Holcim: Annual Results 2011

Emerging markets continue on growth course
Financial year 2011 was characterized by markedly varied economic conditions. While construction activity in mature markets was rather sluggish, emerging economies in Asia and Latin America remained on a solid growth course. Cost inflation increased around the world, which led in particular to higher raw material, energy and transport costs. Natural disasters such as the heavy floods in eastern Australia and Thailand, as well as the earthquake in New Zealand, affected construction activity.

Sales increase in all segments and in the four large Group regions
In four of its five Group regions, Holcim once again sold more cement, aggregates and ready- mix concrete. Only the Group region Africa Middle East saw slight declines in sales volumes. Increases were strongest in aggregates, especially in Latin America and Asia Pacific. In cement, Holcim also sold larger amounts in Latin American markets, followed by Asia. As a result of acquisitions, increases in ready-mix concrete were particularly strong in North America. The greatest organic growth, however, was achieved in Latin America.

In the fourth quarter, cement deliveries increased 6.7 percent to 36.2 million tonnes. The largest sales increases came from the Group regions Asia Pacific and Latin America. Aggregates sales developed positively during this period as well, rising 8.9 percent to 42.6 million tonnes, with Europe and North America achieving the highest level of increases. With the exception of Asia Pacific, deliveries of ready-mix concrete were up in all Group regions, amounting to a consolidated increase of 6.5 percent to 12.2 million cubic meters. Important contributions to this result came from Europe and North America.

Continued cost reduction measures show results
At the beginning of the financial crisis in 2008, Holcim introduced measures to reduce fixed costs. In 2011, further efficiency improvements were undertaken. This primarily involved the temporary or permanent closing of production facilities almost exclusively in developed markets, and not only in cement, but in all segments. Spain, Italy, several Eastern European markets and the US were particularly affected by closures and restructuring.

Capacity increases continued in important markets
In countries with rising demand – primarily in the emerging markets – Holcim continued to increase capacity. In 2011, the new Shurovo plant in Russia began operations. It is currently considered one of the most modern facility in the country and supplies the booming Moscow construction market. Shortly before the end of the year, Garadagh Cement in Azerbaijan produced its first clinker. The newly built kiln line will strengthen the Group company in this attractive market for construction materials. In Latin America, cement capacity was substantially increased in Ecuador. In Asia, which has large deficits in residential and infrastructure construction, Holcim is also in the process of adapting existing capacity to developments on the demand side. In India, ACC began operating what is currently the largest clinker kiln in the world at its Wadi plant. The Chanda plant was also significantly expanded, while Ambuja Cements added additional clinker capacity in Rauri and Bhatapara, as well as two new grinding stations.

The Group company ACC will increase cement capacity in east India by additional 5 million tonnes by early 2015. At Jamul, the existing facility will be replaced by a state-of-the-art clinker plant and grinding capacity increased simultaneously. In addition, the capacity of the existing Sindri grinding plant will be increased, and a new grinding plant will be built at Kharagpur. Both installations will source clinker from the new Jamul plant. Therewith, overall capacity of ACC will increase to 35 million tonnes. The Tuban plant in Indonesia, a dynamic market with great potential, is another installation under construction and will produce cement starting in 2013. Finally, Holcim Brazil will bring a new kiln line on stream at its Barroso plant in 2014.

Like-for-like higher turnover and operating EBITDA at last year’s level
The strong Swiss franc, weaker construction materials markets in certain areas and increased competitive pressure led to consolidated net sales of CHF 20.7 billion, a 4.2 percent decrease. On a like-for-like basis, not taking into account exchange rate and consolidation changes, consolidated net sales actually increased 7.5 percent. While operating EBITDA decreased 12.3 percent, on a like-for-like basis it remained virtually stable at minus 0.2 percent. The substantially improved financial results of Holcim Russia and Holcim Australia, as well as of the Group companies in Indonesia, Singapore, Colombia and Switzerland, had a positive effect on the year-end results. In many markets, increased costs due to inflation, especially for raw materials and energy, could not be completely passed on to sales prices. This, combined with various local factors, negatively affected performance above all in the Philippines, India, North America and Great Britain.

In the fourth quarter, despite strong exchange rate volatility, which reduced operating results by CHF 98 million, operating EBITDA rose by 5.3 percent compared to the same quarter a year before. On a like-for-like basis the increase was 15.5 percent, above all thanks to Group companies in Asia Pacific and Europe. In Europe, the sale of CO2 emissions certificates added CHF 52 million to operating EBITDA (fourth quarter 2010: 20). In Asia Pacific, operating EBITDA rose 28.3 percent on a like-for-like basis.

Contact
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