HeidelbergCement AG

Overview Key strengths Key risks No. 2 position in the aggregates and cement businesses. Currently high energy costs are putting pressure on margins despite resilient demand and successful pass-through to date. Extensive geographic diversification and absolute size in the sector. Cement's high levels of direct CO2 emissions expose the company to climate transition risk, particularly in the EU where tightening regulation is increasing carbon costs. Strong focus on sustainability through both product innovation and carbon emissions reduction, which may support the company's competitive position over the medium term. Potential monetary and political risks, as well as heightened economic volatility, arising from operations in emerging markets. Management's commitment to maintaining a 'BBB' rating. Operations in an industry exposed to physical asset

... margin will continue to suffer over the next few quarters, ahead of high energy costs. Reported EBITDA margin dropped to 15.3% in the first half of 2022, compared with 19.2% in first-half 2021 and 17% in first- half 2020. This drop is largely due to the sharp increases in energy and, less so, raw material costs, which were not completely offset by increases in sales prices. In fact, in the reporting period material costs rose by 23.3% compared with 2021. At the same time, the economic slowdown in Europe has led to a drop in sales volumes. Excluding consolidation effects, cement and clinker sales volumes decreased by 2.6% in first-half 2022 compared with 2021. Nevertheless, group revenues increased by 11.3% in first-half 2022 (year- on-year) to 9,950 million, because of price increases in all group areas. While HeidelbergCement has implemented price increases to compensate for cost inflation, and price-over-cost was positive in June after...

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