Holcim: strong start to the year in Europe and Asia, but weaker in the Americas

Holcim: strong start to the year in Europe and Asia, but weaker in the Americas
Published: 08 May 2007

Holcim’s first quarter turnover rose by 23.8% to SFr5,728m (EUR3,536m) and the operating EBITDA advanced by 34.0% to SFr1,342m (EUR828m) with margins improving from 21.6% in 2005 to 23.4%.  The trading profit improved by 44.2% to SFr904m (EUR558m) and at the net attributable level the increase was 109.4% to SFr356m (EUR220m). Net debt at the end of March stood at SFr13,505m (EUR8338m) with the gearing level standing at 70.0% compared with 91.2% a year earlier.  Cement volumes in the period rose by 24.5% to 34.6Mt, while downstream volumes grew more modestly at 4.9% to 36.2Mt for aggregates and by 3.3% to 9.4Mm³ for ready-mixed concrete. 
Helped by a mild winter and good levels of demand in most countries, European turnover increased by 35.4% to SFr2,237m (EUR1,381m) and the EBITDA rose by 49.5% to SFr435m (EUR269m), while at the trading level the increase was 71.6% to S.Fr. 278m (EUR172m). European cement shipments were up in all countries and increased by 22.0% to 7.2Mt and the ready-mixed concrete volume advanced by 4.9% to 4.3Mm³, while aggregates deliveries benefited from the initial consolidation of Foster Yeoman and rose by 21.2% to 22.9Mt.  

Notably good performances were achieved in Spain, France, Romania, Bulgaria and Russia, with Russian prices being particularly buoyant. With the investment in additional clinker capacity in Romania and Bulgaria well underway, Holcim has announced the doubling of capacity at the Shurovo works in Russia to 2.1Mta by 2010. 
The weakness in North American housebuilding activity led to a 12.6% reduction in turnover there to SFr773m (EUR477m), with the EBITDA dropping by 77.9% to SFr17m (EUR10.5m) and giving rise to a seasonal trading loss of S.Fr62.3m (EUR38.5m).  Cement shipments declined by 17.1% to 2.9Mt, aggregates volume by 24.7% to 7Mt and ready-mixed concrete deliveries by 18.2% to 0.9Mm³.   Cement prices have continued to improve in the United States, but were a little weaker in Canada, where the bid to buy out the 21% minority in St. Lawrence Cement is unlikely to be completed before the autumn.
In Latin America, turnover edged ahead by 0.8% to SFr933m (EUR576m) but the EBITDA declined by 7.6% to SFr304m (€188m) as cement shipments were off by 1.6% to 6.3Mt and aggregates shipments by 3.2% to 3Mt, but ready-mixed concrete volumes were stable at 2.4Mm³.  Cement shipments were lower in Chile and in Mexico,  which had been exceptionally strong last year, and to a lesser extent in Nicaragua and El Salvador, but were ahead elsewhere, notably in Colombia and in Venezuela.  As a result, exports from Venezuela were further curtailed.
Helped by a full period’s consolidation of the Indian businesses, turnover in the Asia Pacific area rose by 68.3% to SFr1,451m (EUR896m) and the EBITDA jumped by 104.6% to SFr444m (€274m).  Largely thanks to the Indian acquisitions, cement volumes increased by 57.4% to 15.9Mt. The two Indian companies, ACC and Ambuja Cements, were producing to capacity and each of them are in the process of adding some 3Mt of annual capacity during 2007.  Further new capacity under construction should take the capacity to in excess of 50Mta by 2010.  With the exception of Siam City Cement in Thailand, group cement deliveries are ahead across the Asia Pacific area, and Thai exports were ahead. Approval for the capital increase at Huaxin Cement is still outstanding, but it looks as if Holcim is going to have to settle for a stake of less than 50%, at least in the short-term. The subsidiary in Azerbaijan has now been transferred from the Asian to the European region.