Heidelberg Materials AG · XETR:HEI
Heidelberg Materials — Investor Day (May 2022)
30 slides from Heidelberg Materials's investor day presentation, May 24, 2022
Slide 1: We drive value
• Titel bearbeiten We drive value Zweite Ebene 2022 Capital Markets Day – 24 May René Aldach Member of the Managing Board & CFO 2022 Capital Markets Day – Finance
Slide 2: We are stronger today than ever before
We are stronger today than ever before. 2 2022 Capital Markets Day – Finance
Slide 3: We have a clear focus on value creation for all stakeholders
We have a clear focus on value creation for all stakeholders. 3 2022 Capital Markets Day – Finance
Slide 4: We regard the CO2 transformation as a business opportunity for us
We regard the CO2 transformation as a business opportunity for us. 4 2022 Capital Markets Day – Finance
Slide 5: We are well-aware of CO2 transformation business impacts and have a clear roadmap
WE DRIVE VALUE We are well-aware of CO2 transformation business impacts and have a clear roadmap Reduce clinker incorporation, CapEx for defined CO2 − Improved energy cost efficiency increase alternative fuels rate and roadmap − Lower CO2 exposure other efficiency measures CapEx − First mover advant
Slide 6: Conventional CO2 CapEx is already incorporated into our business model
WE DRIVE VALUE Conventional CO2 CapEx is already incorporated into our business model Decrease clinker − Key projects already defined and incorporation in execution − Clear roadmap on plant level to reduce CO2 emissions per tonne of clinker/cement Process excellence ~€ 100-150 m Increase alternative
Slide 7: CCUS CapEx will not have any material impact on our cash allocation
WE DRIVE VALUE CCUS CapEx will not have any material impact on our cash allocation Clear roadmap defined for each project, including sensitivity analysis Key assumptions: CapEx for current CCUS projects − All projects to be funded through free cash flow − Total 6 projects will enable 10 mt CO2 captu
Slide 8: OpEx for capturing and storage is already far below the current ETS price
WE DRIVE VALUE OpEx for capturing and storage is already far below the current ETS price Currently included CCUS project portfolio until 2030 80 − Total OpEx for capturing and 70 storage on average ~60 €/t OpEx cost per t CO2 for each project 60 Average OpEx cost per t CO2 ~38 €/t CO2 for capturin
Slide 9: CCUS turns into a competitive advantage in Europe
WE DRIVE VALUE CCUS turns into a competitive advantage in Europe 2022 2023 2024 2025 2026 2027 2028 2029 2030 − CBAM and -10% EUA reduction starting in 2026 will lead to an increasing shortfall in EUAs − Pricing in the sector will move up reflecting the average ETS balance Annual ETS balance without
Slide 10: CCUS turns into a competitive advantage in Europe
WE DRIVE VALUE CCUS turns into a competitive advantage in Europe 2022 2023 2024 2025 2026 2027 2028 2029 2030 − CBAM and -10% EUA reduction starting in 2026 will lead to an increasing shortfall in EUAs − Pricing in the sector will move up reflecting the average ETS balance − CO2 cost avoidance due t
Slide 11: CCUS turns into a competitive advantage in Europe
WE DRIVE VALUE CCUS turns into a competitive advantage in Europe 2022 2023 2024 2025 2026 2027 2028 2029 2030 − CBAM and -10% EUA reduction starting in 2026 will lead to an increasing shortfall in EUAs − Pricing in the sector will move up reflecting the average ETS balance − CO2 cost avoidance due t
Slide 12: CCUS and ETS present a clear margin opportunity for us in Europe
WE DRIVE VALUE CCUS and ETS present a clear margin opportunity for us in Europe Indicative chart €/t CEM Price Cost Margin industry average 2026 2030 Assumptions: (1) European commission reforms on ETS implemented, namely CBAM in 2026 and free allowances reduced by -10% p.a. starting 2026 12 2022 Ca
Slide 13: CCUS and ETS present a clear margin opportunity for us in Europe
WE DRIVE VALUE CCUS and ETS present a clear margin opportunity for us in Europe Indicative chart €/t CEM Price Cost Margin opportunity Margin HeidelbergCement industry due to lower EUA needs average 2026 2030 Assumptions: (1) European commission reforms on ETS implemented, namely CBAM in 2026 and fr
Slide 14: CCUS and ETS present a clear margin opportunity for us in Europe
WE DRIVE VALUE CCUS and ETS present a clear margin opportunity for us in Europe Indicative chart Margin opportunity €/t CEM HeidelbergCement due to premium products Price Cost Margin opportunity Margin HeidelbergCement industry due to lower EUA needs average 2026 2030 Assumptions: (1) European commi
Slide 15: Our CO2 transformation fits to our capital allocation ambition
