Heidelberg Materials tones down profit outlook as Iran war drives up energy costs
Impact of Rising Energy Costs on Heidelberg Materials' Profit Outlook
By Christoph Steitz and Ilona Wissenbach
Energy Price Increases Due to Iran War
FRANKFURT, July 30 (Reuters) - Heidelberg Materials expects the war in Iran to drive up energy costs further this year, the German cement maker said on Thursday, forcing it to cut the upper end of its 2026 profit outlook and introduce price increases across the board.
Higher costs of oil, gas and electricity in the wake of the war and its impact on supply chains have hit industries across the globe, including cement makers, which belong to the energy-intense industries.
Inflation and Financing Costs Affecting Construction
Heidelberg Materials said inflation and high financing costs would likely continue to weigh on global residential construction, with energy costs being a key driver.
Direct Impact of Iran War on Energy Prices
The company said that the war in Iran had already caused energy prices to rise significantly since the end of February, not quantifying the impact on its business.
Company Response and Profit Outlook
Measures to Counter Higher Costs
Highlighting "an environment that remains geopolitically and economically very challenging", CEO Dominik von Achten still said there were first signs of a noticeable demand recovery in its core markets.
To counter higher costs, Heidelberg Materials has introduced a fuel surcharge and announced price increases in the North American and European markets, it said.
Revised Profit Forecasts
The group now expects operating profit to come in at €3.4 billion to €3.65 billion ($3.89 billion to $4.18 billion) in 2026, down from a previous range of €3.4 billion and €3.75 billion.
Analyst Expectations and Recent Results
According to an analysts' poll provided by the company, the group's operating profit is expected to come in at €3.51 billion, which would amount to a 4% increase year-on-year.
Second-quarter operating profit rose 3.6% to €1.09 billion, beating the €1.06 billion poll.
($1 = 0.8733 euros)
(Reporting by Christoph Steitz and Ilona Wissenbach, editing by Ludwig Burger and Thomas Seythal)
