Cement Giant Lifts ‘Constant Currency’ Profit Slightly

Thursday, July 31st, 2014
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As it continues with efforts to merge and create a worldwide behemoth, Swiss cement giant Holcim has recorded a slight lift in operating profit in constant currency terms.

Announcing its first-half results, the company said its operating profit for the six months to June fell 8.1 compared to the same period in 2013 to come in at CHF 962 million ($A1.136 billion) and net income after tax dropped 13.5 percent to CHF657 million

Net sales fell 6.1 percent as a surge in asphalt sales and a modest increase in volumes of cement and aggregate sold was more than offset by declining sales in ready mix concrete.

Strip away currency movements, however, and operating profit was up 2.6 percent and net sales up 4.8 percent, whilst comparisons on a net income after tax basis are obscured as the previous year’s result had been artificially inflated as a result of a gain associated with a reduction in participation of Cement Australia.

The latest announcement comes as Holcim and French giant Lafarge are seeking to shed assets in order to seek regulatory approval for a $50 billion plus merger which if it goes ahead will create what will be by far the world’s largest cement, concrete and aggregates outfit with combined annual sales of around 32 billion euros ($A45.720 billion).

On July 7, the two companies outlined a wide range of assets they said were up for disposal – sales which media reports at the time suggested would amount to around ten percent of the combined group’s assets.

Holcim said it wanted that deal closed by the end of the first half of 2015.

But another deal being pursued by the company hit a snag early in July as media reports suggested the European Commission had objected to Holcim’s plan to offload its Spanish unit to Mexican cement producer CEMEX – part of a deal announced in August last year which would also see Holcim acquire CEMEX’s German businesses, a move approved unconditionally early in July.

Holcim Chief Executive Office Bernard Fontana welcomed the results, saying the Group had recorded strong levels of cement sales in North America, Africa/Middle East and Europe (with mild weather in Europe supporting strong building activity) and had seen a stabilisation of the Asian market.

“Holcim increased sales of both cement and aggregates in the first half of 2014, despite an uneven development of the global economy,” Fontana said.

Looking forward, Holcim says it expects a further year of uneven performance across geographical regions as cement sales and ready-mix concrete volumes increase across all regions but aggregates sales volumes remain flat as improvements in Europe, Asia Pacific, North America and Africa Middle East are offset by negative volumes in Latin America.

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