HeidelbergCement struggles with rising costs

HeidelbergCement said rising energy costs could not be offset by price increases in the second quarter, as the cement maker posted results broadly in line with estimates.

Shares for the Heidelberg, Germany-based cement maker were indicated opening 2.4 per cent lower according to brokers Lang & Schwarz at 0527 GMT.

"Despite a positive development of turnover and results, we are not satisfied with the second quarter," Chief Executive Bernd Scheifele said in a statement.

"We were not able to offset the increase in energy costs in the cement business line with the price increases implemented so far," he added.

The world's No 3 construction materials group said on Friday that second-quarter operating income before depreciation (OIBD) fell 6.1 per cent to €651 million ($934.9m), slightly below the €677m average estimate in a Reuters poll.

Net income from continuing operations for the quarter came in at €219m, above the poll average of €213m.

The group affirmed its outlook and said that the focus in the coming quarters would be on offsetting rising costs for energy and raw materials by raising the prices it charges its customers and cutting costs.

Growth in the Asia-Pacific and Africa-Mediterranean regions was able to partially compensate for rising raw material costs .

HeidelbergCement's rivals include France's Lafarge and Switzerland's Holcim .

On Thursday, Lafarge the world's largest cement maker, said second-quarter operating income fell 16 per cent, missing analysts' forecasts, as higher raw material costs took their toll.

Lafarge, like Heidelberg, struggled to push through price hikes to compensate for higher raw materials prices.

Indocement Tunggal Prakasa , Indonesia's biggest cement maker by market value, which is controlled by HeidelbergCement, on Thursday said that second quarter net profit edged up just 0.7 per cent, weighed by rising costs too.

Last week, Mexican cement maker Cemex reported a net loss of $294m for the April-June period, also much worse than analysts' expectations for a loss of $64m, according to a Reuters poll.

Although revenues rose in Northern Europe, especially in Germany, the group was severely hurt by weak US demand and restructuring and severance expenses.