German Cement Maker Heidelbergcement Is Getting Its Energy Costs Under Control

German cement maker HeidelbergCement is getting its energy costs under control and is raising prices, allowing the company to predict profitability will remain at least on last year s level when it was among the highest in the industry. Profit and sales will climb for a third year in a row in 2012, forecast Bernd Scheifele, Chief Executive of the 139 year-old company, declining to be more specific. The increase in energy costs, which account for about a quarter of the production costs of cement, will slow from 24 percent to about 5 percent this year, as the company replaces coal with cheaper natural gas, he said on Thursday. The group, based in the university town of Heidelberg in southern Germany, is also installing electricity meters for the first time at some of its plants in the United States and trying to benefit from cheaper power at night and during the morning, he said. That will allow the company to earn more from its cement business, while it might slightly raise the margin at its aggregates units -- products to make concrete -- and keep profitability stable from the sale of building products, he said. The shares climbed 3.3 percent to 43.79 euros ($57.04) at 1148 GMT, more than the 0.3 percent rise of the Stoxx Europe 600 Construction and Materials business. "The better than expected results from the cost-cut programme suggest that HeidelbergCement can better cope with the rising energy costs than its peers, " said Silvia Quandt Research analyst Ralf Groenemeyer. The cement maker cut almost 184 million euros ($240 million)more in annual costs in 2011 than it had planned and increased its savings programme to a total of 1 billion euros by 2014 compared with its 2010 cost base. It earned 11.40 euros from each 100 euros in products it sold, compared with 6.30 euros at its Mexican peer Cemex or 9.30 euros at Swiss competitor Holcim. Lafarge from France is amongst the few companies that earn more than HeidelbergCement, generating 14.30 euros. Analysts expect operating profit to climb to 1.57 billion euros this year, according to data from Thomson Reuters StarMine, based on estimates from 15 analysts. StarMine weights analyst estimates according to their past accuracy and gives more weight to newer predictions. HeidelbergCement shares have risen 75 percent in the last five months but the stock price in relation to estimated earnings per share is still 19 percent below peers, including Lafarge and Holcim, according to Thomson Reuters StarMine. The company said it plans to propose raising the dividend for its 2011 business year by 40 percent to 0.35 euro a share. That is less than the 0.38 euro a share analysts had expected, according to Thomson Reuters StarMine. ($1 = 0.7677 euros) Source: uaecement.com