Displaying items by tag: Switzerland
Switzerland: Holcim's net income has more than doubled to Euro360m for the first quarter of 2015 due to its sale of its minority stake in Siam City Cement. Sales of cement volumes fell by 5.5% to 31.2Mt from 33Mt in the same period. Net sales fell by 2.8% to Euro3.78bn.
"Holcim reported robust development in the first quarter 2015, with an increase in financial performance despite a different weather pattern and some volume declines compared to a very strong previous year's quarter. Holcim also generated higher cash flow from operating activities and increased net income significantly supported by the gain from the divestment of the Group's minority shareholding in Siam City Cement," said Bernard Fontana, CEO of Holcim.
Cement deliveries declined in the period as all group regions except North America and Latin America sold less volume. However, in markets including Mexico, the US and the Philippines, more cement was sold. Holcim expects that its key construction markets in 2015 will be the US, India, Indonesia, Mexico, Colombia, the UK and the Philippines. Flat development and market uncertainty is expected in Europe and Latin America respectively.
Switzerland: Holcim's chairman Wolfgang Reitzle has said that Holcim is open to giving Russia's Eurocement a seat on the board after its merger with French peer Lafarge goes through, chairman Wolfgang Reitzle said yesterday.
On 29 March 2015 Russian businessman Filaret Galchev, who owns a 10.8% stake in Holcim via Eurocement Holding, rejected the renegotiated merger terms that Holcim had reached with Lafarge in mid-March.
"It would be beneficial to have him in the board as he would bring in lots of expertise from the cement sector," said Reitzle of Galchev. He added that the future chief executive of the combined company would be named within the next two weeks.
Reitzle excluded re-opening the negotiations with Lafarge on the share-exchange ratio or paying a special dividend to Holcim shareholders to win them over to the deal.
Holcim shareholders, some of whom remain sceptical of the cement industry mega-merger, vote on whether or not to ratify the deal at a shareholder meeting on Friday 8 May 2015.
Holcim to sell off Siam City Cement stake
27 March 2015Thailand: Swiss cement maker Holcim Ltd has launched an up to US$741.4m selldown of shares in Thailand's second-largest cement company Siam City Cement (SCC). Holcim is selling 63.3 million SCC shares through its Thai Roc-Cem Ltd unit at an indicative range of between US$10.73 and US$11.68, according to Thomson Reuters.
On the face of it this week's 'news' that CRH expects to receive the regulatory decisions it needs on its Euro6.5bn purchase of Lafarge and Holcim's joint divestments without significant delay is not particularly ground-breaking. However, the press release helpfully suggests that the deal will proceed according to CRH's desired outcome and only needs to be rubber-stamped. This is not strictly the case, with approval required in the EU, Philippines, Brazil, Canada and Serbia.
So... this story could just be incidental 'puffery' and the timing irrelevant. However, if read in the context of the letter concerning the acquisition from CRH Chairman Nicholas Hartery to company shareholders, it makes for a far more interesting read. Issued on 20 February 2015, the letter notifies shareholders of CRH's planned Extraordinary General Meeting (EGM) on 19 March 2015 and it starts fairly innocuously. The Chairman recommends that shareholders approve CRH's resolution to proceed with the acquisition of the LafargeHolcim assets. He describes the strong overlap between the divestments and CRH's existing portfolio, as well as the financial reasons behind the move. So far, as expected.
However, later in the document, the language gets fairly heated, bordering on bizarre in places. Hartery says that CRH has given 'hell or high-water' commitments to Lafarge and Holcim regarding the purchase This language indicates the importance of the deal to the board and possibly the level of personal involvement in the process to this point.
'What has CRH done?' we are supposed to ask. Are we led to believe that CRH has, in poker parlance, gone 'all in?' Any shareholders that are in doubt as to the board's position need look no further than the section concerning 'break fees.' If CRH backs away from the deal for any reason, for example by failing to approve the resolution at the EGM, the company will have to give a combined Euro158m to Lafarge and Holcim. This would be a sizeable headache and CRH can take no chances.
