UPDATE 2-Australian deal lifts HeidelbergCement profit hopes

Thu Mar 14, 2013 9:05am EDT

(Adds analyst comment, detail, background)

* Buys 25 pct stake in Cement Australia from Holcim

* HeidelbergCement, Holcim both to hold 50 pct

* Demand in Asia, N.America, Africa to boost 2013 profit

* Predicts "significant" rise in 2013 pretax profit

* Shares rise 4.2 pct, biggest blue chip gainers

By Peter Dinkloh

FRANKFURT, March 14 (Reuters) - Germany's HeidelbergCement forecast a big rise in pretax profit this year, boosted by a deal to increase its stake in an Australian cement venture that will help it to meet growing demand from Asia.

Shares in the company rose over 4 percent on Thursday, after it said it had agreed to buy a 25 percent stake in Cement Australia from Swiss rival Holcim for an undisclosed price, giving the two firms equal 50-percent ownership.

Rising demand from North America and Africa would also boost earnings, HeidelbergCement said, forecasting a "moderate" increase in operating profit, a "significant" rise in pretax profit and higher net income this year, without elaborating.

"The outlook is positive from our view," DZ Bank analyst Marc Nettelbeck said. "We stay optimistic for the mid-term."

HeidelbergCement's shares were up 4.2 percent to 56.85 euros at 1220 GMT, the biggest rise on Germany's blue chip DAX index and outperforming a 1 percent increase on the STOXX Europe 600 Construction index.

According to Thomson Reuters StarMine, analysts expect HeidelbergCement's 2013 operating income to rise to 1.68 billion euros ($2.2 billion) from 1.61 billion euros in 2012.

The company said on Feb. 7 it expected to be able to raise prices this year following a pick-up in demand in some of its markets including Ghana, the north-American west coast and Indonesia.

AUSTRALIAN EXPANSION

HeidelbergCement's expansion in Australia gives it a bigger share of a business which had sales of A$1 billion ($1 billion) in 2012. Cement Australia owns two cement factories, as well as a crushing mill, and is building a second crushing mill.

Holcim and HeidelbergCement will jointly manage the venture.

HeidelbergCement buys around 40 percent of the cement from Cement Australia, as much as Holcim, and holding stakes of the same size would eliminate conflicts about the price of the cement, HeidelbergCement Chief Financial Officer Lorenz Naeger said at a press conference.

The German firm, which is cutting debt in a bid to win back an investment grade credit rating, said its net debt had fallen to 7 billion euros at the end of December, 800 million euros less than three months before and less than half of what it was at the end of 2007 after the takeover of British peer Hanson.

HeidelbergCement said in February it aimed to accelerate a cost-cutting programme to save an extra 150 million euros this year, bringing its target for cutting annual costs over the three years ending 2013 to 1 billion euros.

The company is aiming for net debt of 6.5 billion euros in the medium term in order to keep it at a level that would be manageable even in the case of another economic crisis, Chief Executive Bernd Scheifele said.

Scheifele did not detail when he expects to reach that target, but said it would not be this year.

HeidelbergCement plans to propose a dividend of 0.47 cents a share for its 2012 financial year, up from 0.35 cents the year before.

($1 = 0.7722 euros)($1 = 0.9716 Australian dollars) (Editing by Mark Potter)

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