Holcim set for improved Q3 results as price hikes offset energy costs

Holcim set for improved Q3 results as price hikes offset energy costs
Published: 07 November 2006

Swiss cement maker Holcim Ltd is due to announce an after minorities net profit of sfr569-711m , or sfr638m on average, on Wednesday, up from sfr525m one year ago, with higher prices and efficiency improvements likely to compensate for rising energy costs, analysts said.

Analysts also expect an EBITDA of sfr1.766-1.833bn, or an average of sfr1.806bn, after sfr1.464bn, with the EBITDA margin likely to reach 25.9-28.0 per cent, or 27.1 per cent on average, after 26.4 per cent.

Net sales are forecast to come in between sfr6.423-6.835bn, or sfr6.603bln on average, compared to sfr5.555bn, they said.

Analysts at French broker Cheuvreux said they believe that the positive trends seen in the second quarter should have continued.

Although North America could show a decline in cement sales volumes, ’price increases and aggregates sales should bring positive sales growth’, it said.

The broker said it also expects improvements in Asia versus the first half, driven mainly by the Indonesian market.

Robust growth should continue in Latin America with no major slowdown after the elections in Mexico and Brazil.

In Europe, there may be an upside from Germany, but the much more important UK market is still waiting for a recovery in infrastructure spending, Cheuvreux said.

Cheuvreux forecasts a net profit of sfr711m, EBITDA of 1.833 bln, and sales of sfr6.669bn.

While Cement operations are performing well, Holcim’s Aggregates and Ready-Mix operations (40 per cent of sales) are still underperforming, LODH analysts said.

The Swiss bank said this major improvement potential is still underestimated by the market.

’We are keen to see whether management confirms our view by disclosing ambitious new divisional margin targets, as we believe it should’, LODH said.