Holcim, the world’s second-leading cement maker, eyes North American growth in 2010; shares up 5.6 percent
From Reuters
Cement maker Holcim, www.holcim.com which had warned European markets would stay tough, easily beat expectations with a third-quarter net profit of 673 million Swiss francs ($667 million), unchanged from the year-ago period. The world’s second largest cement maker said it was on track to exceed its 600 million franc cost-cutting target for 2009.
Holcim (HOLN.VX), founded in Switzerland in 1912, supplies cement and aggregates (crushed stone, sand and gravel) as well as ready-mix and asphalt. A global company with production sites in around 70 countries, Holcim maintains a market presence on every continent. The company said it anticipates stimulus programs will return North America to growth in the second half of 2010 as it posted forecast-beating quarterly figures.
Shares in the group were trading 5.6 percent higher at 73.55 francs, while the Dow Jones Stoxx European construction index was 1.5 percent higher and rival Lafarge (LAFP.PA) was up 2.8 percent.
"Holcim results were clearly surprising at almost all levels and especially relative to its peers. It remains the 'primus inter pares' in the sector," said Vontobel www.vontobel.com analyst Serge Rotzer.
Holcim expects earnings before interest, tax, depreciation and amortization (EBITDA), its own benchmark for core profit, to return to growth next year, but Chief Financial Officer Theophil Schlatter said it was still too early to predict when it would return to a long-term target of 5 percent growth.
Holcim's strong balance sheet allowed it to take advantage of the global construction slump and snap up debt-laden Cemex Australia earlier this year, while other rivals have had to divest assets. That acquisition was completed October 1. The new Group company now trades under the name Holcim (Australia) Pty Ltd and continues to operate under the leadership of its proven management team.
Holcim expects building activity to remain solid in emerging markets, which account for around 75 percent of Holcim's cement capacity, adding it anticipates Asia Pacific in particular seeing strong demand.
The group cautioned, however, that European markets like Spain, Britain and eastern Europe including Russia, would remain challenging for a longer period.
"More optimistic is Holcim with regard to the development in North America, as building materials markets are expected to return to modest growth in the second half of 2010 on the back of the stimulus programs," it said.
Holcim's steely grasp on costs throughout the crisis has protected its profitability and bottom line from crumbling demand for building materials in Europe and North America.
Edited by Kevin Doyle
Source: Reuters www.reuters.com
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