Cost cuts, improved pricing boost Holcim 1Q

Cost cuts, improved pricing boost Holcim 1Q
08 May 2013

Higher prices, cost savings from its efficiency programme as well as the sale of a stake in Cement Australia helped Holcim compensate for harsh first-quarter winter weather which dragged on sales.

Consolidated net sales for the first three months of the year were 7.2 per cent lower at CHF4.3bn (EUR3.5bn) and operating EBITDA fell by 9.5 per cent to CHF650m, the main reason for which, Holcim noted, was the lower performance by both Indian group companies. However, better results were achieved in group regions Europe and Latin America led by further cost cuts as well as stable or slightly improved selling prices.

The Holcim Leadership Journey programme, launched last May is progressing in line with targets, the company said. Its Customer Excellence work stream still contributed CHF 26m to operating profit in the first quarter of 2013 while the Cost Leadership work stream strengthened operating profit by CHF143m.

Overall, operating profit declined 17.8 per cent YoY to CHF270m but net profit was 161.1 per cent higher YoY at CHF 295m. The share of net income attributable to shareholders of Holcim Ltd increased to CHF187m.

Consolidated cement sales decreased by five per cent to 32.1Mt. Sales increases were achieved primarily by group companies in Ecuador, Russia and Azerbaijan. Deliveries of aggregates were down by 8.6 per cent to 28.6Mt. Favorable market conditions were reported in Switzerland. Declines in aggregates were recorded in Australia, Ecuador and Spain in particular. Sales of ready-mix concrete declined by 16.8 per cent to 8.4Mm3. However, this decline was mainly due to restructuring measures. Asphalt sales contracted by 17.7 per cent to 1.1Mt.

On its outlook, group regions Asia Pacific, North America and Latin America are expected to witness higher sales volumes, but Holcim is somewhat less optimistic regarding Europe and Africa Middle East.

The company said it expects operating EBITDA and operating profit margins to improve, and its Leadership Journey efficiency programme gains momentum. Under similar market conditions, significant organic growth in operating EBITDA and operating profit should be achieved in 2013, it says.

Published under Cement News