Heidelberg Materials' target is to enhance the value of the Group through sustainable and result-oriented growth. Earning the cost of capital and achieving sufficient financial performance are the necessary prerequisites to generate returns for shareholders and guarantee the company’s permanent entrepreneurial ability to act, allowing it to invest in innovation and growth as well as in the development of its personnel and the company.
Beyond our financial performance, we make our contribution to environmental protection and the development of society. In this respect, we are guided primarily by the expectations and requirements of the people and organisations we are in close contact with:
We launched our strategy Beyond 2020 in September 2020. Within this framework, we have defined 5 Concrete Promises in May 2022, on which we intend to focus:
We focus on heavy building materials.
We commit to generate 50% of our revenue from sustainable products by 2030.
We commit to reduce CO₂ emissions to 400 kg CO₂/t CEM by 2030.
We will make this transition a successful business case.
We drive the change for the benefit of our customers, our shareholders, our employees, and the society we live in.
Heidelberg Materials is one of the world's largest manufacturers of building materials, and we’ve been contributing to progress for 150 years. Our products are used in every kind of project, from the construction of houses to creating infrastructure like roads, tunnels, and bridges to the building of commercial and industrial facilities.
The core activities of Heidelberg Materials comprise the production and sale of cement and aggregates, the two essential raw materials for concrete. Our downstream activities include mainly the production and sale of ready-mixed concrete as well as asphalt and other building products.
The heavy building materials sector offers great prospects for growth: Global average construction output is expected to increase by 3.6% per annum over the decade to 2030. Moreover, the global urban population is expected to grow by 1.5 times to 6 bn by 2045. This makes the underlying demand for our products very promising in all segments: infrastructure, residential and non-residential.
The underlying demand for our products remains very promising
When we look at concrete, the second-most consumed material in the world after water, we clearly see its advantages. Concrete is:
Locally made, locally sold
100% recyclable
Durable
Sound-absorbing
Non-flammable
Customisable & flexible
Cost-effective
Concrete is the foundation of modern development. But despite all its positive attributes, we also see the challenges: namely CO2 and energy intensity, as well as the current state of low-value recycling.
This is what we want and will change: Heidelberg Materials is taking the lead to make concrete more sustainable. For us, providing a sustainable product portfolio to our customers will be the game changer for our profitable growth. We will minimise the CO2 intensity of our cement and concrete and maximise circularity in our product mix. That is our focus – today and in the future.
To ensure even greater success in our core business, Heidelberg Materials has set up a digital infrastructure that crosses all business lines and operations. Our ambition is to become the first industrial tech company in the sector and shape the heavy building materials industry towards simplicity, safety for workers, and sustainability.
Concrete Promise #2: We commit to generate 50% of our revenue from sustainable products by 2030.
Heidelberg Materials has made a commitment to generate 50% of our revenue through low-carbon and circular products and solutions by 2030. As a measure of our increased focus on the production and sale of sustainable building materials, we will publish the revenue generated with these products starting from the 2022 reporting year.
To do so, we’ve established the “ecolution” programme as a framework under which all sustainable revenues are recorded: It provides a transparent definition, based on a clearly defined benchmark and strict sustainability criteria. The sustainability of our products in the cement and concrete business lines is measured by their contribution to the reduction of CO₂ emissions. The sustainability of our products in the aggregates and asphalt business lines is measured by their contribution to the circular economy.
Sustainable products already on offer in the Group countries include low-carbon products, concrete products with recycled aggregates content, or innovative solutions that allow for lower material usage, for example, through the targeted placement of the material, as well as the safe and cost-efficient rehabilitation of infrastructure that has reached the end of its lifecycle.
Beside reducing our carbon footprint through the use of alternative raw materials and clinker technologies, our research laboratories are also working on products intended to improve the energy efficiency of buildings, contribute to a cleaner urban environment, and support the energy transition.
We are working intensively to reduce our CO₂ footprint by closing the carbon cycle and by developing cements with a reduced clinker content. For various locations, we are also evaluating the use of alternative cement components, such as natural pozzolans or calcined clays.
Our ecolution programme sets out strict sustainability criteria
Our investments in circular economy are already making a decisive contribution to the long-term reduction of CO₂ emissions. The principle of "reduce – reuse" – in terms of both materials used and CO₂ produced – is key to all our actions in this context.
Concrete Promise #3: We commit to reduce CO₂ emissions to 400 kg CO₂/t CEM by 2030.
As part of our “Beyond 2020” strategy, we’ve significantly advanced our ambitious climate targets. In spring 2022, we substantially tightened our emissions reduction target, sharply accelerating decarbonisation: By 2030, we intend to reduce specific net CO₂ emissions to 400 kg/t of cementitious material. This corresponds to a reduction of almost half compared with the base year 1990.
