Europe / Middle East / Africa
Cement maker Holcim cuts costs
Aug, 17 2012
(Switzerland) -- Holcim is cutting costs and raising the prices of its
cement and other building materials to meet financial targets, hit by a
double whammy of deteriorating demand in cash-strapped Europe and high
"While demand in North America should beat the
previous outlook, Holcim now expects a decline in Europe," the world's
second-largest cement maker said on Wednesday. Europe is Holcim's
second-largest market by sales, after Asia-Pacific.
construction industry customers, especially those in southern Europe at
the heart of the debt crisis, are suffering as governments slash
spending in an attempt to get budgets under control.
At the same
time, Holcim and rivals Lafarge, HeidelbergCement and Cemex have been
trying to pass a surge in electricity, coal and oil costs on to
customers by hiking the prices of their products.
Holcim was most
likely to raise prices for its cement, aggregates and concrete in Asia,
Latin America, the U.S. and Canada, chief financial officer Thomas
Aebischer said, where markets are more robust. Question marks remain
over Holcim's ability to implement prices hikes in Europe, he added.
company declined to comment on the size of price rises it is seeking
across its various markets and product groups, but said it was aiming to
at least pass on inflation-induced costs to its customers.
Zurich-based group said in May it would take out costs and improve
efficiency to boost profit by at least 1.5 billion Swiss francs ($1.5
billion) by the end of 2014.
Analysts at Bank Vontobel said that
while Holcim's overall outlook was almost unchanged, the contribution of
Europe compared with North America was three times bigger, making this
effectively a "reduction of the outlook".
Holcim stock was down
0.4 percent at 0923 GMT, after initially falling more than 2 percent.
The Stoxx 600 European construction index was down 0.7 percent.
net profit rose 9.2 percent to 379 million Swiss francs on slightly
higher sales of 5.6 billion francs, which was chiefly due to strong
demand from emerging markets in Asia, Latin America and Russia.
Analysts in a Reuters poll had forecast on average a net profit of 377 million Swiss francs and sales of 5.69 billion francs.
ahead, Holcim said it will "accord cost management the closest
attention" and that planned spending would result in an additional
operating income of at least 150 million francs this year.
($1 = 0.9724 Swiss francs)
By: Andrew Thompson
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