HeidelbergCement has a stable financing structure for the long term and a well-balanced debt ma- turity profile (see the following diagram). We will refinance the €1 billion Eurobond becoming due in October 2014 and the maturing financial liabilities in 2014 by making use of available liquidity, issuing on the capital market, or use of free credit lines depending on the capital market situation. The following graph shows the maturity profile of HeidelbergCement as at 31 December 2013.
Debt maturity profile as at 31 December 2013 1) (€m)
1) Excluding reconciliation adjustments of liabilities of €-49.9 million (accrued transaction costs, issue prices, and fair value adjustments) as well as derivative liabilities of €29.6 million. Excluding also puttable minorities with a total amount of € 50.6 million.
Bonds Debt instruments Syndicated facility (SFA)
2014 2015 2016 2017 2018 2019 2020 2021 > 2021 0 500 1,000 1,500 2,000 2,500 1,000 1,291 1,300 97 846 247 23 1,122 11 980 19 500 1,050 500 39 2 2 5
As at the end of 2013, we had liquidity reserves consisting of cash, securities portfolios, and committed bank credit facilities, amounting to €4.2 billion (see Group financial management section on page 77). We also have framework programmes in the money and capital markets in place that allow us to issue the relevant securities within a short period of time (€1.5 billion Euro Commercial Paper Programme and €10 billion EMTN Programme).
Our objective is to further improve our financial ratios in the coming years in order to achieve the necessary preconditions for our credit rating to be upgraded further by the rating agencies. In particular, we want to reduce the ratio of net debt to operating income before depreciation (OIBD) to below 3.0x by the end of 2014 (31 December 2013: 3.1x). An investment grade rating remains our objective as – given the capital-intensive nature of our business – favourable refinanc ing opportunities in the banking, money, and capital markets create an important competitive advantage.
Employees and society
Over the next few years, we will continue to focus on improving the identification of internal successor candidates for senior management positions and on the global IT-supported handling of our core personnel processes for all management levels. Since the beginning of 2013, the performance management, goal agreement, remuneration, appraisal interview, and individual development plan processes for senior managers have been handled with IT support via the “HR GLOBE” platform. The extension of this approach to middle management and future executives started at the end of 2013 and will be gradually continued over the next years.
The “Summit” management training programme in collaboration with Duke Corporate Education will be the focus of our training measures at Group level until 2015. In the coming years, we will constantly examine the quality of our programmes for the advancement of future executives, such as the trainee programme for new employees from the CIS countries, and develop these programmes across all countries. We have added a follow-up programme to our existing “Engineer in Training” programme. In the aggregates business line, we are continuing with the trainings at the Aggregates Academy. Over a period of four to five years, our talented engineers are specifically prepared for management positions in the technical field both in Germany and abroad.
In 2014, we will proceed with the training of middle and junior management in the topic of man- agement responsibility in occupational health and safety. Foremen, in particular, play a key role in the improvement of our occupational health and safety culture. Consistent implementation of and compliance with existing safety standards continues to take top priority and is a pre-requisite for the prevention of accidents, which we will monitor in a targeted manner by means of stan- dardised site inspections.
The areas surrounding our plants are as diverse as the people living and working there. That is why our social commitment is geared towards their needs. The voluntary activities we undertake at our locations are in line with our Corporate Citizenship Guidelines. All measures should achieve positive results for the benefit of society. We also want to promote mutual trust and partnership through transparency, open communication, and cooperation. Because we firmly believe that companies play a vital role in tackling social issues, our commitment is an ongoing one. In cooperation with development organisations, we aim to improve health care and the quality of vocational training in particular at our locations in Africa.
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Environmental responsibility
HeidelbergCement will continue to hold the co-chair of the WBCSD Cement Sustainability Initiative (CSI) in 2014. The key areas of activity focus on climate change, biodiversity, and the development of a global responsible sourcing scheme for concrete.
We will increase the number of biodiversity management plans as well as implement and moni- tor existing plans. With our partner BirdLife International, we will examine the possibilities of future cooperation in Africa and Asia. The second round of the “Quarry Life Award” is currently in progress in 22 countries. Prizes will be awarded for the most innovative projects of students and young researchers at an international presentation in Prague in autumn 2014.
Various projects are planned in all Group areas in order to increase the proportion of alternative fuels that are recovered from waste materials. We want to convince waste management companies, municipalities, and public authorities of the advantages that waste utilisation in clinker kilns offers within a balanced waste management system.
In 2014, the regulatory environment continues to be difficult and uncertain due to the as yet pend- ing structural reform of the EU Emissions Trading System (EU ETS) and review of the so-called carbon leakage list, which names industrial sectors that are deemed to be at considerable risk
of transferring CO2 emissions to non-EU countries, is ongoing. Nonetheless, we believe it highly
probable that the cement industry will continue to receive free allocation of emission certificates. In China, our plants in the Guangdong province will be affected by a recently introduced regional
CO2 emissions trading scheme from 2014 onwards.
We will continue our Group-wide environmental audit of all business lines in 2014 in order to achieve our goal of auditing all locations between 2015 and 2020.
In 2014, our environmental protection initiatives will also focus on reducing dust, nitrogen oxide, and sulphur oxide emissions. We will therefore invest in new filters and emission monitoring sys- tems at several locations in Europe, Asia, and Africa. In order to comply with NESHAP (National Emission Standards for Hazardous Air Pollutants), we will install new clinker coolers, mercury control systems, and various continuous monitoring systems for mercury, dust, and hydrocarbon emissions at our US cement plants.
In India, we will commission a facility to generate electricity from the waste heat of all three kiln lines at our clinker plant Narsingarh. As a result, we will save energy and generate over 13 MW of electricity ourselves.
At our European ready-mixed concrete plants we will either install new recycling systems or update the existing systems.
Research and technology
In the next few years, we will continue centering our efforts on developing cement types with re-
duced clinker proportion and thus lower CO2 emissions. The alternative raw materials and fuels used
will benefit the environment. Significant cost savings are also expected, depending on the future
price development for CO2 emission certificates. In addition, we will promote the development of
Another area of focus is the development of high-quality binders and concrete applications in order to achieve greater benefit for our customers and added value for our company. In the future, we will intensify the successful transfer of technology to further increase the speed of innovation. For the concrete business, we plan to increase again the profit contribution of special products in mature markets in 2014.
In the cement business line, we will ensure that the success of our “Operational Excellence” programme, which was completed during the reporting year, will lead to further sustainable savings in the coming years. In the aggregates business line, we will continue to advance the “CLIMB Commercial” programme, which was launched in 2013 and focuses on optimising our product, price, and customer strategy. We intend to improve our results by €120 million by the end of 2015.
Procurement
Over the current and the next year, we will continue to increase the efficiency of our procurement activities by consistently standardising and optimising our procurement processes. This will include further efforts to bundle commodity groups.
For 2014, we anticipate varying energy price developments in the energy markets that are relevant to us. While significant price increases are still expected in Asia, Central Asia, and parts of Africa partly because of the high rates of inflation, we anticipate a more stable price level for Central and Northern Europe in comparison with 2013. In North America, we expect higher electricity and fuel costs compared with 2013 due to the recently once again increased gas prices.
Overall, we plan to maintain the rather short-term focus of our purchasing policy for fuels and electricity. We will only make use of price opportunities arising from price setting on an individual basis.