Ready for takeoff: we are sharply accelerating decarbonisation
To achieve this, we will rely mainly on the following levers:
Optimising the product mix: Construction markets are embracing sustainability – and we are pioneering this change, providing local, sustainable solutions, including low-carbon and recycled materials. The guiding principles here are lowering the clinker content in our products and driving circularity.
Process improvements: We are driving forward measures at our plants, like maximising the use of alternative fuels, including biomass, switching to electricity from renewable energy sources and carrying out a wide range of investments in plant efficiency.
Carbon capture, utilisation and storage (CCUS): Heidelberg Materials has the most advanced CCUS project portfolio in our sector. With just the projects already launched, we are on course to save 10 million tonnes of CO₂ cumulatively by 2030. In Brevik, Norway, we are building the world’s first industrial-scale CCUS plant in the cement sector, and numerous other CCUS projects with solid technologies and leading partners are currently being developed all over the world.
We have defined concrete targets for all these measures at all locations worldwide.
But our 2030 target of 400 kg CO₂ per tonne of cementitious material is only an intermediate step on the way to the ultimate destination: By 2050 at the latest, we will offer carbon-neutral cement and concrete across our entire portfolio and achieve “Net Zero” emissions.
These goals and the associated measures are consistent with the road map defined by the International Energy Agency (IEA) to help the industry implement the Paris Agreement. Heidelberg Materials was the first cement company to have its targets reviewed and endorsed by the Science Based Targets initiative (SBTi). We are now actively supporting the SBTi’s efforts to finalise a 2030 road map and criteria for the cement industry in line with the 1.5 °C target.
Concrete Promise #4: We will make this transition a successful business case.
We are convinced that the stepping-up of our climate targets is not in contradiction to commercial success. Our clear focus is on shareholder return and value creation, and we are positioned to continue our profitable growth in the years ahead. We also anticipate a further increase in the return on invested capital, which is why we’ve raised our ROIC target to >10%.
We set ourselves new and ambitious targets
Thanks to our well-balanced product portfolio, high demand, and a consistently implemented pricing policy, we expect revenue growth of 5% per year on a comparable basis. Being an early mover in CCUS, we see substantial margin growth opportunities in many regions. Combined with ongoing success in sales growth and sustainable premium products, for which there is very clear demand, we see our EBITDA (RCOBD) margin between 20% and 22% on average by 2025.
All of these measures will continue to generate a high cash flow in the future, which will enable us to finance the transition solidly from our own resources – well within our free cash flow and leverage targets. With our balanced cash allocation strategy, we expect to be able to keep our leverage ratio within the range of 1.5x to 2.0x EBITDA and at a level that is efficient in terms of capital costs.
We are building on a strong foundation, and our leading role in the sector will also extend to the area of financing. By 2025, more than 70% of our debt will be covered by sustainable financial instruments that are aligned with the climate goals of the EU taxonomy.
Concrete Promise #5: We drive the change for the benefit of our customers, our shareholders, our employees, and the society we live in.
Heidelberg Materials is leading the way towards decarbonisation of the building materials sector. With technologies from carbon capture to carbon-reduced cement and digitally optimised processes, Heidelberg Materials has already made great progress on its path to becoming a net-zero company. But how will this transformation affect us? What do we mean when we speak of “change for the benefit of our customers, our shareholders, our employees and the society we live in?”
Customers: Heidelberg Materials is a reliable partner for sustainable products and solutions
From big infrastructure programmes to residential development, our customers’ demand for sustainable building materials continues to grow. We at Heidelberg Materials have long been committed to offering a wide range of high-quality sustainable products that meet the needs of growing populations in our different markets. We are ready for the future of net-zero building, and – with products like EcoCrete – we offer the right products to achieve just that.
Shareholders: Heidelberg Materials is positioned for profitable growth in a transforming sector
Fuelled by green procurement criteria and growing ESG demands, customers are willing to pay a premium for sustainable products, making them a key differentiator and a game changer for profitable growth. For early movers like Heidelberg Materials, this creates advantages in terms of costs, margins, and growth. For us, the transformation of our sector is a once-in-a-lifetime opportunity.
Employees: Heidelberg Materials is a future-proof employer
While society and the demands from customers and regulators are transforming towards a net-zero world, Heidelberg Materials is already far along in the process of changing ourselves, our vision, and our culture. We don’t seek the quick and shortsighted answers to the big challenges of our time. We are in this for the long run. We are here to drive the change, shape our future and create secure jobs with a purpose.
Society: Heidelberg Materials provides the materials to build a sustainable tomorrow
Solving the issues of population growth, climate change, and resource challenges is critical for the future of global prosperity. Society needs smart, resilient, and livable buildings and infrastructure, making our innovative sustainable products key to the sustainable development of our world.
