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Holcim Q3 Profit Up, Sales Fall Amid Weak Demand

Nov, 06 2013

Swiss cement giant Holcim Ltd (HCMLY.PK) Tuesday reported a higher third-quarter profit, citing positive earnings performance in Europe, North and Latin America, as well as its cost discipline initiatives. Meanwhile, net sales fell about 8 percent, due to weak demand in key markets such as India and Mexico.

In Asia Pacific, net sales fell 19.9 percent, hurt by by fall in demand in India. According to the company, demand for construction materials fell in key markets such as India, Mexico, Canada and, to a lesser extent, Brazil. Meanwhile, demand stabilized in Europe, it said.

Further, Holcim noted that the cost programs of "Holcim Leadership Journey" is on track, and has contributed 531 million Swiss francs and the Customer Excellence program contributed 95 million francs to consolidated operating profit so far this year.

In the third quarter, net income shareholders increased to 469 million francs from 392 million francs in the previous year. The company has restated its prior-year results.

Operating EBITDA was 1.13 billion francs, down 5.1 percent from the year 2012.

Net sales for the quarter declined 7.8 percent to 5.29 billion francs from 5.74 billion francs generated last year. On a like-for-like basis, quarterly sales improved 1.9 percent.

Sales of cement edged down 0.5 percent to 35.7 million tonnes, while sales of aggregates were 45.4 million tonnes, up 2.2 percent from a year ago. The company showed a 12.9 percent fall in sales of ready-mix concrete.

For the nine-month period, sales volumes declined in all three segments, with the greatest declines in ready-mix concrete. Weaker operating results in India, Mexico, Brazil and Canada in particular led to a reduction in consolidated operating EBITDA and operating profit for the first nine months of the year.

Looking ahead, Holcim said it does not expect to reach the previous year's sales volumes of cement, aggregates and ready-mix concrete in 2013.

While Group region Europe is expected to witness higher cement sales volumes, Holcim is somewhat less optimistic regarding Latin and North America and Africa Middle East. In Asia Pacific cement sales are expected to reach levels similar to the previous year.

The firm expects a further improvement in operating EBITDA and operating profit margins. Under similar market conditions, organic growth in operating EBITDA and operating profit should be achieved in 2013, the company added. In Zurich, the shares closed Monday's regular trading at 68.40 francs.

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