Swiss franc, energy costs hit Holcim 3Q profit
Holcim posted a 34.5 per cent in third quarter net profit as price hikes failed to offset rising energy costs and the strong Swiss franc.
Consolidated net sales decreased by 6.7 per cent to CHF 15.5bn, mainly because of exchange rate factors. On a like-for-like basis, it rose by 5.8 per cent. Operating EBITDA fell by 16.9 per cent to CHF3bn, but on a like-for-like basis the decline came to a smaller 4.4 per cent, and organic growth reached 1.1 per cent in the third quarter.
In particular, the Group companies in Russia, Singapore, Indonesia, Colombia as well as Holcim Australia made larger contributions in Swiss francs to the result. While many other Group companies improved their results in local currency terms, in the consolidated financial statements these successes were cancelled out by the strong Swiss franc however. The Group company in the Philippines was among those to see their performance hit by rising costs and regional falls in selling prices. The operating EBITDA margin reached 19.2 percent (nine months 2010: 21.6) despite the still outstanding sales of CO2 emissions certificates. Signs of a slight improvement in operating EBITDA did start to emerge in the third quarter, as demand clearly increased, particularly in the emerging markets and in North America. As a result of the increase in net current assets, one-off tax refunds in the previous year and lower operating EBITDA, cash flow from operating activities came to CHF930m.
Consolidated cement deliveries increased by 5.2 per cent to 108.1Mt by end of September 2011. Shipments of aggregates increased by 9.8 per cent to 130.4Mt, and ready-mix concrete rose by five per cent to 36.1Mm3.
Holcim said growth should remain on track in most emerging markets, though the Swiss company struggled to adjust prices in parts of Latin America and price pressure rose sharply in Sri Lanka.
"As expected, many emerging market companies enjoyed brisk construction activity. However, in the euro zone and North America, growth mainly remained restrained," Holcim said in a statement.
In the Asia Pacific region, where Holcim makes more than a third of its revenues, like-for-like net sales rose 18.7 percent, buoyed by government infrastructure projects in Indonesia and a road-building programme in India.
Sales in Europe slipped 0.9 per cent, weighed down by a lack of activity in Spain’s construction sector, where Holcim closed 25 ready-mix concrete plants. Demand also stagnated in Eastern and Southeastern Europe.
Demand in Latin America remained strong with like-for-like sales up 14.3 per cent, while net sales edged up 2.6 per cent in the Africa Middle East region.
But Europe and North America struggled due to a lack of stimulus in the construction sector, Holcim said.
Projects to build public roads in the US led to an uptick in demand in North America, where like-for-like sales rose 5 percent in the third quarter, but demand was weak in Canada.
Published under Cement News