Returning to CRH's press release, its timing is even more intriguing when we consider reports out of Switzerland this week. Swiss newspaper Sonntagszeitung reports that Holcim has considered offering its shareholders a 'sweetener' to win their approval for the merger. It says that this could involve 'creative methods' to sway its shareholders into backing the deal, including a generous special dividend or a share buyback. The paper reports that Holcim is wary of not securing investor approval for a capital increase for financing, which is required for it to satisfy its side of the deal.
Holcim's actions may in turn be motivated by Reuters reports from 23 February 2015, which state that analysts have seen a potential divergence in earnings outlooks between Lafarge and Holcim as a potential 'spanner in the works' of the deal. This is in response to Lafarge's apparent poor performance relative to Holcim in the fourth quarter of 2014. Reuters even refers to analysts' rumblings that the terms of the whole mega-merger may be up for renegotiation in light of this.
CRH has said that it is prepared to move hell and high water to buy the LafargeHolcim divestments, but will it be able to if there is no LafargeHolcim from which to divest?
The full letter to CRH shareholders and associated information about the proposed CRH acquisition of Lafarge and Holcim's proposed divestments can be seen here.
Holcim reports better-than-expected 2014 results
23 February 2015Switzerland: Holcim has announced better-than-expected results for 2014, including higher cement sales volumes and higher net sales. It has also announced that its non-controlling interest of 27.5% in its joint venture Siam City Cement Public Company Limited is available for sale.
Cement sales volumes in 2014 exceeded those in 2013 due to a stronger economy in North America and growth momentum in some emerging markets such as India, the Philippines, Indonesia and Mexico, offsetting a challenging situation in Latin America. Consolidated cement sales were up by 1% year-on-year to 140Mt. In the fourth quarter of 2014, cement volumes decreased slightly by 0.6% to 34.4Mt.
Holcim's net sales grew by 3% on a like-for-like basis. Growth mostly resulted from price improvements in many regions, particularly in North America, against the backdrop of a favorable market environment and in Latin America in response to cost inflation. An unfavorable currency effect of 5.2% and negative changes in consolidation structure impacted the consolidated net sales performance in 2014, which was down by 3.1% to Euro17.8bn.
Like-for-like operating earnings before interest, taxes, depreciation and amortisation (EBITDA) adjusted for merger and restructuring costs of Euro128m increased by Euro200m or 5.5% in 2014. Consolidated operating EBITDA however was down by 3.8% to Euro3.49bn mainly as a result of negative currency effects and merger and restructuring related costs.
In 2014, operating profit adjusted for merger and restructuring costs of Euro139m went up by Euro232m or 10.6% year-on-year. Consolidated operating profit, however, was down by 1.7% at Euro2.16bn. Net income increased by 1.5% to Euro1.51bn. In 2014, net financial debt was Euro8.97bn, Euro170m up from Euro8.79bn mainly due to an unfavorable currency impact of Euro233m.
During the fourth quarter of 2014, Holcim's consolidated net sales increased year-on-year by 1.9% to Euro4.53bn. Operating EBITDA reached Euro935m, up by 6.5% year-on-year. Adjusted for merger and restructuring costs booked in the quarter of Euro52m, like-for-like operating EBITDA growth reached Euro103m or 11.8%. Operating profit increased by 6.9% to CHF 598 million. Excluding merger and restructuring costs of Euro53.9m, operating profit growth reached Euro101m or 19.2%. Net income was up markedly by 43.5% to Euro426m.
Holcim expects that the global economy will continue its gradual recovery in 2015. Key construction markets of Holcim in countries like the USA, India, Indonesia, Mexico, Colombia, the UK and the Philippines are expected to be the main growth drivers. Europe overall is expected to have 'flat' development. Latin America will continue to face uncertainties in countries such as Argentina and Brazil, but should show slight growth in 2015. The Asia Pacific region is expected to grow, although at a modest pace. Africa and the Middle East is expected gradually to improve. Cement volumes should increase in all group regions in 2015 with the exception of Europe.
