The building materials manufacturer HeidelbergCement is feeling the corona crisis.
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“The current development in the construction industry is highly dynamic,” said the new CEO Dominik von Acht on Thursday, according to a message in Heidelberg. Individual countries would have relaxed the protective measures, other countries would continue to pursue a restrictive policy. Therefore, an outlook for the year is still difficult.
However, due to the production stops in many countries, HeidelbergCement expects negative effects on sales and earnings in the current year.
HeidelbergCement originally wanted to increase sales and operating profit slightly in 2020 compared to the previous year. In March, the DAX Group withdrew its targets for 2020 upon submission of the 2019 figures.
The development in the second half of the year will be a decisive indicator of how quickly and sustainably the construction industry will recover to the pre-crisis level, it said. HeidelbergCement should benefit from government infrastructure and other economic stimulus programs in individual core markets in the medium term.
In the first quarter, sales fell seven percent year-on-year to EUR 3.93 billion. In addition to lower sales, HeidelbergCement justified this with a decline in the trading business.
Until mid-March, global construction activity was only slightly affected by the effects of the corona pandemic, so HeidelbergCement was even able to increase the result compared to the previous year, said von Acht. Adjusted earnings before interest, taxes, depreciation and amortization rose three percent to EUR 405 million in the first quarter. The company performed significantly better than expected. The group initially did not provide any information on the bottom line.
HeidelbergCement launched a new savings program at the end of February due to the Corona crisis. For example, the company plans to cut spending by one billion euros with fewer staff costs, voluntary management salary cuts, restrictions on investments and lower tax payments. HeidelbergCement currently has cash and cash equivalents of around EUR 5.7 billion, said CFO Lorenz Näger according to the announcement.
In addition, HeidelbergCement plans to distribute significantly less to shareholders. The Management Board and the Supervisory Board want to propose a dividend of 60 cents per share for 2019 to the Annual General Meeting, which is due to take place online on June 4. The original proposal was 2.20 euros. This left HeidelbergCement 317 million euros more in cash. As soon as the Corona crisis has been overcome, the company wants to return to the previous dividend policy.
This is how the HeidelbergCement share reacts
After there were still profits shortly after the start of trading, the HeidelbergCement share is now turning negative. Via XETRA, the paper is now 0.84 percent lower at EUR 41.37.
“HeidelbergCement had a surprisingly good quarter,” wrote expert Robert Gardiner from the Irish analysis company Davy. He pointed out that a better-than-expected price environment and lower costs could have offset some of the falling volumes. This helps, but the building material manufacturer must now focus on reducing costs and keeping liquid funds. It would make a lot of sense, among other things, to cut the dividend.
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HEIDELBERG (dpa AFX)
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