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HeidelbergCement AG HEI

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Narrow-Moat HeidelbergCement Raises Full-Year Profit Guidance; We Increase Our FVE to EUR 81

Matthew Donen, CFA Equity Analyst

Analyst Note

| Matthew Donen, CFA |

A recovery in sales volumes across HeidelbergCement’s product categories was the primary driver behind the group’s second-quarter revenue and EBITDA growth of 18% and 22%, respectively. HeidelbergCement has lifted its profit guidance for the year following a robust first half of the year from a slight increase in profits to “strong” growth. We don’t expect much margin expansion for the remainder of the year due to cost inflation and forward contracts unwinding but expect high levels of demand to persist. We raise our EBITDA growth forecasts for 2021 to 6% from 2%, which together with a moderate lift margin forecasts, results in our fair value estimate increasing to EUR 81 from EUR 72. Shares remain fairly valued.

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Company Profile

Business Description

HeidelbergCement is one of the world’s largest building materials companies, with operations in 60 countries. Its core activities include the production of cement and aggregates, which are used to construct houses, infrastructure, and commercial facilities. The sale of cement and aggregates accounts for the majority of group revenue and profits. North America is the company’s largest market, contributing 29% of EBITDA, followed by Western and Southern Europe, contributing 21%. HeidelbergCement is listed in Germany and has 55,000 employees.

Contact
Berliner Strasse 6
Heidelberg, 69120, Germany
T +49 622148113227
Sector Basic Materials
Industry Building Materials
Most Recent Earnings Dec 31, 2019
Fiscal Year End Dec 31, 2021
Stock Type
Employees 53,327