A mixed year for Holcim in 2009 but with strong foundations and an excellent emerging market portfolio, particularly India and China, the No 2 global cement producer is set to reap the benefit from improving market conditions in 2010.
Looking back over the year, Holcim raised SFr2,113.5m (€1,409m) through a one-for-eleven rights issue in July. The Schmidheiny family only exercised part of its rights, as a result of which its interests in Holcim fell to 18.2% and falling to below 20% for the first time. In addition to the rights issue, Holcim also raised €112m (US$157m) from the sale of its interests in the Panamanian, Dominican Republic and Haiti cement operations to the joint venture Argos of Colombia. That sale followed the nationalisation of Holcim's Venezuelan operations that had provided Holcim's clinker requirements in that area.
In terms of expansion, Holcim spent S.Fr.1,770m (€1,172m) on the acquisition of Cemex Australia, since renamed Holcim (Australia). That deal raised Holcim's stake in Cement Australia from 50% to 75% and provided substantial downstream interests. Furthermore, Holcim is spending around S.Fr. 250m (€166m) on participating in the rights issue by the 39.9%-owned Huaxin Cement in China to finance that company's expansion and to maintain Holcim's shareholding at the maximum that the Chinese government will currently allow.
In terms of group cement capacity, 5.6Mt are being added in 2009, by far the most notable addition being the commissioning of the single kiln at the 4.0Mta cement works at the Ste. Genevieve works in Missouri and the majority of the cement mills, with the two remaining mills supposed to come on stream by March, 2010. Next year Holcim aims to add 12.5Mt, of which 8.1Mt should be in India.
Domestic cement volumes this year are expected to emerge pretty stable in Switzerland but to be down, sometimes materially, in the rest of Europe, with the strongest reductions coming in Slovakia, Bulgaria, Spain and Russia, which saw volumes in the first three quarters drop by respectively 49.4%, 42.6%, 35.2% and 32.9%. Prices have fallen the sharpest in Russia, but were also lower in Spain and Italy, while they improved the most in Serbia, Germany and Croatia. North American volumes are expected to fall by around 30% in the USA and by 12% in Canada, with prices being weaker in the USA but improving in Canada. In Latin America, volumes are lower in most major markets, in particular Chile, with prices improving, notably in Brazil and also in neighbouring Argentina.
In Australia, volumes could be down by up to 12% in 2009 and the decline being almost twice as strong in New Zealand, though prices have improved in both countries. In Asia, volumes are down in Sri Lanka, Malaysia, Indonesia and Thailand, but they improved in the other markets where Holcim is active, with local cement prices rising in double figures in Indonesia, Malaysia and Vietnam and only in Sir Lanka are they lower. Some weaker markets, such as Thailand and Indonesia were helped by notably higher export volumes.
In the first nine months of 2009, cement shipments declined by 8.9% to 99.1Mt, which represents an underlying deterioration of 7.3%, adjusting for the de-consolidation of Venezuela, Nigeria and some Caribbean businesses. Sales of other binders fell by 32.4% to 2.5Mt. Shipments of aggregates were down by 18.9% to 103.2Mt, while ready-mixed concrete deliveries declined by 17.8% to 30.4m m³ and the asphalt volume was down by 21.4% to 8.1Mt.