HeidelbergCement AG

The positive outlook reflects our view that we may raise the ratings over the next 12 months if HeidelbergCement's FFO to debt comfortably exceeds 25% on a sustainable basis and its S&P Global Ratings-adjusted EBITDA margin remains at least at the 2019 level. We could upgrade HeidelbergCement if, in 2020-2021, the group progresses on its trajectory of resilient cash flow generation and debt reduction. In our view, the global economic and operating conditions will remain challenging until a COVID-19 vaccine is widely available; consequently, the current economic recovery may be short-lived. This raises some uncertainty about how significant the cement volume recovery will be in 2021. However, we view both HeidelbergCement's proven cost discipline during the pandemic, and its commitment

... nine months of 2020 has been resilient, particularly in North America and Europe, notwithstanding the pandemic. Group revenue was a moderate 7.9% lower than in the same period of 2019. During the second quarter of 2020, when numerous countries were in lockdown, group revenue was only 13% lower than in 2019. At the same time, in the first nine months of 2020, group EBITDA was 4.6% higher than in 2019. As result, the reported EBITDA margin jumped to 20.8% in the first nine months of 2020 from 18.3% in 2019, and by about 400 basis points (bps) in the third quarter of 2020. This reflects both the group's resilient performance in some countries, such as Northern and Eastern Europe and the U.S., and significant cost savings. Although we believe that the operating environment remains challenging and uncertain, we now anticipate that group EBITDA in 2020 will be above the 2019 level. We anticipate quicker debt reduction in 2020, reflecting HeidelbergCement's...

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