June 11 - Fitch Ratings has affirmed Germany-based HeidelbergCement AG's
Long-term Issuer Default Rating (IDR) at 'BB+' and Short-term IDR at
'B'. The Outlook on the Long-term IDR is Stable. The agency also affirmed the
senior unsecured rating of debt issued by HC's related entities,
HeidelbergCement Finance BV, Hanson Ltd and Hanson Australia Funding Ltd. at
The affirmations reflect HeidelbergCement's careful financial policy and the
agency's expectation that credit metrics will remain stable or improve slightly
in 2012, even in the current uncertain scenario for the cement markets.
Fitch expects trading conditions to remain difficult in 2012, particularly in
western Europe, where volumes will remain depressed. Under its conservative
assumptions, the agency does not forecast major improvements to come from North
America, although the Q112 results of major cement companies suggest that both
prices and volumes could see some recovery. In emerging markets, Fitch believes
that cost inflation, although easing compared to 2011, will remain the major
issue putting pressure on margins.
In such a scenario, Fitch expects HeidelbergCement will be able to maintain or
slightly improve EBITDAR in 2012, thanks to cost cutting and the increase in
cement volumes sales. By contrast, the agency forecasts free cash flow (FCF)
will deteriorate due to higher capex and dividends, but to remain positive. The
disposal of non-core assets should also drive debt reduction.
Fitch expects HeidelbergCement's leverage and credit metrics will remain stable
or improve marginally in 2012, remaining within the level acceptable for the
current 'BB+' rating. A deterioration of trading conditions, resulting in
negative FCF and/or in FFO net leverage of around 4.0x on a sustained basis
would be a rating negative. Higher and faster deleveraging with FFO net leverage
declining to around 3.0x on a sustainable basis could lead to a positive rating
The group's liquidity is adequate, supported by EUR1.0bn of unrestricted cash
and by a EUR3.0bn revolving credit facility (RCF), maturing in 2015, of which
EUR2.7bn was undrawn as of March 2012. The maturity profile is well-balanced and
HeidelbergCement maintains good access to capital markets. In Q411 and Q112 the
company issued new bonds and debt certificates in excess of EUR1.2bn, which were
partly used to refinance a EUR1bn bond maturing in January 2012. In addition, in
February 2012, HeidelbergCement extended the maturity of its EUR3.0bn RCF to
2015 from 2013.
HeidelbergCement is a heavy building materials player, with a global leading
position in aggregates and is among the top three global players in cement and
ready-mixed concrete. It is geographically diversified, with a presence in about
40 countries. In 2011, the group reported revenue and EBITDAR (based on Fitch's
calculations) of EUR12.9bn and EUR2.4bn, respectively.
Additional information is available on www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable criteria, "Corporate Rating Methodology", dated 12 August 2011 are
available at www.fitchratings.com.
Applicable Criteria and Related Research:
Corporate Rating Methodology