Acquisitions, prices rises boost Holcim profits

Acquisitions, prices rises boost Holcim profits
Published: 01 March 2006

Recent acquisitions and price increases helped Holcim to report a 75 per cent increase in net profit for 2005, beating market expectations.
The Swiss company said on Wednesday that net profit reached SwFr1.54bn (US$1.2bn) on sales up 40 per cent at SwFr18.47bn. 
"Holcim exploited its strengths in a favourable economic climate and buttressed its market position through major acquisitions," the company said in a statement. 
It expects construction activity to remain favourable in its main markets in 2006, while both the group companies and newly acquired units, such as Britain’s Aggregate Industries, would report sound growth.
"Holcim expects to be able to absorb higher energy costs with price adjustments and efficient energy management," the company said. 
In Europe, virtually all Group companies turned in a better performance. The improvement in results was supported by the first-time consolidation of Aggregate Industries UK, higher delivery volumes, predominantly better selling prices and cost savings. The key performance drivers were the Group companies in Spain, France Benelux, the UK, Switzerland, Southeast Europe and Russia. Operating EBITDA increased by 33.5 percent to CHF 1.605bn.

Holcim made significant progress in North America. Holcim US raised cement shipments again and recorded higher prices across the board. Combined with further modernisation of the production base, this led to a substantial improvement in its operating result. Aggregate Industries US posted good results. On account of major maintenance work at two cement plants, the Canadian Group company fell marginally short of the previous year’s result.

Efficiency gains at all three Group companies were responsible for the strong 68.4 per cent increase in operating EBITDA to CHF 0.928bn.

A start was made on the construction of the Ste. Genevieve cement plant on the Mississippi. The facility will come on stream in 2009 with an annual capacity of 4 million tonnes of cement. Investment costs for this forward-looking plant and the related logistics infrastructure amount to US$1bn, US$130m of which are for harbor facilities and logistics.