Global economic growth in the first half of 2013 was weaker than foreseen, says
Construction activity was hurt by the severe winter as well as the bad weather encountered in many regions, and demand fell short of expectations particularly in India, Canada, Mexico and Morocco.
By contrast, the economic climate was significantly better in the Philippines and Ecuador, among other markets.
Holcim succeeded in increasing group net income and cash flow from operating activities with Europe and Latin America achieved better operating results, leading on balance to a higher operating EBITDA margin.
“It was primarily on account of India that Holcim was unable to exceed the previous year’s operating EBITDA growth on a like-for-like basis,” says the group.
“However, in the second quarter the group achieved organic growth in both operating EBITDA and operating profit. Thanks to the Holcim Leadership Journey which is making progress above all on the cost front, ROIC before taxes continued to increase. Over 12 months, net financial debt decreased by CHF 1.2 billion [approximately €970,000].
“Consolidated sales volumes were lower in all segments. Latin America contributed most positively to the development of cement sales. The decline in deliveries of aggregates and, above all, ready-mix concrete was more acute. This reflects not only the frequently limited demand, but also the reorganisation and restructuring efforts initiated, and in some cases completed, in order to sustainably improve margins. Holcim has been able to achieve better prices in many markets.”
The financial results show consolidated net sales decreased by 5.1% to CHF 9.6 billion. The 3.4% decline in operating EBITDA to CHF 1.8 billion was largely attributable to the two Indian group companies as well as Holcim Canada, Holcim Mexico, Holcim Morocco and Holcim France. Group regions Europe and Latin America achieved better results. On the positive news front, fixed costs were lower and the price environment was in many cases stable or slightly better. Proceeds from the sale of CO2 emission certificates were down by CHF 10.3 million in Europe. Consolidated operating profit fell by 3.3% to CHF 1 billion, but on a like-for-like basis moderate growth of 0.1% (2nd quarter of 2013: +5.4 percent) was recorded. Group net income increased by 23.8% to CHF 760 million.
Net financial debt was down by CHF 1.2 billion compared to the same period of the previous year at CHF 11 billion.
Consolidated cement sales were down 3.7% to 68.6 million tonnes. Deliveries of aggregates declined by 7.2% to 69.4 million tonnes and ready-mix concrete volumes decreased by 15% to 18.8 million m³. Asphalt sales were down by 8.3% to 3.3 million tonnes because of North America.
The group companies in Ecuador, Azerbaijan and Russia reported significant increases in cement sales, while deliveries of aggregates were up at Holcim Switzerland and
In its outlook for 2013, Holcim says it anticipates an increase in sales of cement in 2013 but the group does not expect to reach the previous year’s levels in the aggregates and ready-mix concrete businesses.
While group regions Asia Pacific and Latin America are expected to witness higher cement sales volumes, Holcim is somewhat less optimistic with regard to Europe and Africa Middle East. In North America, cement sales are expected to reach similar levels to previous year.
Turning to operating EBITDA and operating profit, the board of directors and executive committee expect a further improvement in margins. The Holcim Leadership Journey, which gains further momentum, will contribute to this development.
Under similar market conditions, organic growth in operating EBITDA and operating profit should be achieved in 2013.
