Holcim’s 2005 EBITDA was SFr 4757m, SFr43m higher than analysts at JPMorgan (JPM) were forecasting. Holcim reported 2005 earnings of SwFr 1540m, in-line with JPM forecast of SwFr 1541m and SwFr40m (2.7%) above Bloomberg’s estimate of consensus. Operating profit was SwFr22m below its forecast at SwFr 3316m, but SwFr 54m (1.6%) aboveBloomberg’s estimate of consensus.  Holcim’s operating profit exceeded JPM forecast for Latin America, but was slightly lower than its estimates in its other four regions. The shortfall relative to its forecast in Holcim’s operating profit was offset by its interest charge being lower than analysts had expected.

Outlook equally promising for 2006 in our view. Holcim reported a 10.5 per cent increase in its like-for-like operating EBITDA in 2005. For the current year it is forecasting growth on this basis "above the long-term average of 5%".  JPM is estimating an increase of 10.1 per cent, almost the same as the company achieved in 2005.

Increasing cost of electricity remains the main concern – reports JPM. Holcim continued to largely offset the higher fuel expenses, by increasing the usage of alternative waste fuels and reducing the clinker factor. Despite the higher unit cost of thermal energy, it only accounted for 4.7 per cent of Holcim’s sales in 2005, only 0.1 of a percentage point higher than in 2001. Controlling electricity costs has been more difficult though, due to the lack of substitutability. Electricity costs as a percentage of sales therefore increased from 4.6 per cent in 2001 to 5.7 per cent in 2005. These trends are expected to continue in 2006. Holcim is budgeting for a further SwFr 1.5 per tonne increase in energy costs, with the increase concentrated in the cost of electricity.
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