(New: Statement from the press conference, share price, analysts)

HEIDELBERG (dpa-AFX) - Building materials group Heidelberg Materials (formerly Heidelbergcement) earned slightly more than expected last year. "We closed 2022 with a very good result thanks to a great final spurt in the fourth quarter," CEO Dominik von Achten said at a press conference in Heidelberg on Thursday. He added that thanks to the cost-cutting program in the fourth quarter, the Group had more than compensated for the sharp rise in energy costs for the first time in the course of the year. The share rose by around two percent at midday, making it one of the biggest gainers in the leading Dax index.

Heidelberg Materials got off to a good start in 2023, the manager said. Although volatility on the energy and raw materials markets remains high, the easing of energy prices is giving the Group some breathing room. On the demand side, government infrastructure plans should offset the decline in private residential construction. Management is optimistic about the rest of the year. For 2023, the Executive Board expects adjusted earnings before interest and taxes of EUR 2.35 to 2.65 billion. Sales are again expected to increase after adjusting for foreign exchange effects and acquisitions and disposals.

In an initial reaction, Jefferies analyst Glynis Johnson called the cement maker's projected adjusted operating profit for this year "more specific and optimistic" than expected. She had expected 2.2 billion euros. In terms of sales, the company is looking to grow this year, she said, adding that she had previously expected a 1.4 percent decline. For analyst Nabil Ahmed of the British investment bank Barclays, expectations were slightly exceeded in the fourth quarter. This was driven by an improved price-cost ratio and the Asian business, he said. Despite the stronger cash flow, however, debt levels rose, he said.

Last year, sales climbed almost 13 percent to 21.1 billion euros. Higher energy and raw material prices had a major impact on construction activities and thus on demand for building materials, it said. This had led to significantly weaker sales in many of Heidelberg Materials' key markets. However, price adjustments in all Group areas more than compensated for this decline in volumes.

Adjusted EBIT - or RCO - fell by five percent to just under 2.5 billion Euro. However, the figure was slightly better than analysts had expected. The bottom line in 2022 was a profit attributable to shareholders of just under 1.6 billion Euro, compared with just under 1.76 billion in the previous year. Heidelberg Materials explained the decline among other things with a one-time tax effect. In addition, the company had benefited from the sale of parts of the company in 2021. Adjusted for these effects, net profit had risen significantly.

A further savings program is not planned at the moment, von Achten said. However, the company would remain disciplined. Last year, the company had once again stepped up its cost-cutting efforts to offset the increased costs of energy and raw materials. With additional price increases and cost-cutting measures, the Group recouped well over two billion euros, according to von Achten.

Meanwhile, the company has no plans to withdraw from Russia for the time being. "We are continuing to run our plants in Russia on a low flame," von Achten said. It is a local business, he said, and Heidelberg Materials has completely frozen its investments there. The company is complying with all sanctions decided by the German government and the EU, the manager stressed. Heidelberg Materials has written off the Russian business by a good 100 million euros at the end of 2022, added CFO René Aldach. The business still stands at 150 million euros in the balance sheet, he said. Heidelberg Materials operates three cement plants in Russia, which contribute three percent to Group sales.

The Heidelberg Materials share, which is listed on the Dax, had staged an impressive recovery for a good year since hitting a multi-year low of 29 euros at the start of the Corona crisis in the spring of 2020. Its price rose to a good 80 euros in the spring of last year. Then it went down again to around 39 euros in September 2022.

Since then, a recovery has been underway. Since the turn of the year alone, the share price has risen by around a quarter and, at around 66 euros, was recently more expensive than a year ago, when the Russian war of aggression against Ukraine began. However, it is still a long way from its record high of around 112 euros in 2007. The following year, the global financial crisis caused an unprecedented slump in the share price to less than 20 euros.

Heidelberg Materials is one of the largest building materials companies in the world. In Germany, it is the market leader in cement and ready-mix concrete as well as sand and gravel. The company, which has almost 51,000 employees, aims to produce climate-neutral concrete by 2050. To achieve this goal, Heidelberg Materials is expanding its recycling of building materials, including through acquisitions./mne/jkr/stk