Holcim reported increased sales and improved prices in the first half of 2012, with better margins in the second quarter despite a challenging operating environment in Europe. The group has further said it is  looking to implement a  “leaner and more efficient structure” . As part of the new changes, three managers will leave the executive committee and Urs Bleisch will head the “Holcim Leadership Journey” cost-cutting initiative.

Consolidated net sales increased by 2.1 per cent in the first half of 2012 to CHF10.4bn (EUR1.3bn) while operating EBITDA rose by 1.9 per cent to CHF1.9bn, despite the poor state of the European market and restructuring costs in markets such as Spain, Great Britain, Brazil and Mexico of CHF37m, Holcim noted.

Holcim also improved its operating EBITDA margin in the second quarter. This positive development was due to a combination of rising sales volumes and partial price increases, albeit not yet on the desired scale, the company highlighted. On a like-for-like the group grew at the operating EBITDA level by 6.3 per cent in the first half of the year, 6.9 per cent in the second quarter. Net income improved by 6.6 per cent to CHF624m and the share of net income attributable to shareholders of Holcim Ltd rose by nine per cent to CHF389m. Net financial debt rose since year-end 2011 by 5.3 per cent to CHF 12.2bn. The gearing decreased to 60.9 per cent (June 30, 2011: 64.8).

Consolidated cement sales increased by 4.4 per cent to 74Mt. Deliveries of aggregates declined by seven per cent to 75.6Mt, and ready-mix concrete volumes by 1.3 per cent to 22.8Mm3. Sales of asphalt decreased, mainly in Europe, by 16.2 per cent to 3.6Mt

The increase in cement sales was fuelled by the emerging markets and North America in the first half of 2012. In particular, the Group companies in India, the Philippines, Thailand and Indonesia achieved significantly higher cement sales, as well as the US and Mexico. With the exception of Russia and Azerbaijan, which also sold more, this positive picture contrasts with the negative market development in Europe, caused by the debt crisis, Holcim said in a statement.

With an increase in cement deliveries of 3.1Mt Asia Pacific was the strongest group region.  The top performer in the aggregates segment was North America, mainly due to Holcim Canada. In the ready-mix concrete business, Holcim achieved significant sales increases in North America. An important role was also played by the higher volumes of Holcim Singapore and Holcim Apasco in Mexico.

Going forward, Holcim expects demand for building materials to rise in emerging markets in Asia and Latin America, as well as in Russia and Azerbaijan, in 2012. While demand in North America should beat the previous outlook, Holcim now expects a decline in Europe.

"Holcim will accord cost management the closest attention, and pass on inflation-induced cost increases," the company said.

Streamlining of operations

Separately, the company said it is streamlining its Group organization as of 1 September 2012 and as part of the "Holcim Leadership Journey.” The Board of Directors and the Executive Committee initiated the 'Leadership' programme in May with the aim of increasing the return on invested capital to at least eight per cent after tax between 2012 and the end of 2014. Appropriate measures are being introduced to further strengthen Customer Excellence and Cost Leadership and increase the operating profit by at least CHF1.5bn by the end of 2014, with a target of at least CHF150m for the 2012 financial year. 

Changes in regional responsibilities

• Roland Köhler, member of the Holcim Executive Committee and currently CEO of Holcim Group Support Ltd, will assume responsibility for the newly structured Group region Europe. He is supported by three Area Managers, who are also members of senior management of Holcim Ltd:
- Urs Fankhauser, currently Area Manager for Eastern and Southeastern Europe, will assume responsibility for Western Europe, excluding UK.
- Kaspar E.A. Wenger, country manager Switzerland, will assume additional responsibilities for Southern Germany and Italy and has been appointed Area Manager.
- Horia Adrian, currently CEO of Holcim Russia, has been appointed Area Manager for Eastern and Southeastern Europe, including CIS/Caspian region.

• Bernard Terver, currently Area Manager and member of senior management of Holcim Ltd, as well as CEO of Holcim US and Aggregate Industries US, will assume overall responsibility for the new Group region North America and UK, and has been appointed member of the Holcim Executive Committee.

• Javier de Benito, Area Manager and member of senior management of Holcim Ltd, will directly lead Africa Middle East now including the Group’s positions in West Africa and the Arabian Gulf that have until now been run by Holcim Trading. He will also be responsible for the stakes in South and East Africa. He will be reporting directly to the CEO of Holcim Ltd.

• Ian Thackwray, member of the Holcim Executive Committee, will remain responsible for East Asia, including China, the Philippines and Oceania, and in addition will take on responsibility for Holcim Trading SA, Madrid, one of the worlds’ leading trading organizations for cement, clinker, and other materials.

• The area of responsibility of Executive Committee members Paul Hugentobler, in charge of South Asia & ASEAN excluding the Philippines, and Andreas Leu, in charge of Latin America, are unchanged. 

• Urs Böhlen, member of the Holcim Executive Committee and currently responsible for Eastern and Southeastern Europe, CIS/Caspian region, will step down from this leadership function and act as an advisor to the CEO of Holcim Ltd until his retirement in 2013.

• The two members of the Holcim Executive Committee Benoît-H. Koch and Patrick Dolberg, responsible for North America, UK, Norway, Mediterranean (including Iberian Peninsula) as well as International Trade, and Western and Central Europe, respectively, will leave the Group.

 Changes in functional responsibilities

Under the leadership of Urs Bleisch, who is heading the newly created Project Management Office for the “Holcim Leadership Journey”, corporate functions that directly contribute to the program for strengthening customer excellence and cost leadership will be combined. Urs Bleisch has been appointed Corporate Functional Manager and member of senior management of Holcim Ltd.

Ramit Budhraja, currently CEO of the South West Division of Indian Group company ACC Limited, will lead the Customer Excellence Initiative at Group level, effective October 1, 2012, and keep his current position until a successor is appointed. Becoming more customer-focused is a key driver to successfully deliver on the objectives of the “Holcim Leadership Journey”. He will report to Urs Bleisch.

Procurement and IT, as well as the newly created Mergers & Acquisitions function of Holcim Group Support Ltd will be reporting directly to Executive Committee member and CFO Thomas Aebischer.

Published under Cement News