Displaying items by tag: Holcim

Switzerland: Holcim surprised investors with a profit warning today, after announcing it would take a Euro641m hit in one-off charges on its 2011 accounts. The bulk of the impairment relates to a Holcim-specific issue in South Africa regarding AfriSam but analysts noted the decision to write down the value of assets in parts of Europe and the US on the back of sharply lower demand could be echoed by other cement makers.

"Some mature markets will never again see the record levels of profitability of the mid-2000s. Other players could be forced to do the same," warned Josep Pujal of Kepler Capital Markets.

Euro343m of Holcim's charges stemmed from completely writing down its remaining South Africa investment following a steep fall in demand for construction materials in the country since 2010. Holcim's South African exposure stems from its former local subsidiary, the country's biggest cement maker by sales, AfriSam. The remainder of the write-offs stem from adjusting property, equipment and goodwill lines in the group's accounts to much weaker markets. Some Euro271m in writedowns related to Spain and eastern Europe and Euro26m related to the US.

New Zealand: New Zealand's foreign investment watchdog, the Overseas Investment Office (OIO), has given the green light to Holcim for the purchase of a leasehold at Timaru's port. The amount Holcim paid to lease the 2.26 hectares of land, which it will hold for a minimum of 50 years, was kept confidential by the OIO.

The agreed leasehold, including a new wharf and storage facilities capable of handling cement, indicates that Holcim is preparing the ground for the construction of a new US$500m cement plant at Weston, near Oamaru. In October 2011 the Swiss cement company announced a delay on a decision for the proposed plant until late in 2012. That announcement was the latest in a long line of delays that started in 2007. Construction of the 0.86Mt/yr plant is expected to create nearly 500 local jobs.

Onne van der Weijde, currently CEO of Ambuja Cements Ltd in India, has been appointed as an area manager and a member of the senior management of Switzerland's Holcim Ltd. He took on his new role on 1 January 2012. Mr van der Weijde remains CEO of Ambuja Cements Ltd and reports directly to Holcim's executive committee member Paul Hugentobler, who is responsible for Holcim operations in South Asia, excluding the Philippines.

A Dutch citizen, Mr van der Weijde holds a Bachelor's Degree in Economics and Accounting from the University of Rotterdam in the Netherlands and an MBA from the University of Bradford in the UK.

Mr van der Weijde was CFO at Holcim Indonesia from 2001 to 2005. In 2005 he was appointed General Manager of Holcim India Ltd and in 2006 he also assumed the CFO function at ACC Ltd until October 2008. Since November 2009 he has been CEO of Ambuja Cements Ltd.

Ecuador: The Ecuadorean unit of the Swiss cement multinational, Holcim, has announced that it will begin the second phase of its Guayaquil plant expansion in December 2012. The second phase will require an investment of nearly US$400m and it will see the construction of a third kiln at the plant. This will allow the South American country to sustain its growth in the coming decades, according to the company.

As well as aiming to supply the country's domestic cement needs, the investment will generate about 2500 direct and indirect jobs in the country during the construction phase, which will last approximately 24 months. The first phase of the expansion in early 2010, an investment of US$120m, will be inaugurated in the first quarter of 2012. Completion of the project will see Holcim Ecuador's cement capacity jump from 3.5Mt/yr to 5.4Mt/yr.

Switzerland: Holcim has blamed a 32% fall in income for the third quarter on the strong Swiss franc.

Holcim's income fell by 32% to USD460m in the third quarter from USD680m in the second quarter of 2011. Over the nine months to 30 September 2011 its income fell by 18% year-on-year to USD1.1bn from USD1.4bn in 2010. Sales mirrored this decline, falling year-on-year by 6.1% to USD5.9bn over the nine months to 30 September 2011 compared to USD6.3bn in 2010. The decline in sales between the second and third quarters was similar at 6.7%.

Despite the fall in total group income and sales, sales of cement rose in both the nine-month and quarterly period. For the nine months to 30 September 2011 sales rose by 5.2% to 108Mt from 103Mt. For the quarter ending 30 September 2011 volume sales rose by 6.2% to 37.2Mt from 35Mt in the quarter ending 31 July 2011.

"The strong appreciation of the Swiss franc during the first half of 2011 continued to negatively impact the financial result during the quarter, albeit to a lesser extent than during the second quarter," said Chief Financial Officer Thomas Aebischer. Holcim's sales during the three months to 30 September 2011 were reduced by USD948m by the currency. Operating earnings before interest, taxes, depreciation and amortisation (EBITDA) were reduced by USD200m, according to Aebischer.

As expected, Holcim noted that many emerging markets enjoyed brisk construction activity. In the Eurozone and in North America growth mainly remained restrained. The Latin America cement sector achieved the strongest rise in sales volumes, followed by Asia Pacific and Europe. In particular, the group's companies in Russia, Singapore, Indonesia, Colombia and Australia made larger contributions in Swiss francs to the sales. Where other group companies improved their results in local currency terms these successes were cancelled out overall by the strong Swiss franc.

