Holcim’s net profit falls 12 per cent

Holcim’s net profit falls 12 per cent
Published: 19 August 2010

Holcim Ltd on Thursday joined rivals in warning that weak cement demand in Europe is offsetting steady growth in Asia as the company posted a 12 per cent drop in quarterly net profit.

The cement and building aggregates maker said net profit fell to CHF399m (US$382.8m) in the three months ended June 30 from CHF453m a year earlier. Sales, however, rose 11 per cent to CHF6.16bn from CHF5.56bn due to acquisitions.

The Switzerland-based company said there are no signs of a global economic recovery although some important countries such as the US have stabilised and many markets in the Asia Pacific region continue to grow at a fast pace.

Holcim again refrained from repeating its long-standing target of five per cent like-for-like growth in earnings before interest, taxes, depreciation and amortisation, or Ebitda, after dropping that forecast in the first quarter.

Cement makers around the world were hit hard by the credit crisis and resulting economic downturn as construction markets contracted and responded by cutting costs and closing plants. There have been some signs of a pickup this year, although companies have reported that Europe is still experiencing a downturn.

French rival Lafarge SA last month posted a 15 per cent decline in second-quarter net profit and reduced its full-year outlook for cement demand due to a slower-than-expected recovery in its European markets. Mexican rival Cemex SAB said that while it is seeing signs of a turnaround in some markets such as the US and Mexico, it’s expecting sharp declines in markets such as Spain. It said it couldn’t predict where demand would go due to continued economic uncertainty.

However, Germany’s HeidelbergCement AG said it expects demand, and its sales and earnings, to pick up this year on growing demand from Asia-Pacific, Africa and North America.