Holcim Croatia posts operating loss amid challenging market conditions

Holcim Croatia posted an operating loss of around HRK18.8m (EUR2.5m) last year as the domestic cement industry continues to face difficulties, and the near-term outlook for demand growth remains negligible.

"The negative trends that have gripped the construction sector in the past four years and the problems with the collection of claims because of the generally poor liquidity in the country strongly influenced Holcim Croatia's business last year," SeeNew quoted Holcim Croatia CEO Mario Grassl as saying. However, despite an overall fall in domestic consumption, Holcim Croatia’s market share edged ahead, the company highlighted.

Holcim is present in the market through Tvornica Cementa Koromacno, a 1Mta plant, operated by its subsidiary Holcim (Hrvatska) d.o.o. In 1Q12, it EUR1m in the reconstruction of a clinker cooler at Koromacno to increase thermal energy efficiency and decrease maintenance costs. In addition, the producer aims to advance its use of alternative fuels to over 50 per cent of its energy intake. At present it uses coal supplemented by old tyres, sawdust, waste oil, animal meal, emulsions and solid recovered fuel.

Croatia is slow emerging from the recession but the government remains cautious in its approach to infrastructure spending. Cuts in spending have meant a stagnant cement consumption at best.  Overcapacity of local and domestic producers put a downward pressure on sales prices while input costs, particularly energy and raw material costs, have advanced significantly. In addition, the Croatian government raised value-added tax from 23 to 25 per cent.

Looking ahead, any modest growth forthcoming would originate in the infrastructure sector rather than a depressed housing market. The construction industry is looking forward to the realisation of the government’s announced plans for EUR240m investment into the renovation of around 500 public buildings. However, industry sources believe demand for construction materials is still declining and a full recovery to pre-crisis levels is not expected until 2015.