Bloomberg News

HeidelbergCement Seeks U.S. Brick Exit Following Review by Chief

March 15, 2012

HeidelbergCement AG (HEI), the world’s third-largest cement maker, is looking to sell North American brick operations this year after Chief Executive Officer Bernd Scheifele carried out a strategic review with an eye on costs.

The sale of brick plants in the U.S. and Canada may generate “a couple of hundred million euros,” Chief Financial Officer Lorenz Naeger told journalists today. The Heidelberg, Germany-based company may go on to seek buyers for similar operations in the U.K., which include a site in Maidenhead, over the next couple of years, he said.

Scheifele and managers spent months reviewing operations as the company battles higher energy prices, which rose 24 percent last year. To spur growth, HeidelbergCement is focusing on aggregates and cement. It’s channeling 80 percent of its investment into emerging markets and targets as much as 9 percent growth in cement sales this year, he said.

“In our strategic review we concluded we must continue to aggressively manage costs,” Scheifele said. The sale of North American (PAL) brick units is a project the company is “pushing for 2012.”

The global brick market is dominated by Wienerberger AG (WIE), based in Vienna, with 2.4 billion euros ($3.1 billion) in sales. The Vienna-based company expressed interest in the assets, the HeidelbergCement CEO said last year.

Scheifele is extending a purge on costs in a bid to reclaim investment-grade status. HeidelbergCement will expand a cost- cutting target by an additional 250 million euros by 2013, and aims to save another 150 million euros by 2014 by optimizing its supply chain.

Outlook

The company predicted operating profit and sales will rise this year on growth in Asia and Africa, buoyed by easing raw- material and energy inflation.

Net income in 2011 rose 4.5 percent to 534 million euros. Sales advanced 10 percent to 12.9 billion euros. Both figures beat estimates by analysts in a Bloomberg survey. It proposed a dividend of 35 cents a share, an increase of 40 percent, and pledged to lower debt to 6.5 billion euros from 7.77 billion euros in the medium-term.

“Deleveraging remains the highest priority for us,” Scheifele said. “We will again intensify our efforts to reduce costs and improve efficiency.´´

To contact the reporter on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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