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Holcim sees positive signs in first quarter results

World Cement,

Most emerging markets remained on track for growth

It was a mixed picture in the global construction markets during the first quarter of 2010. While most emerging markets continued to grow, heavy snowfall and a weak economy further restrained construction activity in Europe and North America.

The Group shows organic growth at operating level
Holcim performed well and achieved organic growth. In March in particular, the Group produced significantly better results than in 2009 and also improved its margins. There are several reasons for this:

The Group benefited from its strong presence in growth markets and primarily from brisk demand for building materials in Asia. In India in particular the market is booming and it is here that Holcim is engaged in the largest number of projects to expand capacity.

A substantial contribution came from Australia. Holcim Australia is a wholly-owned subsidiary of the Group since October 1, and Cement Australia has been fully consolidated since this date as well. Holcim Australia is one of the continent's leading suppliers of aggregates, ready-mix concrete and concrete elements. In the first quarter, Australia contributed an additional operating EBITDA of CHF37 million.

Higher sales volumes
Consolidated cement sales grew by 4.4% to 31 million t. Deliveries of aggregates and ready-mix concrete increased substantially – by 17.5% to 29.5%.

million t and 9.2% to 9.5 million cubic meters respectively. The increases in volumes are largely a consequence of the new consolidation of Holcim Australia. In the aggregates segment, several Group companies also contributed to the volume growth, including Aggregate Industries UK as well as Group companies in Switzerland, Canada and Brazil. There was a sharp decline in sales of aggregates in Eastern Europe. Nearly half of the Group companies managed to increase their sales of ready-mix concrete. However, Europe in particular saw a decline in the concrete business. Overall, price levels remained stable, with few exceptions.

Better operating results
Consolidated net sales increased by 4.8% to CHF4.7 billion, mainly as a result of acquisitions, and operating EBITDA rose by 19.1% to CHF909 million. The related margin increased by 2.3 percentage points to 19.2%. Holcim made improvements in the regions Europe, North America and Africa Middle East. As expected, in Group region Asia Pacific, average operating EBITDA margin decreased because Holcim Australia does not operate in the high-margin cement segment. Like-for-like operating EBITDA margin in this region improved. Internal operating EBITDA growth of the Group came to an impressive 12.7%. The ongoing cost-cutting programme had a positive impact on the quarterly financial statement. As in the previous year’s quarter, cash flow from operating activities was negative at CHF-257 million due to seasonal factors.

Net income declined 66.2% to CHF66 million, and the share attributable to shareholders of Holcim Ltd decreased by 191.9% to CHF -68 million. The lower earnings primarily reflect the non-recurring cash-neutral tax charge of CHF182 million, which had already been announced in connection with the restructuring of the Group's interests in North America. Without this restructuring, net income would have increased by 27.2%.

The market trend in Group regions Europe and North America remains uncertain. Only over the coming months will it become clear whether the weak demand in the first quarter of 2010 was due more to the hard winter or to the general adverse economic conditions.

However, in Latin America and Group region Africa Middle East, Holcim expects business to develop on a stable footing. Asia Pacific will remain on track for growth.

In Asia, Latin America and Russia, Holcim will commission cement and grinding plants with an annual capacity of around 8 million t before the end of the year.

In 2010, the Group will benefit from the cost advantages gained last year and further strengthen the efficiency of its processes and competitiveness.

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