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Holcim reports higher sales volumes in 2011 annual results

World Cement,

Annual results 2011

  • Higher sales volumes for cement, aggregates and ready-mix concrete.
  • Consolidated net sales decreased 4.2% (like-for-like: +7.5%).
  • Operating EBITDA decreased 12.3% (like-for-like: -0.2%).
  • Cash-neutral impairments of CHF775 million reduced Group net income to CHF682 million.
  • At CHF2.8 billion, cash flow from operating activities remained solid.
  • Strong balance sheet and high liquidity.
  • Proposal for a payout from capital contribution reserves of CHF1.00 (2011: 1.50) per registered share.

Fourth quarter 2011

  • Positive volume developments for cement, aggregates and ready-mix concrete.
  • Net sales increased 3.9% (like-for-like: +13.1%).
  • Operating EBITDA increased 5.3% (like-for-like: +15.5%).
  • Cash flow from operating activities increased 13.5% (like-for-like: +28.4%).


  • Europe: stable demand.
  • North America: slightly higher sales volumes.
  • Latin America: increased demand for construction materials.
  • Africa Middle East: market conditions unchanged.
  • Asia Pacific: growing demand for construction materials.
  • Organic growth at operating EBITDA level.

Emerging markets continue on growth course

Financial year 2011 was characterised by markedly varied economic conditions. While construction activity in mature markets was rather sluggish, emerging economies in Asia and Latin America remained on a solid growth course. Cost inflation increased around the world, which led in particular to higher raw material, energy and transport costs. Natural disasters, such as the heavy floods in eastern Australia and Thailand, as well as the earthquake in New Zealand, affected construction activity.

Sales increase in all segments and in the four large Group regions

In four of its five Group regions, Holcim once again sold more cement, aggregates and ready-mix concrete. Only the Group region Africa Middle East saw slight declines in sales volumes. Increases were strongest in aggregates, especially in Latin America and Asia Pacific. In cement, Holcim also sold larger amounts in Latin American markets, followed by Asia. As a result of acquisitions, increases in ready-mix concrete were particularly strong in North America. The greatest organic growth, however, was achieved in Latin America.

In the fourth quarter, cement deliveries increased 6.7% to 36.2 million t. The largest sales increases came from the Group regions Asia Pacific and Latin America. Aggregates sales developed positively during this period as well, rising 8.9% to 42.6 million t, with Europe and North America achieving the highest level of increases. With the exception of Asia Pacific, deliveries of ready-mix concrete were up in all Group regions, amounting to a consolidated increase of 6.5% to 12.2 million m3. Important contributions to this result came from Europe and North America.

Continued cost reduction measures show results

At the beginning of the financial crisis in 2008, Holcim introduced measures to reduce fixed costs. In 2011, further efficiency improvements were undertaken. This primarily involved the temporary or permanent closing of production facilities almost exclusively in developed markets, and not only in cement, but in all segments. Spain, Italy, several Eastern European markets and the US were particularly affected by closures and restructuring.

Like-for-like higher turnover and operating EBITDA at last year’s level

The strong Swiss franc, weaker construction materials markets in certain areas and increased competitive pressure led to consolidated net sales of CHF20.7 billion, a 4.2% decrease.

On a like-for-like basis, not taking into account exchange rate and consolidation changes, consolidated net sales actually increased 7.5%. While operating EBITDA decreased 12.3%, on a like-for-like basis it remained virtually stable at minus 0.2%. The substantially improved financial results of Holcim Russia and Holcim Australia, as well as of the Group companies in Indonesia, Singapore, Colombia and Switzerland, had a positive effect on the year-end results. In many markets, increased costs due to inflation, especially for raw materials and energy, could not be completely passed on to sales prices. This, combined with various local factors, negatively affected performance above all in the Philippines, India, North America and Great Britain.

In the fourth quarter, despite strong exchange rate volatility, which reduced operating results by CHF98 million, operating EBITDA rose by 5.3% compared to the same quarter a year before. On a like-for-like basis the increase was 15.5%, above all thanks to Group companies in Asia Pacific and Europe. In Europe, the sale of CO2 emissions certificates added CHF52 million to operating EBITDA (fourth quarter 2010: 20). In Asia Pacific, operating EBITDA rose 28.3% on a like-for-like basis.

Cash-neutral impairments affect net income

As part of the South African policy to support Black Economic Empowerment (BEE), Holcim in 2007 sold its majority stake in AfriSam (formerly Holcim South Africa) to a BEE-compliant consortium. Since then the Group has held a 15% stake in the company. As demand for construction materials has heavily decreased since 2010, AfriSam found itself forced to carry out far-reaching financial restructuring measures during the reporting year. In this connection, Holcim had to write-off CHF415 million, which is made up of a notes issue, accrued interest and foreign currency movements, of its investment. The stake in AfriSam is now at 2%.

In Spain, parts of Eastern Europe and in the US, Holcim has also been forced, due to unsatisfactory demand, to make value adjustments on property, plant and equipment, as well as goodwill, of a total of CHF360 million.

Due to these cash-neutral impairments totaling CHF775 million, net income has been reduced by 57.9% to CHF682 million, and the share of net income attributable to shareholders of Holcim Ltd to CHF275 million. Cash flow from operating activities came to CHF2.8 billion. Cash flow generation was particularly strong in the fourth quarter 2011.

Continued solid balance sheet

Holcim continues to show a solid balance sheet and good liquidity. Although new plants came on line and others are under construction, net financial debt only rose by 1.6% to CHF11.5 billion.

Payout to be proposed to Annual General Meeting

Despite the above-mentioned cash-neutral impairments, the Board of Directors will propose to the Annual General Meeting on 17 April 2012 in Zurich, a payout from capital contribution reserves of CHF1.00 per registered share (2011: 1.50).

Outlook for 2012

Holcim expects demand for building material to rise in emerging markets in Latin America and Asia, as well as in Russia and Azerbaijan in 2012. A slight improvement for North America can also be expected.

In Europe, demand should remain stable, provided that the situation is not undermined by further systemic shocks. In any case, Holcim will accord cost management the closest attention and pass on inflation-induced cost increases. Holcim’s approach to new investments will be cautious. Holcim expects that the Group will achieve organic growth in terms of operating EBITDA.

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