Holcim’s sales fall, but profits are marginally higher in 1H13

Holcim has reported its financial results for 1H13, showing net income has risen 23.8% y/y. Overall, however, the Group reports that demand fell short of expectations in key markets including India, Canada, Mexico and Morocco. Consolidated sales volumes were low in all segments, with cement falling 3.7% y/y to 68.6 million t during the January – June period. Aggregates, ready-mix and asphalt sales suffered more significantly, down 7.2%, 15% and 8.3%, respectively.

Latin America

Latin America contributed most positively to the development of cement sales thanks in part to a very positive performance in Ecuador. Cement sales in this Group region were up 1.4% y/y to 12.3 million t. The second quarter saw growth of 2.8%.

Asia Pacific

Cement sales in Group region Asia Pacific were marred by slack demand in India, falling 3.6% across the region to 36.4 million t in 1H13. Operating profit and operating EBITDA also fell significantly to CHF597 million (-8.6% like-for-like) and CHF826 million (-7.8% like-for-like), respectively. However, Holcim Philippines reported substantial improvement.

North America

North America was hampered by slow sales in Canada, bring total cement sales to 5 million t compared with 5.4 million t in 1H12. However, Holcim US showed improved performance.

Africa Middle East

In Africa Middle East, Morocco proved to be a drag on overall regional cement sales, which declined 13.1% y/y over the period. Operating profit was down 16.5% on a like-for-like basis and operating EBITDA fell 11.5% like-for-like.

Europe

In Europe, sales of cement, aggregate and ready-mix were down while asphalt remained stable y/y. However, restructuring has benefited operating results, with operating EBITDA up 27% to CHF352 million and operating profit up 326.4% like-for-like to CHF98 million.

Overall picture

Overall, like-for-like operating EBITDA fell 0.6% in 1H13, while operating profit rose 0.1% like-for-like. The second quarter proved to be better than the first with operating EBITDA up 2.8% and operating profit up 5.4% y/y. Price development was positive across most regions, with Europe being the notable exception. Consolidated net sales decreased 5.1% to CHF9.6 billion, but Group net income increased by 23.8% to CHF760 million. Net financial debt was down by CHF1.2 billion y/y. The Holcim Leadership Journey contributed CHF376 million to consolidated operating profit, thanks largely to progress on the cost front.

Outlook

Holcim expects cement sales to improve in 2013, particularly in Group regions Asia Pacific and Latin America. The outlook is less positive for Europe and Africa Middle East, while cement sales in North America are anticipated to more or less level with 2012. The Group anticipates a further improvement in operating EBITDA and operating profit margins.

Adapted from press release by Katherine Guenioui