In its 2020 first quarter report, HeidelbergCement says it expects to weather the economic downturn caused by the COVID-19 pandemic.
Highlights of the report include:
- Strong first quarter 2020 – result *) increases by 4% despite decline in revenue
- 2020 outlook uncertain – negative impact expected on revenue and result
- €1 billion cash savings – COVID-19 action plan COPE initiated in February
- Solid financial position – €5.7 billion of liquidity
- Annual General Meeting on 4 June 2020 – dividend reduction to €0.60 per share
- Long-term prospects favourable – government stimulus to support the sector
“HeidelbergCement has made a good start to 2020. Until mid-March, construction activity worldwide was only slightly impaired by the effects of the coronavirus pandemic, and our results increased in comparison with the previous year," says Dominik von Achten, chairman of the managing board of HeidelbergCement.
From mid-March, however, sales volumes were significantly impaired by the effects of the coronavirus pandemic, such as state-imposed production downtimes and construction stoppages on major infrastructure projects.
During the first quarter of 2020, total cement and clinker sales volumes decreased by 3% to 27.7 million tonnes (previous year: 28.6). Deliveries of aggregates declined by 4% to 60.1 million tonnes (previous year: 62.9), and ready-mixed concrete sales volumes fell by 6% to 10.7 million cubic metres (previous year: 11.3). At 1.8 million tonnes (previous year: 1.8), asphalt sales volumes were 4% below the previous year’s level.
HeidelbergCement says it's globally well positioned, in terms of the way it is coping with the immediate effects of the global coronavirus pandemic as well as its prospects for sustainable and profitable growth. At an early stage, the company says it took all the necessary measures to cushion the impact of the decline in construction activity on its revenue.
The full effect of the crisis on the company results for 2020 cannot be estimated yet, it says. In mid-March, when the previous year’s results were presented, HeidelbergCement had already withdrawn its original outlook for 2020. Because of the significant decline in construction activity in many countries from mid-March due to stipulated production downtimes, the company expects a negative impact on revenue and results.
The development in the second half of the year will be a crucial indicator of how quickly and sustainably the construction industry recovers to pre-crisis level, it says. The Group anticipates that in individual core markets, construction activities are likely to benefit in the medium term from infrastructure and other economic stimulus programmes launched by governments.
“The current development in the construction industry is highly dynamic,” says von Achten. “Some countries have relaxed the protective measures a little, while others are continuing to pursue very restrictive policies. It therefore remains difficult to provide an outlook for the year. However, our measures from the COPE action plan are already proving highly effective. We will weather the crisis very well.”
The full report is here.