HeidelbergCement brushes off Brexit vote, sees little impact in 2016

BERLIN: Germany’s HeidelbergCement has reported forecast-beating core profits and shrugged off Britain’s vote last month to leave the EU, saying demand in its second biggest market had risen in the past few weeks.

The cement producer and the world’s biggest maker of aggregates said demand in Britain in the last two weeks had been among the best it had seen this year after the appointment of Theresa May as prime minister had brought some stability.

Britain accounts for 10 percent of the company’s revenue.

“We expect that Brexit at least in 2016 — as it looks at the moment — will not hit us massively,” CEO Bernd Scheifele said, as the company confirmed its full-year guidance.

Ratings agency Moody’s said this month that Britons’ vote to leave the European Union would hurt the earnings of European building material firms’ UK operations. However, it said the impact on companies like HeidelbergCement would be longer-term because their infrastructure and commercial construction projects typically run for a year or more.

Scheifele said the company had critically examined its projects in England and established that only one, the construction of a highrise building in London’s financial district of Canary Wharf, had been scaled back as a result of Brexit.

HeidelbergCement has orders to supply concrete and aggregates for infrastructure projects such as the Thames Tideway Tunnel, a highspeed train line between London and Birmingham and several road works.

The construction industry in Britain suffered its worst contraction in seven years in June, according to a survey by Markit, and the German group’s shares were hammered in the immediate aftermath of the Brexit vote on June 23.

But the stock has since made up that ground and shares were trading up 2.2 percent at 75.63 at 1032 GMT on Friday, almost back at their pre-referendum result level of 75.75 euros.

The buildings materials group posted a 5 percent rise in operating income before depreciation (OIBD) to 791 million euros ($876 million), ahead of the Reuters consensus forecast for 762 million, boosted by price increases and lower fuel costs.

Sales dipped 2 percent to 3.58 billion euros, compared to a forecast for 3.65 billion, while net profit jumped 17 percent to 318 million.

The company said its 6.7 billion-euro acquisition of Italy’s Italcementi, its biggest-ever takeover, was making good progress after it received all the necessary approvals last month.

On Monday, it sold its Belgian assets in connection with the deal and said it had received “high interest” in its assets for sale in the United States, for which it expects binding offers in the first half of August.