Heidelberg Materials (ETR:HEI) reported what management described as “yet another record year” for 2025, supported by higher profitability, disciplined capital allocation, and progress on cost savings and decarbonization initiatives. On the company’s full-year results call, CEO Dominik von Achten and CFO René Aldach highlighted a record result from current operations (RCO) of €3.4 billion, an EBITDA margin of almost 22%, and free cash flow of €2.1 billion.
Record RCO, stronger margins, and improving returns
Management said 2025 performance was broadly positive across key metrics, with the EBITDA margin improving to nearly 22% as the company continued to focus on “structural profitability.” Von Achten pointed to Europe as a notable contributor, with European margins increasing to 20.5% and a particularly strong performance in the fourth quarter that he called a “fantastic entry point” into 2026.
Cost savings: Transformation Accelerator ahead of plan
A major theme of the call was Heidelberg Materials’ Transformation Accelerator Initiative (referred to as “TIE” or “TAI” in the discussion). Management said the program has already delivered €380 million of savings, versus a target of €500 million by the end of 2026. Von Achten noted the savings had been expected to be “backloaded” across 2025 and 2026 but have come through “front loaded quite significantly,” and he said he expects the company to “well surpass” the €500 million mark.
Aldach added that some of these measures are visible in reported cost lines. He noted fixed costs were reduced by €40 million on a reported basis despite negative inventory effects, implying a larger like-for-like reduction.
Cash flow and capital allocation: higher CapEx, stable leverage, rising shareholder return
Free cash flow came in at €2.1 billion, down about €60 million year over year. Aldach attributed the decline primarily to:
- Higher capital expenditures (up €80 million), including spending in Q4 related to the Padeswood carbon capture project in the U.K.
- Provision-related cash outflows (shown as “non-cash items and other” of -€152 million), reflecting payments tied to restructuring provisions set up in the prior year, as well as bonuses and certain litigation-related payments.
The company posted a cash conversion rate of 45%, which Aldach said met the 2025 target, while noting the company’s newer midterm ambition is 50%.
Heidelberg Materials ended the year with leverage of about 1.2x. Management described the balance sheet as stable and said leverage remains below midterm targets.
Shareholder returns increased, with management citing a combination of progressive dividends and share buybacks totaling €1.1 billion in 2025. Aldach said shareholder return will “further go up in 2026” due to the remaining tranche of the company’s share buyback program and the progressive dividend policy. He also said the third tranche is expected to be the largest and estimated it at €450 million, to start after the annual general meeting.
M&A: Australia deal signed; pipeline “clearly full”
On inorganic growth, the company discussed an agreement to acquire the construction materials segment of the Maas Group in Australia. Aldach said the transaction value is AUD 1.7 billion and includes 40 aggregate quarries, 7–8 million tons of aggregates, around 1 million cubic meters of concrete, asphalt, and recycling operations, complementing Heidelberg Materials’ footprint on Australia’s East Coast.
Management said the deal fits its financial framework, citing a multiple of 8.4x after synergies. Aldach noted the acquisition still requires regulatory approvals, which he said are expected around Q3.
Von Achten also signaled a broader acceleration in deal activity, stating the company’s M&A pipeline is “clearly full” and investors “should see more M&A” through 2026 than in 2025. In Q&A, management emphasized it does not plan to issue equity for acquisitions, calling an equity raise “clearly off the table.” Aldach discussed available headroom under the company’s leverage framework and said management can flex leverage around its target depending on opportunities.
Outlook: cautious range, FX headwind, and pricing focus
For 2026, the company guided to RCO of €3.4 billion to €3.75 billion, with ROIC again expected to be above 10% and CO2 emissions set to decline slightly further. Management said CapEx will be slightly higher than in 2025, and leverage is expected to be around 1.5x (in line with midterm targets).
In Q&A, Aldach said the company’s guidance assumes a “three-digit million” negative FX impact (roughly 3%). Excluding FX, he said organic and scope growth assumptions imply about 8% growth, with scope contributing around 1.5% to 2%. He also said the Maas transaction is not included in guidance.
On pricing, management repeatedly said implementation is progressing “in the targeted direction” in both Europe and North America and that the company continues to prioritize “value before volume.”
Heidelberg Materials also addressed European emissions trading system (ETS) uncertainty, with von Achten saying he does not believe the ETS will be scrapped and that the company will remain financially disciplined on investments. He reiterated that major carbon capture and storage (CCS) projects require strong business cases and stable policy frameworks, and management said a CO2 price in the €30 range would not support new CCS investment economics.
About Heidelberg Materials (ETR:HEI)
Heidelberg Materials AG, together with its subsidiaries, produces and distributes cement, aggregates, ready-mixed concrete, and asphalt worldwide. It provides cement products; natural stone aggregates, including sand and gravel; crushed aggregates comprising stone chippings and crushed stones; and ready-mixed concrete for use in the construction of tunnels or bridges, office buildings, or schools, as well as to produce precast concrete parts, such as stairs, ceiling elements, or structural components.