Swiss prosecutor opens Holcim insider trading probe
02 February 2015Switzerland: The Swiss Attorney General's office has opened an investigation into possible insider trading in the securities of cement producer Holcim Ltd, the office has said in a statement.
The investigation was first reported by the NZZ am Sonntag newspaper, which said that suspected insider trading took place just before Holcim's announcement in April 2014 of a plan to merge with France's Lafarge. The investigation is probing a possible offence by a 'secondary insider,' not someone with authorised access to insider information, but who obtained such information in an unauthorised way, the Attorney General's office said. The statement gave no further details.
What next? Expect the unexpected…
21 January 2015On 15 January 2015, the Swiss National Bank (SNB) abandoned the Euro1.20 cap on the Swiss Franc. The effects of the decision were immediate, with the value of a Franc dropping from Euro1.20 to just Euro0.99. The decision caused turmoil for currency brokers and big business in Switzerland's normally bullet-proof finance sector, with some brokers out of business by the end of the same day.
It is not hard to see why these brokers were caught out by the sudden change in the SNB's position. On 18 December 2014 Thomas Jordan, Chairman of the SNB's Governing Board, stated in no uncertain terms that, "The SNB remains committed to purchasing unlimited quantities of foreign currency to enforce the minimum exchange rate with the utmost determination." In research conducted by Bloomberg News on 9 - 14 January 2015, not one of 22 economists questioned expected the SNB to abandon the cap in 2015. That's quite an about-turn by the SNB in less than a month.
The decision to 'scrap-the-cap' shows the potential of outside influences to suddenly unseat even the most secure of businesses. Such companies include Holcim, the share-price of which went on a rollercoaster on the SIX Swiss Exchange in the immediate aftermath of the announcement. At one point on 15 January 2015 Holcim had lost 20% of its value before closing 11% down on the day. It has since recovered somewhat, although a whopping Euro3bn of its capital has been swallowed up due to the plummeting Franc.
Following the sudden changes to its circumstances, Holcim immediately reinforced its commitment to its merger with Lafarge. "Regarding a possible impact on the combination with Lafarge, what we can say is that we remain committed to the merger," said spokesman Eike-Christian Meuter. There was an almost simultaneous reciprocal statement from the French producer, also stating its commitment. No change there then.
The calmness of Holcim's statements was broadly in line with commentary from bankers, which stated that large deals were unlikely to be affected by the change. This is because Swiss firms can insure themselves against the effects of such moves. Another 'get-out of jail free card' could have been a material adverse change (MAC) clause. If in place a MAC would allow the merging parties to terminate a transaction if an external event significantly changes the outlines of the deal. It is not possible to know whether Lafarge and Holcim have such a clause due to confidentiality issues.
Despite the fundamentals of the LafargeHolcim merger appearing to be unaffected, the scrapping of the Franc cap is an excellent example of how external policy makers can have a direct and unexpected impact on the underlying conditions of the global cement industry. Another major external influence at present is the low oil price, mainly affected by the oil producing cartel OPEC. HeidelbergCement said this week that it expects the oil price fall to have a positive impact on its profit in 2015. It makes 80% of its revenue in oil-importing countries, which should see reduced transport and production costs. This will result in improved economic conditions, higher levels of construction and hence cement production. For HeidelbergCement 2015 could be a case of costs down, sales up.
That surely sounds like good news, for some stagnant 'old' developed economies at least. However, in the world of 'new normals' it is the IMF that has sounded the biggest warning this week. It dropped its 2015 global economic growth forecast from 3.8% to 3.5%. As fuel prices slump, so too has inflation. In the EU this has resulted in deflationary pressures that could yet stump the recovery. Consumers (and construction firms alike) may go from a position of not being able to afford things, to not wanting to buy them. In the longer term, this may be yet more bad news for the cement sector in established markets.
