Holcim profit beats forecasts

Holcim saw its operating profit improve following cost-cutting measures. Holcim

Holcim, the world’s second-biggest cement producer, has increased net profit by more than a third despite a drop in sales in 2003.

The company said the improved result, which outstripped forecasts, was due in part to its global presence and its focus on developing markets.

The cement manufacturer announced on Tuesday that net profit had grown by 35.6 per cent, reaching SFr686 million ($538.78 million).

Sales dropped by 3.2 per cent last year, although this was mostly due to a weaker dollar. In local currencies, sales actually grew by 2.4 per cent.

Part of the improvement was due to the closure of old factories and cost-cutting measures. Plants in Switzerland, southern Germany and the United States have been shut down or replaced, and jobs cut at newly acquired units.

Holcim’s deputy chief executive, Urs Bieri, said that the company was “quite happy” with the result, particularly when it was compared with the figures of competitors.

“We think we’ve found a turnaround in the United States which is remarkable and very important for our result,” he told swissinfo.

“Overall, we could reduce costs and improve prices for the products we sell, so the whole result turned positive,” he added.

Keeping pace

Holcim has bought plants recently in Spain, Serbia and Indonesia to keep pace with its main competitor, the French market leader, Lafarge.

The company said it expected “only a fairly modest brightening of activity” in the building industry in 2004 after a subdued pick-up last year. However, it is optimistic it can improve sales in key markets.

Chief executive Markus Akermann said that the North American market was looking up. The economic recovery and the addition of more efficient plants there are expected to boost results.

Holcim also expects business to strengthen in developing countries and emerging markets.

Volume

Sales volumes increased in all core sectors. Sales of cement reached 94.3 million tons in 2003, aggregates 95.9 million tons and ready-mix concrete 27 million cubic metres.

Holcim’s main business, cement, increased everywhere. Growth was spurred by the consolidation of the company’s results in the Philippines and the acquisition of a cement plant in Spain.

Latin America provided the greatest contribution to operating income, according to the company. But better results in Africa, the Middle East and the Asia-Pacific region also played a role.

In Europe, sales and earnings rose in Spain, fuelled by a building boom, but the construction slump in Switzerland and Germany eroded business.

The firm plans to issue new stock to help buy shares it does not already own in its Mexican unit, Apasco. Last week, local regulators gave the go-ahead to a $750 million buyout offer.

Holcim gave no details of a capital increase in its 2003 earnings report.

In late-morning trading at the Swiss stock exchange, Holcim shares, which had risen by 18 per cent this year, were down 1.1 per cent at SFr66.75.

swissinfo with agencies

Key facts

Holcim sales for 2003: SFr12.6 billion.
Net profit: SFr686 million.
Production capacity cement: 145.2 million tonnes.
Cement sales: 94.3 million tonnes.
Aggregate sales: 95.9 million tonnes.
Ready-mix concrete sales: 27 million cubic metres.
Personnel: 48220.