Mixed outlook for Holcim

By Becca Durrant03 March 2010

Holcim reported sales of CHF 21,1 billion (€ 14,4 billion) for 2009, a - 16% decline compared to the CHF 25,2 billion (€ 17 billion) recorded at the end of 2008. Operating profits were CHF 4,6 billion (€ 3,2 billion) in 2009, a -13,2 % fall compared to the CHF 5,3 billion (€ 3,6 billion) the previous year.

The Group reported a -7,9% decline in fourth quarter 2009 sales to CHF 5,4 billion (€ 3,7 billion) from CHF 5,8 billion (€ 4 billion) during the same period in 2008. However, the Group's operating profit in the fourth quarter last year totalled CHF 1 billion (€ 694 million), a +5% increase on the CHF 968 million (€ 662 million) recorded in 2008.

Holcim's European business experienced the steepest fall in operating profits for the Group last year, with a -38,5% decline to CHF 1,2 billion (€ 842 million) compared to the CHF 2 billion (€ 1,4 billion) reported in 2008. Holcim Switzerland was the only Group company to post an improved result. All other European companies reported a much weaker performance compared with the previous year.

Operating profits for the Group in North America also fell in 2009 by -17,7 % to CHF 400 million (€ 273 million), while total sales fell by -23,1 % to CHF 3,5 billion (€ 2,2 billion). The difficult market conditions adversely impacted the results of Holcim US in particular. Despite costs savings, the company said it was only able to offset a limited amount of the decline in volumes through efficiency improvements.

In contrast, Aggregate Industries US achieved a "remarkable" improvement in its results and Holcim Canada likewise raised its operating profit.

In a statement the company said, "It is unclear how the building materials markets will perform in the current financial year. Uncertainty is at a high level, especially with regard to developments in Europe and North America. Much depends on whether the stimulus programmes designed to expand infrastructure will indeed be implemented as proposed."

The company added many emerging markets are in a better position this year with Holcim's Asia Pacific region looking particularly favourable with a +17,7% increase in operating profits in 2009 to CHF 1,8 billion (€ 1,2 billion), partly due to the acquisition of the aggregates and ready-mix concrete activities in Australia.

Meanwhile, Latin America and Africa and the Middle East regions are also likely to experience stable business performance in 2010.

Holcim said it will start the next upturn from a stronger position and will be able to get back on track towards achieving its long-term growth targets.

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