Holcim ahead despite Europe slowdown
Annual results released by Holcim earlier this week show that cement sales for the Swiss major in 2012 were ahead in spite of lower European volumes and political instability in the Middle East.
Turnover during the year rose by 3.9 per cent in 2012 to CHF21,544m and in euro terms the increase was 6.4 per cent to EUR17,867m. Operating EBITDA improved 6.2 per cent to EUR3502m before restructuring costs, after which the advance was a mere 0.7 per cent to EUR3304m. The trading profit fell by 6.2 per cent to EUR1506m (though before exceptional items it was ahead by 10.5 per cent) and net profit jumped by 126.5 per cent to EUR516m.
During 2012, Holcim closed a total of 4.67Mt of cement capacity, 25 quarries and pits and 159 batching plants, all of which were unprofitable. Net debt at the end of December was 10.3 per cent lower at EUR8582m to give a gearing of 52.2 per cent compared with 58.8 per cent a year earlier.
Holcim increases its lead
Better demand in the fast-growing markets of Asia and Latin America as well as North America contrasted with low demand in debt-laden Europe. Last year Holcim sold 148Mt of cement in 2012, an increase of 2.5 per cent. Rival Lafarge, meanwhile, sold 141.1Mt last year, a decline of 2.9 per cent. Holcim has thus increased its lead over Lafarge.
Turnover in Holcim's Asia Pacific region rose 9.5 per cent and the underlying EBITDA advanced 11.7 per cent. Cement deliveries increased 4.7 per cent to 79.2Mt and with the exception of Vietnam and Australia, were ahead in all other countries. Double-digit increases were seen in the Philippines, Thailand and Indonesia but the Chinese associate Huaxin Cement suffered from severe price competition. Holcim Indonesia's 1.6Mta plant is slated to come on-stream in Java by end-2013. To further satisfy this rapidly-growing market, it has decided to construct an identical kiln line at the same Tuban site by 2015.
North America turnover rose by 9.7 per cent and EBITDA recovered by 33.5 per cent. Cement deliveries from the 17 works improved by five per cent to 12Mt. Cement volumes rose by 4.5 per cent in the USA and 7.1 per cent in Canada, with the US increasing by an average 3.6 per cent but easing by 0.6 per cent in Canada.
Latin America saw shipments increase by three per cent to 24.9Mt. Cement volumes in Mexico, Holcim's most important market in the region, improved by 3.3 per cent and in Brazil they advanced by 4.5 per cent. Only Argentina suffered from a weakness in demand as volumes increased in all other group countries. An additional facility at the Brazilian Barroso site will go online at the end of 2014, raising Holcim Brazil's total capacity to 7.6Mta. Meanwhile at the Guayaquil plant in Ecuador, clinker capacity is being increased by around 1.5Mta by end-2015.
European turnover fell by a further 5.1 per cent and cement deliveries from the 36 works were off by two per cent to 26.3Mt. With the exception of Russia and Azerbaijan, where volumes grew by 23.3 and 30.4 per cent, respectively, deliveries were down in all other countries. Spain was by far the worst performer (-35 per cent YoY) and Bulgaria, Slovakia and Italy all saw volumes fall by between 19 and 21.7 per cent. European capacity is being cut by around 10 per cent with closures in Spain, Italy, France, Belgium and Hungary.
Cement shipments in Africa and the Middle East were also down by 4.4 per cent YoY to 8.4Mt. Holcim Maroc, the largest group region contributor, saw prices decline by 2.5 per cent as increased competition and the civil war in Syria had a depressing effect on Lebanese cement consumption. This year should see the commissioning of a new 1.3Mta works in Guinea.
Less optimistic on Europe & Middle East markets
On its outlook for the year, group regions Asia Pacific, North America and Latin America are expected to witness higher sales volumes. However, Holcim is somewhat less optimistic with regard to Europe and Africa/Middle East. Overall, it anticipates an increase in cement sales in 2013.
EBITDA and operating profit are expected to witness a further improvement of margins. The Holcim Leadership Journey, which will gain further momentum in all streams as planned, will also contribute to this development. Under similar market conditions, significant organic growth in operating EBITDA and operating profit should be achieved in 2013, according to Holcim.