WE DRIVE VALUE Our CO2 transformation fits to our capital allocation ambition CapEx for conventional ~€100-150 m p.a. CO2 reduction initiatives already included in Net CapEx target CapEx ~€1.5 bn until 2030 to capture 10 mt CO2 CapEx for CCUS no major impact on cash allocation ~60 €/t of captured CO
Slide 16: We are aligning our financing with our sustainability targets
We are aligning our financing with our sustainability targets. 16 2022 Capital Markets Day – Finance
Slide 17: More than 70% of our financial instruments will be sustainable by 2025
WE DRIVE VALUE More than 70% of our financial instruments will be sustainable by 2025 Linking financing to climate change and innovation Sustainable/green as % of total financial instruments Pricing Overview as of today: adjustment > 70% Sustainability-linked loan (RCF) Use of proceeds KfW / EIB loa
Slide 18: Our ambitious target is aligned with the EU Taxonomy
WE DRIVE VALUE Our ambitious target is aligned with the EU Taxonomy* KPI 1: Specific net CO2 emissions per tonne of KPI 2: Tonnes of CO2 emissions avoided using CCUS cementitious material (GCCA definition) Target: 400kg net CO2 /t cementitious by 2030 Target: 10 mt cumulative until end of 2030 Frame
Slide 19: We are further improving our financial position until 2025
We are further improving our financial position until 2025. 19 2022 Capital Markets Day – Finance
Slide 20: Low EBITDA volatility and strong growth combined with high cash generation
WE DRIVE VALUE Low EBITDA volatility and strong growth combined with a high cash generation Well balanced footprint and product portfolio >> Stable and solid EBITDA development Lfl EBITDA growth 9.1% 8.2% 6.7% 6.1% 5.9% 4.7% 5.5% 3.6% Ø 5% vs. global GDP growth of 2.7% 2.0% 2.5% ABOVE NEW CASH 2011
Slide 21: Core Capex drastically reduced in favour of conventional CO2 and CCUS capex
WE DRIVE VALUE Core Capex drastically reduced in favour of conventional CO2 and CCUS capex Net CapEx spending p.a. 1. Core CapEx down by €250-300 m p.a. €1.2 bn 100-150 ~€1.1 bn 2. Conventional CO2 CapEx up 50-100 ~€1.0 bn +€50-100 m p.a. -250-300 3. CCUS added as new category 850-900 4. Total Net C
Slide 22: We will further increase our ROIC target to >10%
WE DRIVE VALUE We will further increase our ROIC target to >10% Above 10% ROIC 9.3% Clearly above 8% 10 7.9% 7.2% 8 6.5% ABOVE 2018 2019 2020 2021 Beyond 2020 New target NEW ROIC TARGET: 10% BY 2025 target for 2025 22 2022 Capital Markets Day – Finance
Slide 23: Our leverage is at a very comfortable level, target BBB flat rating well-secured
WE DRIVE VALUE Our leverage is at a very comfortable level, target BBB flat rating well-secured Leverage (Net debt / EBITDA) 2.7x 2.3x 1.9x Between Between 1.3x 1.5x to 2.0x 1.5x to 2.0x NO CHANGE 1.5x IN LEVERAGE to 2018 2019 2020 2021 Beyond 2020 target Target confirmed TARGET: 2.0x 23 2022 Capita
Slide 24: Our cash allocation will further shift to shareholder return and growth
Our cash allocation will further shift to shareholder return and growth. 24 2022 Capital Markets Day – Finance
Slide 25: We will continue to grow the business through bolt-on acquisitions
WE DRIVE VALUE We will continue to grow the business through bolt-on acquisitions Gross Non-PPE (M&A) CapEx (€m) Key criteria: − Strategic fit aligned with portfolio and financial targets − Contribution to net profit 1,425 after year 1 310 − ROIC around 10% after reaching 167 acquisition’s full pote
Slide 26: Strong cash generation, focus on shareholder return and growth
WE DRIVE VALUE Strong cash generation, focus on shareholder return and growth Cash generation 2018-2021 Cash allocation 2018-2021 Cash allocation 2022-2025 €6.7 bn FCF in last 4 years Focus was mainly on debt payback Focus on shareholder return and growth 3.2 9.5 Divestments Bolt-on & Clear commitme
Slide 27: We are fully committed to deliver on our ambitious financial targets
We are fully committed to deliver on our ambitious financial targets. 27 2022 Capital Markets Day – Finance
Slide 28: We set ambitious new targets for 2025
WE DRIVE VALUE We set ambitious new targets for 2025 Key figure Beyond 2020 target Current status New targets 2025 EBITDA margin 22% by 2025 (+300 bps vs. 2019) End of 2021: 20.7% (+171 bps vs. 2019) 20-22% by 2025 = ROIC Clearly above 8% End of 2021: 9.3% Above 10% Leverage 1.5x to 2.0x End of 2021
Slide 29: Key takeaways
1. We further expect profitable growth, driven by good demand, strong pricing and – importantly – our sustainable products. 2. As an early mover in CCUS, we see a substantial margin growth opportunity in Europe. But not only there! 3. We will make this transition – including CCUS – happen within our
Slide 30: We are HeidelbergCement
We are HeidelbergCement. Sustainable value for our stakeholders. 2022 Capital Markets Day – Finance