Heidelberg Mterials S/Adr

Good morning, good afternoon, everyone listening into our Q1, sorry, Q2 call, H1 call. We're here in a room with Dominik von Achten, our CEO, Rene Aldach, CFO, and the IR team. Looking forward to your questions later on, but before we have some prepared remarks, and without losing time, over to you, Dominik.

Thanks, Chris, and welcome everybody from my side, including Rene Aldach, our CFO, and Let me just go through the presentation that I think many of you have in front of you. In general, a strong quarter for us, and we are accelerating the growth, so a couple of good news to share. First of all, operational performance, 6% up on revenues and 4% up on RCO. I think that moves in the right direction. What is very important for us is to see that for more than four years, since Q1 2022, this is the first quarter with a positive volume impact. Okay, I think that's one quarter, but I think that's very important to note from our side that this is since more than four years, the first quarter with positive volume impact. We are accelerating also the unorganic growth with a couple of M&A transactions that either closed or have been done in the second quarter. So Mars Australia will try to close during this year. Ameritex in the US has been signed and closed, a very important strategic position in the fastest growing concrete pipe provider in Texas. Axancha Turkey, transaction has been closed end of June, very good strong platform for the Mediterranean both for the Turkish local market but also export hubs to Africa, US and other parts of the world. Transaction finally closed at the beginning of Q2. That's a strong market position in the prairie market in Western Canada. Very important also is what we would call the self-help. So we really continue to work on all cylinders when it comes to pricing and surcharges, mitigating the effects that are absolutely there from the Iran situation that we have increasing energy prices along the full supply chain, and that's why we are working diligently on pricing and surcharges, and that work continues. As much as the work on our own cost position, especially the fixed cost side, continues with the TAI program, Transformation Accelerator program, where we are now at 440 million euros, so we're moving in the right direction. The third tranche of the share buyback, 1.2 billion, has been started and is running well, up to 450 million. And then we've specified our outlook to the range of 3.4 to 3.65 billion euros. The ROIC will be slightly above 10% and the CO2 emissions will be around the previous year level. That's mainly due to the Accenture acquisitions in Turkey. With that, I turn to page 3. You see the numbers, plus 7% like for like, plus 6% revenue. That's very good. Strong growth on the top line. Operating EBITDA also moving in the right direction, like for like 4%, reported 3. Operating margin more or less flat, slightly down. and then operating EBIT also up like for like 5% and reported 4%. So I think that's a good set of numbers for Q2. And that also gets us well into the water for H1 with basically a flat performance year over year on the profit numbers and a slight growth on the top line. So in that respect, moving in the right direction. If you go to the Q2 profit, you see that things are shifting a little bit, which is important to see. One is the net volume effect increases, so that's good news. As I said, the volumes are coming back. Price over cost is around the zero mark, slightly negative. We'll get into the details, I'm pretty sure, in your questions. and then we also see a scope effect coming from the acquisitions down the road. You will see more coming, so I think that moves in the right direction. H1, and you see when you flip the page six and five back and forth, you see the difference there. Net volume impact in H1 was noticeably smaller. Price over cost was again around the zero line. I think you see the shift especially on the net volume side that is important to note. Then, important for us to work on those two legs, as I said earlier, pricing. Significant pushes around the globe. We've just finished our quarterly management meetings. So, significant push around the globe with a big focus continues to be Europe and North America when it both comes to top-line price increases but also surcharges. So that work continues as we speak. We'll go into the details when we go through the regions. And then on the right side, the Transformation Accelerator, the 440 million. And we are very confident here that we will surpass the 500 million saving target that we originally set. Then on page 8, we go to Europe. You see here, I would say, a very good performance in Europe. Revenues up, EBITDA up, RCO up, and margins up on CEMENT, slightly around the zero line on aggregates in terms of changes, and slightly up in the total region if you combine everything. So, a resilient performance in Europe. Based on good pricing, NRC charges are in place and we are very focused on price over cost, which is positive in the region. That is very important to note. Then the volume development on the total group development is supported by also Europe. There are recovery signs in our sluggish markets around Germany, Binnen, France, UK but only very limited. Bigger increases now come from Scandinavia. I think the markets in Sweden and Norway have really rebounded quite a bit and Italy and most parts of Eastern Europe stay strong and obviously for us also importantly the situation in Hungary has turned around so we continue to climb back up in Hungary which is an important joint venture that contributes also to the European results. and then the team is also doing an excellent job on fixed cost savings. You know that we have worked on our plant network in Europe and we're going to continue to see the lower cost base coming into the results as we speak. Then North America, I think strong performance on the top line and also the bottom line. Top line up like for like seven and reported five. Operating EBITDA almost double digit like for like plus 9% and 4% on reported and RCO like for like double digit plus 11 and reported 5%. EBITDA margins come and go in the quarters. We've seen this in the past. So cement down, aggregates up, total region basically flat. So that's the picture in North America. It's clear that there is good volume developments driven mainly also by a couple of very big projects. Not so much a rebound in housing at this point, but it's also fair to say that there is inflationary cost pressure in the US and then ways on the margin developments. We are continuing to work on pricing. We have announced July, August, September price increases So I think we are continuing to move on the top line in North America to mitigate the underlying inflation. If we then go to Asia Pacific, page 10, I would say a very mixed picture, very strong rebounding in Australia. The market is very resilient. The team does an excellent job there. Good volume development. Pricing is moving in the right direction. Cost management is moving in the right direction. So overall, I'm very positive that we will see good performance out of Australia also for the full year. Asia, I think, is probably one of the weakest link at this point when it comes to profit development. I think the volumes are actually moving in the right direction, but there is clear underlying inflation and cost pressure. and pricing clearly has upside potential in our key markets, Indonesia and also in India. I would say across the board in Asia, that's something that needs to rebound. Then if you go to page 11, AMBA, I think again, a very strong performance from AMBA, top line growth, bottom line growth and look at the margin development. Margin now in AMBA, Cement, more than 30%, another 300 basis points. I think, guys, this really moves in the right direction. The region is now almost at 28%, so very, very strong performance on the top line and also on the bottom line coming out of AMBA, and that moves really in the right direction. Good on AMBA. Then when we come to unorganic growth, I think the pipeline is absolutely intact and we are executing the deals, the mass transaction I mentioned in Australia. We expect news in the coming weeks here how this will close. So let's wait and see. On this one would be an important contribution potentially also to this year's results or then at the latest to next year's results. We have already the contribution from Ameritech. The same is true for Accenture as of July, so there is no impact in Q2, but there will be from Q3 going forward. Bernco did close the beginning of Q2, and then things come and go. You know that we are actively not only acquiring, but also Disposing the most underperforming assets, and this is the reason why we have sold the position in eastern Kazakhstan, Bukdama, a very old plant, wet kiln, very difficult in profitability, and also in terms of CO2 footprint. So in that combination, we decided to exit during the quarter. The deal is signed and closed. So in that respect, that's it. Sustainability. There was a lot of discussion around the EU ATS. I think the water has been cleared to a large extent. The EU Commission has made their proposal how to proceed. We broadly support that proposal and I think it sends a clear signal that the EU ATS is here to stay. and yes there are some minor adjustments around the linear reduction factor of the benchmark more or less expected and from our perspective we can live with it. We may adjust here and there the one or the other investment but overall I think that moves in the right direction. We have set a completely different tone in terms of CO2 footprint in France to the opening of the new kiln in Ervaux, reducing the CO2 footprint by nearly 30%, 3-0% of the significant progress in the right direction, let alone that this is also financially a very attractive investment. Advancing the technology on carbon capture at smaller scale in this point, but it's a completely new technology, oxy-fuel plants together with three competitors in a plant in southern Germany. The plant is now up and running capturing the first CO2, so we are moving also to advance The technology on carbon capture. And then last but not least, but importantly, you know, when we talk about Dow Jones and FTSE, we are moving further ahead in the indices to underline our sustainability leadership. If you talk about that, you look at the performance of the KPIs, the broadly move in the right direction, alternative fuel rate up, clinking corporations down. Thank you very much. That's it for me then, René. Maybe you take the financial side.

