Holcim reported a rise in cement deliveries for the first nine months of 2012 supported by pricing improvements. Emerging markets continue to support growth together with stronger demand for building materials in North America, but the Europe and Middle East and Africa divisions register declines.

Commenting on its results, the company said in a statement: “Holcim continues to have the advantage of a strong presence in emerging markets, where construction activity remains high. This unique geographic diversification in the industry helped support sales in the first nine months of 2012 in spite of a difficult market situation in Europe. Compared with the previous year, Holcim achieved higher consolidated sales of cement and nearly stable sales of ready-mix concrete – often at better prices. Deliveries of aggregates and asphalt were lower. The Group companies in India, the Philippines, Indonesia, Russia, Thailand, Mexico and the USA recorded significantly higher cement sales.”

Despite the difficult market situation in Europe, the company reported a rise in consolidated 3Q net sales of 4.8 per cent to CHF16.2bn and operating EBITDA by 5.9 per cent to CHF3.1bn. Operating profit also increased over proportionally compared with net sales by 7.2 per cent to CHF1.9bn.

Compared with the previous year, the operating EBITDA margin improved by 0.2 percentage points to 19.4 per cent, despite restructuring costs totaling CHF58m in nine months in Spain, Brazil, UK, Mexico and now Hungary. On a like-for-like basis, i.e. excluding changes in the scope of consolidation and exchange rates, the Group grew at the operating EBITDA level by 6.4 per cent in the first nine months of the year. All Group regions achieved organic growth except for Europe and Africa Middle East. ??Net income increased by 10.3 per cent to CHF1.1bn and the share of net income attributable to shareholders of Holcim Ltd rose by 9.8 percent to CHF783m. Due to the higher operating EBITDA and lower taxes paid, cash flow from operating activities improved by 19.1 percent to CHF 1.1bn. With CHF11.6bn, net financial debt remained stable. Gearing improved to 56.3 per cent (year-end 2011: 58.8).

Sales performance

Consolidated cement sales increased by three per cent to 111.4Mt in the first nine months of 2012. Deliveries of aggregates declined by 7.7 per cent to 120.3Mt, and ready-mix concrete volumes contracted by 1.7 per cent to 35.5Mm3. Sales of asphalt decreased by 14 per cent to 6.6Mt, primarily due to poor business development in the UK.

Asia Pacific continued its growth track with cement sales up 5.9 per cent in the first nine months of the year to 59.5Mt. Latin America remains a pillar of the Group's success and cement sales over the period rose three per cent to 18.5Mt. The group reported higher sales of cement and ready-mix concrete in North America, with cement sales advancing 4.2 per cent to 8.9Mt and ready-mix volumes rising 17.8 per cent to 6Mt. The European sovereign debt crisis continues to weigh on activity there and Holcim saw a 2.3 per cent drop in cement sales for 9M12 to 20.1Mt. The company also reported a lack of activity in Africa Middle East where cement sales were down 0.9 per cent to 6.4Mt in January-September and declined 8.4 per cent in the third quarter of 2012 to 1.9Mt.

Holcim Leadership Journey progress

The company said that the Holcim Leadership Journey, a Group-wide program introduced in May, is progressing positively. Regions and Group companies have already started to implement initial measures and the organizational adjustments at Group level have been made.

These include the introduction of a leaner management structure for Europe to handle the difficult economic situation in that Group region, and the creation of a Project Management Office to monitor the progress of the Holcim Leadership Journey. Guidelines to measure the operational and financial progress of the program have also been put in place.

The financial impact of the entire Holcim Leadership Journey will be released together with the year-end results 2012.

Outlook

Holcim expects demand for building materials to rise in emerging markets in 2012 in Asia and Latin America, as well as in Russia and Azerbaijan. In North America, cement volumes will also increase. In Europe however, sales volumes are expected to decrease in all segments.  Holcim said it will give cost management the closest attention, and pass on inflation-induced cost increases. Holcim’s approach to new investments will be cautious.

Published under Cement News