Holcim produces bumper figures for 2005

Acquisitions like this in India are helping the company to strengthen its position. Holcim

Switzerland's Holcim cement producer has reported an almost 75 per cent increase in net profit last year to SFr1.54 billion ($1.17 billion).

The record result beat market expectations, and the world’s second-largest cement maker said on Wednesday that it was optimistic about construction activity this year.

In a statement from its Zurich headquarters, Holcim said that group sales last year had risen by 39.8 per cent to SFr18.468 billion, driven by growth in all sales regions.

Acquisitions had also swelled sales of aggregates and ready-mix concrete.

Cement deliveries increased to 110.6 million tonnes compared with 102.1 million in 2004.

Holcim said that last year’s acquisition of Aggregate Industries in Britain had resulted in “sizable” rise in sales of aggregates to 169.3 million tonnes (104.2 million tonnes in 2004) and of ready-mix concrete to 38.2 cubic metres (29.3 cubic metres in 2004).

Cost management

It commented that operationally the main focus was once again on cost management, with the group succeeding in absorbing some of the “massive” increase in energy costs.

“This is a good result across the board,” analyst Christian Arnold at Bank Vontobel commented. “I can’t see anything disappointing.”

The company’s key performance drivers in Europe were Spain, France, the Benelux countries, Britain, Switzerland, southeast Europe and Russia.

Holcim said it had made “significant progress” in north America, Latin America remained on growth track, and all companies in Africa and the Middle East had increased sales volumes significantly.

Given the group’s decision to enter the Indian market in a big way, the focus in its Asia Pacific region was on expansion.

It splashed out $477 million (SFr611.6 million) in January in a major step forward in the fast-growing Indian market.

Holcim paid 21 billion rupees for a 14.8-per-cent stake of India’s Gujarat Ambuja Cements (GACL).

It also offered to buy up to an additional 20 per cent of the firm for $560 million.

In 2005, Holcim’s net investments amounted to SFr6.339 billion (SFr2.4 in 2004). The company said the bulk of the increase was attributable to the acquisition of Aggregate Industries and acquisitions in India.

Increased dividend

The board of directors is proposing that the dividend be increased to SFr1.65 per share, an increase of SFr0.40 over last year.

In its outlook, Holcim said both the board and management expected “solid growth” in both established group companies and newly consolidated concerns.

It said it expected to be able to absorb higher energy costs with price adjustments and efficient energy management.

Holcim forecast that internal operating growth would once again be above the long-term average of five per cent.

Lafarge, the world’s largest cement maker, reported last Thursday that its net profit rose by a better-than-expected five per cent last year even though higher energy and transport costs had eroded profit margins.

The French company posted net profit of €1.1 billion (SFr1.72 billion) last year, up from €1.05 billion in 2004.

Operating profit rose seven per cent to €2.36 billion from €2.2 billion, on a previously reported 11 per cent rise in revenue. The operating margin, or operating profit as a share of revenue, fell to 14.8 per cent from 15.2 per cent.

Lafarge sold 123 million tons of cement last year, putting it ahead of rivals Holcim and Mexico’s Cemex.

swissinfo with agencies

Key facts

Financial figures 2005

Sales: SFr18.468 billion (+39.8% compared with 2004)
Operating profit: SFr3.316 billion (+47.3%)
Net income: SFr1.54 billion (+74.8%)
Proposed dividend: SFr1.65 gross (up SFr0.40)
Staff at end of 2005: 59,901 (+27.7%)

In brief

Holcim is the world’s number two cement maker behind Lafarge of France.

It was formerly called Holderbank, taking its name from a village in northern Switzerland where it was founded in 1912.

Swiss industrialist Thomas Schmidheiny is a major shareholder in the company.

Holcim holds majority and minority interests on more than 70 countries on all continents.