Weak Asia Market Hit Cement Maker Sales

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Thursday, February 27th, 2014
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Weak markets in the Asia Pacific including lower volumes of aggregates sales in Australia have hit overall group sales and underlying profits of the world’s third largest manufacturer of cement and concrete.

In a statement released on Wednesday night (Australia time), Swiss company Holcim Ltd said difficult conditions across all product categories and regional markets throughout calendar 2013 caused overall revenue to drop by 6.8 percent across the group to 19.179 billion CHF ($A24.026 billion).

Holcim

Driving the decline was a 12.7 percent decline in revenues within the Asia-Pacific region, which by volume accounts for around half of the Group’s sales of cement and more than a quarter of sales of ready-mix concrete.

Whilst sales volumes of cement within the region (70.3 million tonnes) dropped by 1.3 million tonnes, volumes of aggregates (25.2 million tonnes) also fell by 1.3 million tonnes and those of ready-mix concreted dropped by 300 million cubic meters.

Whilst the company does not give specific breakdowns for Australia, it hints that lower volumes here was a key factor in its fall in aggregate sales whilst softer conditions in India were a key factor behind the group’s overall sales decline in the region.

Because of the weak sales result, underlying operating profit fell 5.1 percent from 2.485 billion CHF to 2.357 billion CHF, albeit with bottom line net income (1.272 billion CHF) more than doubling as the previous year was impacted by CHF736 million in restructuring costs.

Going forward, the company does not give specific numbers but says it expects to deliver organic growth in operating profit in 2014.

Whilst aggregates volumes are expected to remain flat as increases in Asia-Pacific, the US and Europe are expected to be offset by lower volumes in Latin America, volumes of cement would increase across all regions whilst those of ready-mix concrete would lift in most regions except Europe and Latin America.

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