HeidelbergCement announced that it has made good progress with the acceleration of its portfolio optimization during the past weeks. The company closed the divestment of its 50 percent share in Ciment Québec and its minority participation in Syria in December 2018. In addition, a former cement plant area within the Cairo metropolitan area has been auctioned, and the divestment of the Ukrainian business has been signed. Closing of the latter transactions is expected to occur in 2019.
All these divestments together have a total value exceeding €150 million ($172 million), and will have a slightly positive effect on operating EBITDA in 2019 compared with 2018.
“We deliver on our action plan and have accelerated our efforts to improve our portfolio and generate cash in order to speed up deleveraging,” said Dr. Bernd Scheifele, chairman of the managing board of HeidelbergCement. “For 2018, we expect to realize about €500 million in disposal proceeds and we are well on our way to reach our target of €1.5 billion by the end of 2020. We remain committed to improving shareholder value and maintaining a solid investment grade rating.”
At HeidelbergCement’s Capital Markets Day in summer 2018, the company announced its goal to reduce complexity and risk by disposing of non-core businesses, market positions with high risks or limited growth potential and idle assets. The original target was to generate proceeds from disposals in the range of €1 billion to €1.5 billion in the three-year period from 2018 to 2020.
When the Q3 2018 earnings report was released in early November 2018, HeidelbergCement announced an action plan to drive earnings and cash flow generation. As part of this action plan, the company intends to accelerate disposals and review further divestment potentials with the goal to reach or even exceed the upper end of the target range set at the Capital Markets Day.