 2010,” he said, adding that the group’s unchanged priority was to further reduce debt.
By the end of September, the group cut down its net debt quarter-on-quarter by another €400 to €8.65bn.
HeidelbergCement embarked on the expensive acquisition of UK rival Hanson three years ago, a move that left the group with €14.7bn in net debt.
It has significantly reduced this debt load in the past few years by selling subsidiaries, raising equity and with the help of its strong cash flow.
HeidelbergCement ran into refinancing trouble in the past year, after the industrial empire of late Adolf Merckle, its largest shareholder, collapsed at the end of 2008.
But a large share placement and a push into the bond market quickly brought the group back on track.
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