Holcim expectations

Holcim expectations
Published: 27 August 2003

Holcim announces H1 results Thursday 28th August. Analysts at Merrill Lynch suggest sales falls of around 11 per cent and not too much joy in the months ahead - a cautionary note for investors.

Holcim announces H1 results Thursday 28 th August. Merrill Lynch predicts sales to fall 11 per cent, but EBIT to fall only five per cent. On volumes, the analysts expect the Easter-boosted Q1 rates in Latin America to slow, and the weather influenced European volumes to be less weak. Asia should continue to lead growth rates. Dollar pricing in emerging markets has struggled to keep up with devaluations, but Latin America and Asia may see a little further progress on this front, but Europe and North America look likely to be respectively slightly above and below flat.

Margins should continue to gain in all regions bar Africa-Middle East (where Merrill hopes for a reduction in the rate of decline), but currency continues to weight heavily on the Americas and Asia-Pacific. Acquisitions should help Europe (bringing in more profitable Hispania in Spain versus excluding lower margin Baubedarf in Switzerland) and Asia (Philippines).

Cement stocks are currently the preferable choice over aggregates (or construction stocks if not housebuilders) for a recovery and dollar strength theme, but Merrill is maintaining its sell stance, believing it's too late to board the recovery train at this station. Merrill also sees Lafarge as cheaper and more geared to recovery via its Asia/Eastern Europe bias than Holcim's Latam and Africa/Mideast orientation.