HeidelbergCement cuts debt, strengthens core units toward 2020

Sources: HeidelbergCement AG, Germany; CP staff

Lehigh Portland Cement parent HeidelbergCement envisions $1.8 billion to $2.4 billion in acquisitions over the next three years, backed by $1.2 billion to $1.8 billion in non-core asset sales, plus savings realized from continuous efficiency improvements across global cement, aggregates and ready mixed concrete businesses. Driving those improvements are digital platform implementation in operations, maintenance, logistics and purchasing. 

HeidelbergCement outlined new Vision 2020 targets during its Capital Markets Day 2018 in Bergamo, Italy, home to the company’s global research & development center and Italcementi S.p.A. headquarters. Pointing to the successful integration of Italcementi, acquired in mid-2016, along with the raising of dividends to record levels, HeidelbergCement Chairman Dr. Bernd Scheifele noted, “Our model is based on the most advanced vertical integration, a simple structure focused on three core business lines and a de-centralized, lean organization with strong local teams. We have a compelling strategy in place, which clearly differentiates us from our competitors, and remain the industry leader in business excellence and cost efficiency. HeidelbergCement is well positioned to capitalize on its strengths in the current business cycle.”

The company intends to further improve its asset base by active portfolio management. On the one hand, it follows a selective merger and acquisition strategy to strengthen existing cement, aggregate and concrete businesses by increasing vertical integration. On the other, management seeks to reduce complexity and risk by disposing of non-core operations, market positions with high risks or limited growth potential and idle assets. HeidelbergCement advised Capital Markets Day participants that it anticipates organic EBITDA (earnings before interest, taxes, depreciation and amortization) growth to hover 5 percent annually through 2020.


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