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HeidelbergCement core profit falls on higher energy, transport costs

·1 min read
FILE PHOTO: A logo of HeidelbergCement is pictured at their headquarters in Heidelberg

FRANKFURT (Reuters) -HeidelbergCement, the world's second-largest cement maker, on Wednesday reported a 27% drop in first-quarter core profit, blaming a significant increase in energy and logistics costs.

"The first quarter of 2022 was not an easy one for HeidelbergCement," Chief Executive Dominik von Achten said.

"Although there is still a lot of uncertainty concerning energy and raw material availability and costs, we continue to see strong demand for our products in all regions."

Like steel and chemicals, cement production is among the more energy-intense manufacturing processes, making power costs a key factor in determining whether companies can hit their profit goals.

The result from current operations before depreciation and amortisation (RCOBD) fell to 394 million euros ($416 million), while sales rose 11.8% to 4.43 billion euros, the company said.

HeidelbergCement confirmed its outlook for 2022 for strong revenue growth and a slight increase in the result from current operations, in both cases before consolidation and exchange rate effects.

The company said in March it expected a significant rise in sales this year from global infrastructure programmes and continuing demand for new homes.

Still, the possibility of lower growth globally and in Europe presented a risk to the group, HeidelbergCement said on Wednesday.

"In Europe, the risk of recession has increased as a result of rising inflation and strained supply chains. We classify this as a general risk with a possible impact on the entire Group and possibly a rapid occurrence," the statement said.

($1 = 0.9480 euros)

(Reporting by Christoph Steitz, Editing by Victoria Waldersee and Jane Merriman)