Holcim sees 3% improvement in like-for-like net sales

Holcim sees 3% improvement in like-for-like net sales
Published: 23 February 2015


Holcim increased net sales by three per cent on a like-for-like basis in 2014. Growth mostly resulted from price improvements in many regions, particularly in North America against a favourable market environment as well as a response to cost inflation in Latin America.

An unfavourable currency effect of 5.2 per cent and negative changes in consolidation structure impacted the consolidated net sales performance in 2014 which was down 3.1 percent to CHF19,110m (US$17.8bn).

Like-for-like operating EBITDA adjusted for merger and restructuring costs of CHF138m increased by CHF215m or 5.5 per cent in 2014. Consolidated operating EBITDA however was down 3.8 per cent to CHF3747m mainly as a result of negative currency effects and merger and restructuring related costs.

Operating profit adjusted for merger and restructuring costs of CHF149m rose by CHF249m or 10.6 per cent on a like-for-like basis. Consolidated operating profit, however, fell 1.7 per cent in 2014 to CHF2317m. The currency-related effect impacted operating profit by CHF147m or 6.2 per cent.

In the year under review, the group’s operating profit margin increased by 0.2 percentage points to 12.1 percent. Adjusted for merger and restructuring costs booked in 2014, the operating profit margin progressed by 0.9 percentage points on a like-for-like basis. This margin improvement was mostly driven by higher prices underpinned by favorable volume development.

Net income increased 1.5 per cent to CHF1619m and net income attributable to shareholders of Holcim Ltd was up 1.2 pe rcent to CHF1287m.

Over the last 12 months the net financial debt of the group was CHF9644m, up CHF183m from CHF9461m mainly due to an unfavorable currency impact of CHF 250 million.

Sales volumes increase
Cement volumes exceeded the previous year’s level, backed by a stronger economy in North America and growth momentum in some emerging markets such as India, the Philippines, Indonesia, and Mexico offsetting a challenging market in Latin America. Consolidated cement sales were up one per cent to 140Mt, while the like-for-like increase was 1.4 per cent.

Aggregates volumes were slightly below 2013 levels and decreased by 0.9 percent to 153Mt in the year under review mainly attributable to the segment’s restructuring in Latin America during 2013 and lower demand in France. Group region North America recorded a significant increase in aggregates volumes. On a like-for-like basis, the decrease amounted to 0.4 per cent.

Ready-mix concrete deliveries declined by 6.3 per cent to 37Mm3 primarily as a result of restructuring initiatives implemented in Latin America in 2013 to refocus the segment. With the exception of North America, which posted moderate growth, all group regions contributed to this negative development. Adjusted for changes in Group structure, the drop amounted to 4.9 per cent. Asphalt volumes increased 12.4 per cent to 10Mt.

Holcim Leadership Journey
The Holcim Leadership Journey surpassed its target. Total realizsed benefits reached CHF1.848bn by end-2014 by the end of 2014, with cost initiatives contributing CHF1.434bn and Customer Excellence CHF414m. The group had initially targetted a contribution to operating profit of CHF1.5bn by end-2014, compared to the base year 2011 and under similar market conditions. In 2014, the contribution of the Holcim Leadership Journey to the Group’s operating performance amounted to CHF748m.

Outlook for 2015
Providing outline guidance of group areas, Holcim expects Europe's development to be flat while Latin America will continue to face uncertainties in countries including Argentina ad Brazil but should show slight overall growth. Asia-Pacific is expected to advance at a modest pace and Africa and Middle East is anticipated to gradually improve.

Against this backdrop, Holcim said it expects cement volumes to increase in all group regions this year except Europe. Aggregate and ready-mix concrete volumes are expected to increase.

On a stand-alone basis and unconnected to the proposed merger with Lafarge,the Board of Directors and Executive Committee of Holcim expect like-for-like operating profit adjusted for merger-related costs to be between CHF2.7bn and 2.9bn in 2015. Higher pricing and ongoing cost savings are anticipated to offset cost inflation, leading to a further expansion in operating margins in 2015, the group added.