Holcim sales and profits drop

By Steve Skinner17 November 2008

Holcim's sales for the third quarter were down -5% on the same period in 2007 at CHF 6,9 billion (€ 4,5 billion), down from the CHF 7,2 billion (€ 4,8 billion) reported last year. Pre-tax profit fell -27% from CHF 1,5 billion (€ 1 billion) in 2007 to CHF 1,1 billion (€ 741 million) this year.

A company statement said that demand for construction materials in the US, UK and Spain fell sharply in the third quarter, while Central, Eastern and South Eastern Europe all recorded gains in sales volumes. Positive development in Latin America and strong growth in Africa and the Middle East, as well as lively activity in the Asia Pacific region contrasted to sluggish activity in North America.

Overall, cement volumes dropped -5,9% from 38,6 million tonnes in the third quarter of 2007 to 36,3 million tonnes this year and aggregate sales shrank -4,2% from 49,7 million tonnes in 2007 to 47,6 million tonnes this year.

While an +8% increase in ready-mix concrete volumes, from 12,4 million tonnes in the third quarter of 2007 to 13,4 million tonnes this year, offset some of the reduction in cement and aggregate volumes, a static quarter in asphalt volumes – 4,4 million tonnes in 2007 and 4,5 million tonnes this year – meant that overall volumes across the Group’s materials divisions for the quarter were down.

“In the third quarter, the global economy declined much more than expected,” said a company spokesperson. “Holcim is expecting that the course of business will remain difficult in the coming months.

“The construction markets of western and Southern Europe will decline further and the East and South Eastern regions will see a slowdown. In North America, the US construction sector has not yet bottomed out and the Canadian market looks set to slow down too,” continued the spokesperson.

“Activity in Latin America is expected to remain relatively high, but difficulties in the US could negatively impact the region. African and Middle Eastern operations should continue to provide good business, while in the Asia Pacific region we expect a slow-down in demand from some markets. A slight improvement in prices in India is unlikely to compensate for a general upward pressure on costs,” confirmed the spokesperson.

A company statement said that Holcim would be introducing additional cost-cutting measures including planned plant closures in Spain and the US.

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