Holcim mothballs more US capacity

Holcim mothballs more US capacity
04 March 2009

Holcim’s turnover declined by 7.9% in 2007 to SFr25,157m (€15,822m), though on a comparative basis there was a 4.3% increase.  The operating EBITDA fell by 23.0% to SFr5,333m (€3,354m).  The trading profit was down by 33.1% to SFr3,360m (€2,113m) and the net attributable profit, which had been helped by an exceptional gain on selling 85% of the South African subsidiary in the previous year, by 53.9% to SFr1,782m (€1,121m).  Net debt at the end of December was 16.9% higher at SFr15,047m (€10,099m) to give a gearing level of 83.7%, compared with 58.7% at the end of 2007.  Capital investment rose by 33.6% in 2008 to SFr4,391m (€2,761m), but spending on acquisitions fell by 52.4% to SFr1,084m (€682m).  

Group cement deliveries declined by 4.1% to 143.4
Mt, while sales of other binders fell by 12.7% to 4.8Mt.  Holcim Trading experienced a 4% reduction in trading volumes in cement, clinker and extenders to 24Mt.  The aggregates volume fell by 10.8% to 167.7m tonnes but ready-mixed concrete deliveries improved by 7.3% to 48.5Mm³. 

The European turnover was off by 3.4% to SFr10,043m (€6,316m) and the EBITDA was 16.5% lower at SFr2,003m (€1,260m).  Cement deliveries from the 39 works declined by 1.7% to 33.7m tonnes.  In aggregates, volumes fell by 10.3% to 97.6
Mt, but, helped by acquisitions, ready-mixed concrete deliveries rose by 6.1% to 21Mm³, with the number of batching plants increasing by 10.6% to 618.  Volume reductions were most strongly felt in Spain, where prices also went into reverse, and Great Britain, but also declined in Italy, Croatia and, in the second half, Russia.  On the other hand, double digit volume growth was seen in Romania and Bulgaria, with Slovakia showing a high single digit advance.  A number of western European countries are likely to show reduced cement consumption in 2009, but Switzerland should still show stable demand.  As a result of the drop in domestic demand, Holcim recommenced exports from Spain last year, after a break of several years.  Additional grinding capacity should dome on stream in France and Romania this year and an additional 2.1Mt of integrated capacity in Russia in 2010. 

The Asia Pacific area saw turnover decline by 2.9% to SFr6,109m (€3,842m) and the EBITDA fell by 18.9% to SFr1,495m (€940m).  Cement deliveries increased by 1.1% to 65.6m tonnes.  Good growth was achieved in the downstream operations, with aggregates deliveries rising by 17.5% to 4.7m tonnes and ready-mixed concrete volume increasing by 25.9% to 7.3Mm³ as the number of batching plants was increased by some 28% to 147. The strongest growth was seen in Malaysia, India, Bangladesh, Vietnam and Indonesia, while China and Australia also performed pretty well.  On the other hand, lower volumes were seen principally in Thailand, but also in Sri Lanka, New Zealand and Singapore.  Substantial tonnages were exported from The Philippines, Thailand and Indonesia, but Thai export volumes were lower and two kilns were mothballed, also influenced by the weak domestic market.  In India, 7.2m tonnes of additional cement capacity should come on-stream this year and a further 5.1
Mt is planned to be commissioned during 2010.  The 39.9% owned Chinese associate Huaxin Cement commissioned two new kilns and three grinding centres during the past year and now has a total annual cement capacity of 38Mt.  On the back of infrastructure and housing, Asian cement consumption should continue to advance in 2009.

The North American turnover fell by 15.6% to SFr4,527m (€2,847m) and the EBITDA dropped by 51.4% to SFr486m (€3065m).  Cement deliveries were down by 12.2% to 14.4
Mt and sales of other binders dropped by 21.7% to 1.8Mt.  Aggregates deliveries from the 115 quarries and pits declined by 13.4% to 49.3Mt, while ready-mixed concrete volumes were stable at 7.3Mm³, thanks to acquisitions that saw the number of batching plants rise from 178 to 196.  Having permanently closed two works in Michigan and Missouri eliminating 2.2Mt of expensive capacity it is also temporary mothballing the Artesia, Mississippi and Mason City, Iowa plants, temporary removed a further 1.4Mt of capacity.  The commissioning later this year of the 4Mta Sainte Genevieve works on the Mississippi river will provide Holcim with a very large and cost efficient plant an a major navigable waterway.  St. Lawrence Cement in Canada has fared better, but the provinces of Ontario and Quebec are feeling the effects of the weak economy south of the border.
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