* Demand in Asia, Africa continues to grow
* Earnings in Europe, north America helped by one-off gains
* Raises annual cost cutting target to 1 bln euros from 850
* Q4 operating profit up 10.9 pct at 455 mln euros, as
* Shares rise over 4 percent
(Adds share price reaction, analysts' comments, details)
By Peter Dinkloh
FRANKFURT, Feb 7 HeidelbergCement
expects to be able to raise prices this year following a pick-up
in demand in some of its markets in Asia, Africa and north
America, it said on Thursday, after reporting a near 11 percent
rise in quarterly profits.
The German company also said it aimed to step up its
cost-cutting programme to save an extra 150 million euros this
year, which will bring its target for cutting annual costs over
the three years ending 2013 to 1 billion euros ($1.4 billion).
"Due to the continuing strong economic growth in the
emerging markets and the recovery in the U.S., we are cautiously
confident for the future," Chief Executive Bernd Scheifele said,
adding he would give a more detailed outlook when the group
reports full results on March 14.
Operating income in the fourth quarter rose 10.9 percent to
455 million euros, in line with estimates from analysts, with
profits in Africa and Asia coming in better than forecast.
Shares in the group were up 4.7 percent at 48.41 euros at
1147 GMT, when the STOXX Europe 600 Construction & Materials
sector index was up 0.5 percent.
The latest share price values the company at 13.7 times
prospective earnings, in line with the average for its peers,
according to Thomson Reuters StarMine data.
"HeidelbergCement is growing in its most important markets,"
said DZ Bank analyst Marc Nettelbeck. "They are doing a good
Scheifele is focusing on lifting prices and shaving costs to
make up for rising fuel prices and in order to cut debt after
the company saddled itself with 15-billion euros of liabilities
due to the takeover of peer Hanson in 2007.
Scheifele is also changing incentives to get managers to
sell more higher-margin products and is expanding its cement
production in Ghana and Liberia as well as in Indonesia and
India, regions where growth is strongest.
However, HeidelbergCement managed to meet expectations in
the fourth quarter thanks only to a 66 million-euro gain from
selling CO2 emissions certificates.
Operating income in western Europe would have dropped
without the book gain and it would have shown a stronger decline
in eastern Europe. In North America a 42 million-euro gain from
a pension plan helped cushion a drop in earnings there.
"If we strip out those book gains we haven't seen much
effect from the cost savings, as margins haven't progressed,"
said a London-based analyst who declined to be identified.
"The market conditions are very tough, so I wonder how
HeidelbergCement wants to push through price increases?"
(Editing by Mark Potter and Greg Mahlich)