Heidelberg Mterials S/Adr

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the Heidelberg Materials Third Quarter 2023 results. Throughout today's co-recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, please press a star followed by one on your telephone keypad. Press the star key followed by zero for operator assistance. I would now like to turn the conference over to Christoph Beumelburg. Please go ahead.

Thank you, operator. Good morning, everyone. Welcome to our analyst and investor call on the results of the third quarter. As you know, on the 19th of October, we had already pre-released our headline numbers. As you've seen with the release today, these numbers have not changed. So we will use the call today to shed some further color on the regional development progress we made on financials and sustainability, as well as remind you on our capital allocation policy. Dominic and Reni will go through some prepared remarks before we start with the Q&A. So over to you, Dominic.

Great. Thanks a lot. And also a warm welcome from my side and Renee to this Q3 call. Thanks for joining. As Chris said, we have basically released the figures early as they were, from our perspective, very strong. and deviating positively from the consensus. That's why we have gone ad hoc. You see that revenues up 2%, EBITDA is up 25%, RCO even up 33%. What I think is a bit new versus the ad hoc is the margin development, and we'll take you through the margin development for the group and also for the region. Free cash flow, very good, around 2 billion. René will go through the details. Our share buyback program has been done on Tuesday this week. So we delivered exactly what we promised, two and a half years, one billion in three tranches. The first two tranches have been canceled. We may continue to make very good progress, not only on CO2 reduction, but also on the CCUS and other CO2 reducing projects. So I think the pipeline is really full and we get good traction with those projects. And then last but not least, we have upgraded our guidance in the ad hoc. So it's now 2.85 to 3 billion. And the ROIC, we are even taking up now. That's a change to the ad hoc and an update to the ad hoc where we said it's going to be around 9%. So now we go clearly above 9%. And the same is true for leverage. We said it's going to be between 1.5 and 2%. And now we guide that it's going to be below 1.5%. I think the next page, on page four, I only would like to go, sorry, three, no, four. Four, three, sorry. Three, I would only go to the operating margin. You see the other figures you know, but the operating margin you see jumps up to 24.8 now. That's not only above last year's Q3, but also above the very good Q3 in 2021. And I'll go through the next page where you see the same development for the first nine months. And you see there we are still a little bit behind the Q3 or the nine months 2021. And that indicates that the margin development gets even better traction as we go along during the year. That's important. that the positive margin development has clearly accelerated during the nine months more towards the end. And from our perspective, this looks very promising to continue. If you go to the next page, five, you see the driver. of the 270 million improvement on EBIT, so clearly above 1 billion for the Q3. That's driven by volume decline, mainly coming from residential, partially commercial, outbalanced by infrastructure and some industrial projects, but carried very much by positive price over cost, and that is clearly positive in all areas we operate. important points, so there's not one that's moving to the ceiling and the others all lagging behind. It's really carried by all five cylinders, and that's moving in the right direction. That's also true for page six. If you go to the full year, pretty similar picture, 69 million up to almost 2.3 billion now for the first nine months of the year. What you may be more interested about, because that's going beyond, to Chris's point, the ad hoc discussion, is the area perspective. So let's dive into North America. We've discussed on these calls for the last 12 to 18 months a little bit our performance in North America. And I have to say Q3, we are now quite satisfied. We are never fully satisfied, but we are quite satisfied with what we see from North America, not only in terms of financial figures, but also in terms of organic investment, because K4 Mitchell, I was there again a couple of weeks back, is really ramping up. We haven't seen the full results at all this year, but we are now getting to the targeted operational performance already six months after plant start. So that's from our perspective, it's a very good development. We've also invested in Port Canaveral, as you know, and also that one gets significant traction. And then, you know, it's all about organic investment and M&A. You remember our CIFAR acquisition. Also, that one gets traction that clearly sits above the original assumptions of the business case. So in that respect, I think the good news is that all of these will add fully to the EBITDA and RCO next year. All of this came more towards the second half of this year. So in that respect, that should set all the sales for all the North American business for next year. You see the margin development in North America clearly jumping ahead of uh 21 and also 22 now with almost 24 and again none of the three investments that i showed you is yet in that martin development fully so in that respect i think we stay very optimistic for our business in north america if you go to western southern europe next page eight Strong performance on an absolute terms of RCO, more than 100 million up from last year in the quarter alone. And look at the margin jump there from 10.7 to 17.2%. It's never perfect, but 17 is better than 10. So we have a way to go. But I think this is really a very strong recovery in margins for a very important area for us. NECA, next page 9, basically performing on a very high level. Again, 230 million results. Margin at a strong 23.5%. Overall, very strong development from NECA again. So, tick in the box. They are continuing to perform on very high levels. APEC was a little bit difficult through Corona. You know that. But we are more and more optimistic for APEC now. And you see this also reflected in our Q3 performance. China remains difficult. But the other countries are coming back. Australia is a difficult market position, but we have some internal retrenching that gives us good hopes that we will continue to perform very well in Australia and even maybe a little bit better down the road for next year. Same is true for Indonesia. You saw that Indus Cement has done another very important strategic acquisition in central Java. That is obviously not yet in the figures in Q3, but most probably will close the transaction now in the next couple of weeks. And that would then mean that it will go fully into our figures next year, because that asset will be fully consolidated. and will be a strong contribution, big synergy potential for Indonesia. So we see clear improvement there. India has turned the corner. We made a management change in India. We see clear traction there. Volume recovery is moving along very well. So in that respect, also India looks better. Thailand performing on a high level, even improving. Malaysia is coming back up after difficult years. Bangladesh holding up on a good level. So, overall, we have high hopes for APEC going forward. Africa, IM is performing on a very stable level, around the 100 million mark for the Q3. Margins also coming up again. Volumes are, in a couple of countries, under pressure. Ghana, Tanzania, partially. Morocco used to be a little bit under pressure. I think we see country after country stabilizing, not only on volumes, but also on currencies. You know that we have some currency impact in Ghana, in Egypt, and that is at least stabilizing on the lower level. So in that respect, I think we are still fighting for the closure of the transaction in Tanzania. We are hopeful that this can be done by the end of this year. And that then would also make a significant additional contribution of organic growth the African business for 2024.