In its outlook Holcim has pinned its hopes for consistent growth in the emerging markets of Latin America and Asia whilst singling out Africa and the Middle East for continued poor trading. In Europe and North America Holcim's intends for its lean cost structure to enable it to benefit more than average from any economic recovery. Lastly, the group mentioned that the sharp global rise in energy, raw material and transportation costs call for further price adjustments.

Azerbaijan: Holcim has announced the completion of its expansion and efficiency improvement project at its OJSC Garadagh Cement plant in Azerbaijan. Garadagh Cement's CEO, Raoul Waldburger said that the USD448m investment was coming to a close. "The new kiln at Garadagh Cement will start clinker production by the end of 2011," he said. Work on the project, which was carried out by the Chinese firm CBMI Construction Company (belonging to Sinoma International Engineering), had been expected be completed by the end of June 2011.

Thanks to the new kiln, the plant will switch from wet to dry cement production technology. At the same time, the capacity of the plant will rise 2600t/day to 4000t/day. The cost of the project was split between (USD251m), the Asian Development Bank (USD27m) and the European Bank for Reconstruction and Development (USD170m).

New Zealand: Holcim has put plans to a build a new factory in Weston on hold until at least 2012.

The USD400m plant near Oamaru was to become the company's sole production facility in the region. Its creation was intended to create about 450 construction jobs and 120 permanent positions in the area. The decision to proceed with the factory had been expected in August 2011.

Holcim New Zealand's capital projects manager, Ken Cowie, stated that the company's Swiss headquarters had put the project on hold due to uncertainty created by the global economic downturn. "We realise that this creates ongoing uncertainty but we will continue to keep people informed," Cowie commented.

As reported by Global Cement on 5 July 2011 Holcim was seeking contractors to register interest in building the plant in July 2011. Plans to build the factory will now not be considered until late 2012.

Brazil: An antitrust investigation into alleged price-fixing by Holcim and others in Brazil has ended today. The company could face a fine of up to USD413m if the probe decides that Holcim's behaviour was uncompetitive.

Several cement makers are among the companies named by the Brazilian government's anti-cartel investigation arm (SDE) in an inquiry that began in 2005. According to the Brazilian government, the companies were given until 1 October 2011 to make their final submissions before the SDE gives its opinion to the Administrative Council of Economic Defense (CADE), which will makes a final ruling. The companies involved face fines of up to 30% of their Brazilian revenue if CADE decides they have been running a cartel.

"There is an investigation into the cement industry including Holcim, which started in 2005," said Holcim spokesman Peter Gysel. "This is an ongoing proceeding and we cannot comment further."

Cartel fines are normally limited to 30% of revenue from Brazil, but a recent case showed that repeat offences can draw penalties of up to 50%. In 2010 Brazil's antitrust regulator fined White Martins Gases Industraies USD1.3bn for forming a cartel with four other industrial gas companies. The amount was later reduced to USD0.95bn. Praxair expects to win two appeals to the case.

Holcim previously has been fined by the anti-cartel authorities in Brazil following an investigation that dates back to its activities in 2002. "In 2002, there was an investigation in the aggregates business where the company received a non-material fine," Holcim spokesman Gysel said.

Ian Osburn, analyst for ING Bank, said that if the investigation found against Holcim, the company could face fines of up to 50% of its 2009 revenue in Brazil, which he estimates was around USD820m. Penalties of half of that amount, or USD410m, would reduce the company's 2012 earnings before interest, tax and amortisation by around 15% Osburn said. "In the worse case scenario, the fine would be about 15% of Holcim's 2012 group operating profit. That's significant," he said.

Ecuador: Holcim expects to increase production capacity at its plant in the capital Guayaquil by 54% by 2012. The company will spend USD120m on expansion work and new machinery to boost cement production to 5.4Mt/yr from 3.5Mt/yr.

The machinery includes a new mill with production capacity of 250t/hr. The company is also building two warehouses for clinker and cement storage. The expansion project is currently 85% complete and will be ready to operate by the start of 2012.

Holcim decided to carry out the project based on the steady growth of public and private infrastructure projects in the country during the last few years, according to administrative manager Giancarlo Muñz. Current demand for cement in Ecuador is around 5Mt/yr, which is supplied by Holcim, Lafarge, Guapá and Cementos Chimborazo.

Romania: Cement production in Romania were up by 8.1% year-on-year in the first half of 2011 to 3.18Mt. Domestic cement sales increased by 2.4% to 2.95Mt according to data released by the Romanian Association of Cement Producers (CIROM). Romania's cement market is dominated by the local units of Lafarge, Holcim and HeidelbergCement.