Heidelberg Materials forecasts higher annual sales on boost from U.S. incentives

By Christoph Steitz

HEIDELBERG, Germany (Reuters) - Heidelberg Materials forecast 2023 higher sales, helped in part by a major U.S. subsidy scheme that the world's second-largest cement maker said will boost local business, pushing the group's shares to a fresh 1-year high.

The company, which counts North America as its second-largest market by sales globally, said it would benefit from infrastructure investments as part of the U.S. $369 billion Inflation Reduction Act.

"After the geopolitical shifts, the Americans have decided to strengthen their own position," Heidelberg Materials Chief Executive Dominik von Achten said on Thursday.

"And as is so common in America, when a decision is made, trillions are allocated to this decision. That's what happened in this case."

Heidelberg Materials reported sales of 4.9 billion euros ($5.2 billion) in North America last year, an increase of 7.8% and accounting for nearly a quarter of total sales.

The region remained a focus market for Heidelberg Materials, von Achten said, adding that the group could make further acquisitions in North America and that he was optimistic about the market for the next 2-3 years.

The company's shares were up 2% at 1120 GMT at the top of Germany's DAX, hitting their highest since Feb. 21, 2022, with traders welcoming the outlook that foresees higher sales this year from the record 21.1 billion euros achieved in 2022.

According to Refinitiv estimates, analysts expect 2023 sales of 20.9 billion euros, a fall of less than 1%.

Von Achten warned of competition between Europe and the United States regarding industrial incentives, adding that Europe would be better off trying to match, rather than surpass U.S. subsidies.

"I perceive ... Europe would be ill-advised to enter into a super-competition with the Americans now, along the lines of 'higher, harder, further'. We will not be able to win that," von Achten said.

Heidelberg Materials also expects a 2023 result from current operations (RCO) of between 2.35 billion euros and 2.65 billion euros, compared with 2.5 billion euros last year, reflecting what it expects will be volatile energy and raw materials prices.

"The focus is therefore on further price adjustments and strict fixed cost management," the company said.

Heidelberg Materials, which greatly depends on energy prices in the production of cement, posted a 4.9% rise in fourth-quarter RCO to 694 million euros. Its sales rose 12.1% to 5.3 billion euros, beating the 5.2 billion euros expected by analysts.

($1 = 0.9417 euros)

(Reporting by Christoph Steitz; Editing by Friederike Heine and Shounak Dasgupta)