Defending profitability key for European companies

Fitch Ratings says that the ability to defend profitability in emerging countries is the most critical issue for the rating of the European cement companies rated by the agency, Holcim Ltd. ('BBB'/Stable), Lafarge SA ('BB+'/Stable) and HeidelbergCement AG ('BB+'/Stable).

In its special report, Fitch compared the current financials of the major European cement companies to the pre-crisis situation to assess if and how geographical diversification helped companies to recover revenue and preserve profitability.

Fitch believes that the cyclical downturn in mature countries was the main problem in the past few years, but the margin deterioration and the potential slowdown in volume growth in emerging countries will represent the main risk in the near future.

(Source: Reuters)