HeidelbergCement has identified five assets to sell in a review of its business and has had a good start to 2021, its chief executive told Reuters, as the world’s No.2 cement maker enters the next phase of its plan to boost margins.
“We’re now shifting gears. And that’s happening faster than we originally thought,” Dominik von Achten, who took the helm a year ago, said in his first interview with international media.
Von Achten said the first of the sales, which vary in size, were expected in the first half of the year. He declined to say which countries were affected out of the more than 50 in which the firm operates, nor how much it hoped to raise.
Brokerage Main first has estimated the value of the group’s weak assets alone is up to 2.5 billion euros ($3.0 billion).
“There are no sacred cows. Everything was on the table,” von Achten said of the review, adding there were some “rock-solid” markets that would not be exited, citing Northern Europe as an example.
Asked about Indonesia, which Berenberg analysts have named as a disposal candidate, von Achten said: “Indonesia, too, is an important market for us, no doubt.” HeidelbergCement owns a 51% stake in Indocement.
The German company, which is active in Europe, Asia and the Americas, has in the past said its North American business was underperforming, leading it to launch a margin improvement plan that von Achten said was on track.
He said the group was focused on raising the productivity of underperforming assets – which could range from ready-mix concrete plants to cement factories – or exiting them.
HeidelbergCement, along with rivals such as Switzerland’s LafargeHolcim, has quickly recovered from the coronavirus crisis that ground construction activity around the world to a near halt last year.
Von Achten said the company now had a handle on the situation, including mass testing at factories to ensure workers’ safety, and he did not expect a big impact on sites.
“We’ve reached calmer waters,” he said, adding the group was well on track to meet its 2020 targets, including higher core profit, a leverage ratio of less than 2.0 times as well as savings of around 1 billion euros.
He also said the group had made a major step towards its mid-term targets of a core profit margin of 22% and a return on invested capital of clearly more than 8% by 2025.
“With regard to the market I am now more optimistic than I was before Christmas,” he said, adding HeidelbergCement, which is due to report preliminary 2020 results on Feb. 23, had made a good start to the year, even though visibility on future prospects remained low.
“We’re largely done growing muscle ahead of time, we’re fit for a marathon again.”
Source: Reuters.com