Yes, thanks, Dominik. Hello, everyone from my side. We are on slide 15. Quickly, the highlights from the financials of the first six months of the year. Our adjusted earnings per share, which means excluding AOR, are up 2%, which shows you already, highlights you that below RCO, the P&L is also in very good shape. and even on a reported basis our earnings per share is up 7.5% or our net income of the group is up 7.5%. If we go to the cash flow, you see here last 12 months rolling is 1.9 billion. It's down driven by working capital and capex and I think we will go through the cash flow in a few minutes also year-to-date and I explain you the details. The leverage is around 1.6, 1.7 for H1 similar to prior year, so no No big movements over here. And then as part of our strategy, what we have always announced, we increase our M&A, let's say, emissions, which we have seen in the first six months. Dominik has explained what we have done, and we hope to close, let's say, the mass acquisition also this year. And what we also promised is we increase the share of the return. You see it also here, plus 13%, which is driven by higher share of our bank plus higher dividend. Let's go on slide 16. What I said, you see our AOR is 50 million better than last year, which has also to do with revaluating our current Akchansa share because we have now changed from ad equity account to consolidation, and then we need to revalue based on the purchase price we have done. So here there's an accounting effect in there. And what you have read, and Dominik has also alluded to, The Buchtama Cement Plant, as we mentioned in our report, there will be an impairment coming of a material amount, but it's not cash relevant, so it's a clean-up of the past, so there's a $100 million impairment. It will be in the full-year books, but again, non-cash item. Financial results, I think, very good, flat in increasing interest in the environment, I think good results here also. and from the income tax perspectives you see here 40 million improvement which is based on a let's say provision release of a tax case we have won which is a good thing and is also contributing to our increased net profit. Let's go then to slide 17, the free cash flow. I think there are only two items I want to mention. Number one, The working capital you see here was minus $99 million, and there's two things. The $60 million of this is timing of with our trading business increased, let's say, the revenue, and then that money will come back. We've discussed it with them two days ago, so there's no problem about the $60 of the $100. And then the rest is inventory built up, you know. We have taken opportunistic approaches when coal was cheap during the quarter we have probably bought more than we really need but that will benefit us obviously from a cost perspective in H2 then compared to spot plus you know with all the price increases and surcharges obviously the receivables are going up but the promise is it's clear the clear target for us there will be no cash outflow for Merkin Capital by end of the year so the 99 million should go away in terms of free cash flow import from working capital. Again, that interest, I say that's probably flat. Tax is flat. And then you have one negative with CapEx net minus 115. And it's also mentioned here in the comments. Two items contribute to this. First of all, this is a net number. We had 44 million lower divestments. And you see here 30 million higher CapEx spent for the CCUS project in Payswood. and here I guess it's very important to note that it's the capex we spend to build that plant is shared with the UK government and the part we have let's say financed of this we will get this back during the first five years of operation of the plant which is a very good thing because you know we do it now the pre-financing that is a fact but then Thank you very much. Thank you very much. Thanks a lot.