As part of Holcim’s Leadership Journey, the Group has used the reduced levels of construction activity in Europe as an opportunity to streamline its European management structure in order to reduce costs. By also adjusting production capacities across all of its operations, the group’s own evaluations point to annual savings of at least SFr120 million, as well as better utilisation of existing capacities and more efficient allocation of capital expenditure.
Additional cash costs will arise from the restructuring process in 4Q12, though, and these are likely to amount to approximately SFr100 million when site restoration costs are also taken into account. Property write-offs, as well as the plant and equipment being written off will total SFr410 million. These will be charged in 4Q12. It is worth noting that consultation procedures examining the impact that these changes will have on personnel have already been initiated in some Group companies.
This restructuring will accelerate the implementation of the Holcim Leadership Journey, and most of the anticipated SFr200 million in cash costs required to fully realise the journey will be incurred before the end of the year.
For the moment, the Group's payout potential for the 2012 financial year (pre-write-offs) remains unclear, but it will be proposed by the Board of Directors by the end of February 2013, as part of the year-end financial statement to be submitted to the Annual General Meeting.
Adapted from press release by Jack Davidson.