WASHINGTON (dpa-AFX) - Heidelberg Materials AG, a German building materials company, reported Wednesday higher result from current operations or RCO in its third quarter, driven by strong revenue growth, while RCO margin declined from last year. Citing the positive development over the past two quarters, the company confirmed its positive fiscal 2026 outlook.
Further, the firm now expects to exceed its targeted cost savings of €500 million from Transformation Accelerator Initiative by the end of the year.
On XETRA in Germany, the shares were gaining around 8.50 percent, trading at 169.85 euros.
The company plans to continue and expand the initiative over the next two years, and to achieve additional savings of €300 million by the end of 2028. These will be realised in nearly equal parts in 2027 and 2028. The initiative aims to mitigate cost inflation and improve margins through greater technical efficiency.
In addition to operational excellence, the focus is primarily on structural changes, especially in Europe, the company said.
Special attention is being paid to the clinker and cement network in Europe due to the persistently weak market conditions in some markets.
In addition, the company is focusing on low-carbon products with a lower proportion of clinker.
Looking ahead for fiscal 2026, Heidelberg Materials continues to expect the result from current operations or RCO to be between €3.40 billion and €3.65 billion. ROIC is forecast to remain slightly above 10 percent.
In the third quarter, RCO grew 8.7 percent to €1.281 billion from previous year's €1.179 billion. On a like-for-like basis, RCO increased 6.5 percent.
RCO margin, meanwhile, dropped 31 basis points to 20 percent from 20.3 percent 20.0 percent last year.
Result from current operations before depreciation and amortisation or RCOBD grew to €1.624 billion from €1.502 billion a year ago. RCOBD margin fell 54 basis points from last year to 25.3 percent.
In the third quarter, the company's revenue increased 10.4 percent to €6.413 billion from previous year's €5.807 billion. Like-for-like revenue growth was 5.6 percent.
The company recorded strong business development in Europe and sustained growth in North America.
In Europe, revenue of €2.491 billion grew 4.8 percent on a reported basis and 3.9 percent on LFL basis.
In North America, revenue was €1.617 billion, up 9.6 percent from last year, while LFL growth was 6.8 percent.
The firm also recorded strong double-digit revenue growth in Asia-Pacific, Africa-Mediterranean-Western Asia, and Group Services.
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