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Heidelberg Materials weighs US listing to tackle valuation gap

Published 22/02/2024, 08:35
© Reuters. FILE PHOTO: A logo of HeidelbergCement is pictured at their headquarters in Heidelberg, Germany, June 21, 2016. REUTERS/Ralph Orlowski/File Photo

By Christoph Steitz

HEIDELBERG, Germany (Reuters) -Germany's Heidelberg Materials is considering a listing in the United States, its chief executive said on Thursday, as a way to tackle a gap in how its assets are valued at home and abroad.

Dominik von Achten's considerations follow plans by Heidelberg Materials' bigger rival Holcim (SIX:HOLN) to fully separate and list its U.S. business.

In comments following the release of the group's annual results on Thursday, von Achten ruled out a corporate split under his leadership, but said all other options, including a local listing, were being looked at to address lower valuations in Europe versus the United States.

Asked about the scenarios, von Achten said they ranged from "increased transparency around our U.S. performance, maybe in some certain business lines, all the way to a listing in the U.S.", without providing more details.

Von Achten said there was a difference between fully separating and listing the U.S. operations, adding that the company was weighing the pros and cons of a listing but that there were no firm plans and that the group would take its time.

Shares in Heidelberg Materials were down 1.4% at 1529 GMT. Traders cited profit-taking after the stock reached its highest level in more than six years earlier this week.

Von Achten also expressed greater appetite for deal-making at the world's second-biggest cement maker, boosted by a record operating profit and lower debt last year that led to another share buyback.

He singled out the U.S. market as a place where the company could buy, but downplayed the likelihood for deals above 4 billion euros ($4.32 billion), saying smaller and mid-sized transactions would be easier to align with the company's decarbonisation strategy.

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Inflation and financing costs would continue to weigh on residential construction, the company said, but it would focus on negotiating price increases and cost cutting.

It said its operating profit could rise further in 2024 as construction demand was expected to stabilise at low levels.

Heidelberg Materials expects a result from current operations (RCO) of 3.0 billion to 3.3 billion euros, compared with a 3.1 billion analyst consensus provided by the group. In 2023, RCO rose 29.5% to a record 3.02 billion euros, it said.

($1 = 0.9214 euros)

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