HeidelbergCement dividend at highest level since 2007

HeidelbergCement raised its dividend to the highest level since 2007 and forecast moderate profit growth this year as the world's second-largest cement maker sells assets and seeks to benefit from recovery in some markets like the US and UK.

The payout to investors will increase 73 per cent to €1.30 per share, the Heidelberg, Germany-based company said in a statement Thursday.

For 2016, the cement maker expects a “moderate increase” in revenue and operating income adjusted for currency and consolidation and the same for profit before non- recurring items.

The shares gained as much as 2.8 per cent. HeidelbergCement agreed in July to buy Bergamo, Italy-based Italcementi for €3.7 billion to counter the merger of its two larger competitors into LafargeHolcim and to bolster business in markets in southern Europe and Africa.

The cement maker has been aggressively trying to wring savings from the combination, raising a forecast last month to €400 million.

"Our new strategic priorities of shareholder returns and continuous growth are reflected in the considerably raised dividend proposal as well as in the planned takeover of Italcementi," chief executive officer Bernd Scheifele said in the statement.

The company is targeting €1 billion of asset sales and expects the acquisition to close this year.

HeidelbergCement has a positive outlook for the global economy while geopolitical and macroeconomic risks increased, it said.

It sees growth in sales volumes of cement, aggregates and ready-mixed concrete this year.

The company in February reported fourth-quarter operating income before depreciation rose 11 per cent to €696 million and said the US and UK markets were showing signs of recovery while the Chinese economy was going through an “unpredictable slowdown.”

Bloomberg