Pending LafargeHolcim and Sika deals forge ahead despite SNB’s abandonment of Swiss Franc cap
16 January 2015Switzerland: On 15 January 2015, the Swiss National Bank (SNB) abandoned the Euro1.20 cap on the Swiss Franc, causing market turmoil. However, deals involving domestic companies Holcim and Sika are expected to survive the impact of the shock decision.
Bigger deals are insulated against the effects of the sudden surge in the value of the Swiss currency because the companies involved are able to to buy insurance to protect them against such moves. However, some bankers said that the volatility introduced by the SNB decision to scrap the cap after three years could dampen deal-making in the longer term.
Holcim also said that it remained committed to a planned merger with France's Lafarge despite the move by the SNB that knocked almost Euro2.95bn (3bn Swiss Francs) off Holcim's market value.
"Regarding a possible impact on the combination with Lafarge, what we can say is that we remain committed to the merger," said Holcim spokesman Eike-Christian Meuter. According to Reuters, a spokesman for Lafarge said that it also remains committed to the merger.
Holcim was one of the companies caught up in a 10% all-in Swiss blue chip stocks on fears over the impact on their exporting power. Holcim slumped 20% at one point.
France/Switzerland: Holcim and Lafarge have announced the executive committee for the proposed merged company, LafargeHolcim, due to be formed in the first half of 2015. As previously announced, Lafarge's current CEO Bruno Lafont will become LafargeHolcim's first CEO and the chairman of the new board will be Wolfgang Reitzle, currently chairman of Holcim.
Lafont will lead a project team of 10 managers from both Holcim and Lafarge to handle the transition. Once the merger is finalised, the members of this project team will be officially appointed members of the Executive Committee.
The future executive committee is composed of:
- Finance: Thomas Aebischer, currently in charge of Finance at Holcim;
- Integration, Organisation and Human Resources: Jean-Jacques Gauthier, currently in charge of Finance at Lafarge;
- Europe: Roland Köhler, currently in charge of Europe at Holcim;
- Asia Pacific: Ian Thackwray, currently in charge of East Asia Pacific and Trading at Holcim;
- Middle-East Africa: Eric Olsen, currently in charge of Operations at Lafarge;
- North America: Alain Bourguignon, previously in charge of North America and UK at Holcim;
- Latin America: Saâd Sebbar, currently in charge of Morocco at Lafarge;
- Performance and Cost: Urs Bleisch, currently in charge of Corporate Functions at Holcim;
- Growth and Innovation: Gérard Kuperfarb, currently in charge of Innovation at Lafarge;
In India both companies are well on track in preparing the merger of Holcim and Lafarge, with the future structure for the subcontinent to be announced in due course upon clearance by the Competition Commission of India.
The current executive committees of Holcim and Lafarge remain in charge and accountable for the activity and operations of their respective groups until completion of the merger. Both groups continue to operate entirely separately as competitors until the merger is completed.
The selection and nomination process for the rest of the leadership team is also well underway. Apart from the future executive committee, the following direct reports of the future CEO have been selected under project mode:
- Strategy and M&A, Christof Haessig, currently in charge of Corporate Finance and Treasury at Holcim;
- Communication, Public Affairs and Sustainable Development, Alexandra Rocca, currently in charge of Communication, Public Affairs and Sustainable Development at Lafarge;
- Legal, Xavier Dedullen, currently in charge of Legal & Compliance at Holcim;
- Health and Safety, Sapna Sood, currently in charge of Health and Safety at Lafarge.
Jacques Bourgon resigns from Holcim
10 December 2014Switzerland: Holcim Group has announced that Jacques Bourgon, its current head of occupational health and safety, senior advisor to the CEO and senior manager has decided to resign from the group to pursue challenges outside Holcim. He will leave on 31 December 2014. Holcim thanked Jacques Bourgon for his valuable contributions over his 24 years at the company.