March 22, 2018 / 6:30 AM / 2 years ago

HeidelbergCement to hike dividend by a fifth on synergies

A logo of HeidelbergCement is pictured at their headquarters in Heidelberg, Germany, June 21, 2016. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - HeidelbergCement (HEIG.DE), the world’s No.2 maker of cement, on Monday proposed raising its dividend by a fifth on record profits and higher-than-expected synergies from its takeover of Italcementi, though it fell short of analyst expectations.

The company proposed a dividend of 1.90 euros ($2.35) per share for 2017, up 19 percent year-on-year and the eighth consecutive payout increase. Analysts, on average, expected a dividend of 1.99 euros per share.

“2017 was an exceptional year for HeidelbergCement. In its history stretching back over 140 years, HeidelbergCement has never sold more cement, concrete, gravel, and sand than in 2017,” Chief Executive Bernd Scheifele said in a statement.

The group also said it was expecting a moderate rise in sales in 2018, a significant increase in net income and mid- to high-single digit percentage gain in profit from current operations.

Analysts, on average, expect group sales to edge up 3.6 percent this year to 17.89 billion euros, while net income is seen increasing by half to 1.35 billion euros. Larger peer LafargeHolcim (LHN.S) expects average annual sales growth of 3-5 percent.

HeidelbergCement last month raised its target for synergies from the takeover of Italcementi, announced in 2015, for the third time in less than a year and joined peers in forecasting a rise in construction activity along with economic growth.

Reporting by Christoph Steitz; Editing by Tom Sims and Biju Dwarakanath

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