Swiss cement giant Holcim Ltd (HCMLY.PK) Thursday reported higher profit for the first half of the year, even as sales declined amid weak construction activity. The company said it has been able to contain costs and improve prices. It also reported a significant cut in debt and confirmed its full-year goals.
Holcim said global economic growth was weaker than expected in the first half with construction activity hurt by severe winter as well as the bad weather in many regions. Demand fell short of expectations in India, Canada, Mexico and Morocco, while the economic climate turned out to be significantly better in the Philippines and Ecuador.
Net income attributable to shareholders of the company jumped 47.4 percent to 571 million Swiss francs ($612.1 million) from 387 million francs.
Net income increased 23.8 percent to 760 million francs from 614 million francs. Prior-year results have been restated due to changes in accounting policies.
Operating Earnings Before Interest, Tax, Depreciation and Amortization, or EBITDA slid 3.4 percent to 1.82 billion francs, largely due to the two Indian Group companies as well as Holcim Canada, Holcim Mexico, Holcim Morocco and Holcim France.
Like-for-like operating EBITDA fell by 0.6 percent in the first half, primarily due to India.
Consolidated net sales for the first half decreased 5.1 percent to 9.649 billion francs from 10.166 billion francs. Consolidated sales volumes were lower in all segments while price development in all regions were positive, except in Europe.
Consolidated cement sales fell 3.7 percent to 68.6 million tonnes. Deliveries of aggregates declined 7.2 percent to 69.4 million tonnes, while ready-mix concrete volumes decreased 15 percent to 18.8 million cubic meters. Asphalt sales dropped 8.3 percent to 3.3 million tonnes because of North America.
According to the company, demand for building materials remained high in Asia. However, growth temporarily weakened in several markets, including India due to public sector reticence to award contracts and a fall-off in private construction.
For the second quarter, net income attributable to shareholders edged up 1.7 percent to 383 million francs while sales dropped 3.3 percent to 5.326 billion francs.
Holcim noted that its net financial debt decreased by 1.2 billion francs over 12 months.
The company confirmed its outlook for organic growth in operating EBITDA and operating profit for 2013. It expects an increase in sales of cement in 2013, but does not see reaching the previous year's levels in the aggregates and ready-mix concrete businesses.
The stock rose 0.8 percent on Wednesday to close at 70.45 francs.
by RTT Staff Writer
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