UPDATE 2-HeidelbergCement flags strong Q3 as cost cuts take effect

* July, August profits up yr-on-yr

* EBITDA margin to improve to 22% by 2025

* No megadeals on agenda - CFO

* Shares up 1.1% (Recasts, adds details, context)

FRANKFURT, Sept 16 (Reuters) - HeidelbergCement has had a strong third quarter so far, boosted by stable prices and cost cuts launched earlier this year.

The group had said in July it would continue to tighten its purse strings after a good start to the July-September quarter.

“Our results in July and August were significantly higher than in the respective months of the previous year,” Chief Executive Dominik von Achten said at the group’s capital markets day. “The basis for this were in particular our cost savings and stable prices.”

The group also gave new mid-term targets, expecting its core profit (EBITDA) margin to rise by 300 basis points to 22% by 2025 compared with last year, with a return on invested capital of clearly more than 8%.

Shedding non-core and underperforming assets will be a key margin driver, von Achten said. He said HeidelbergCement would pull out of markets where it could not keep a top position or where returns were too low.

He declined to spell out which markets those could be, only saying there was no need for fire sales in the current COVID-19 environment, which he said could have an impact on deal execution.

Commenting on M&A, Chief Financial Officer Lorenz Naeger said that no multi-billion “megadeals” were on the agenda, adding activity would rather be small and targeted.

The company, the world’s second-largest cement maker, said that the result from current operations before depreciation and amortisation in July and August was up by a low double digit percentage versus 2019.

Shares in the group, which competes with Switzerland’s LafargeHolcim, were 1.1% higher. They have lost 13% year-to-date.

HeidelbergCement also said it aims to cut net carbon emissions to below 525 kilograms per tonne of cement by 2025, five years earlier than previously planned.

It aims for its cement production, one of the most carbon intense industrial processes, to be carbon neutral by 2050 at the latest. (Editing by Michelle Adair/Douglas Busvine/Jane Merriman)