Switzerland’s Holcim cement group has reported a slight increase in nine-month net profit to SFr518 million ($382 million), up 0.8 per cent on the same period last year.This content was published on November 12, 2003 - 11:36
Operating income at the world’s second-largest cement concern was also virtually unchanged at SFr1.55 billion.
This figure was reached on 5.4 per cent lower net sales of SFr9.395 billion.
Holcim said at a news conference in Zurich on Wednesday that net profit had actually climbed by 8.2 per cent in local currency terms.
The result was at the upper end of market expectations.
The canton St Gallen-based company said its financial performance had been adversely affected by the fall in the value of the dollar. But further cost savings had enabled Holcim to make “substantial progress”.
Holcim CEO Markus Akermann told swissinfo that he believed the figures were "excellent".
"Excellent in view of the overall economic situation in the world and difficulties in some markets," he commented.
"The United States has not developed according to our expectations. Then, of course, we've had the foreign exchange impact."
"The US dollar in comparison with the Swiss franc devalued about 15 per cent, so that has certainly had a negative impact on our results," he added.
Holcim said the US result was "unsatisfactory", but it was expected to improve thanks to the economic upturn and more efficient cement plants.
The operating result at Holcim's North American division, which suffered from bad weather in the first half after a mild first half in 2002, fell 20.4 per cent to SFr179 million.
"We have a slight reduction overall in the US of cement consumption. You see it especially in the infrastructure sector," Akermann said.
"Many individual states did not have the capacity to continue with very important infrastructure projects. And don't forget we had a very harsh winter," he added.
Private residence construction was the only part of the US construction industry to have been boosted by tax cuts that came into effect this summer, as well as consistently low mortgage rates.
There were clear signs of recovery in the European construction sector, Holcim said, and the market had held up well in the third quarter. Performance in southern and eastern Europe was encouraging, but recession was continuing to plague both the Swiss and German markets.
In its outlook, Holcim said it expected higher operating margins for 2003. The company commented that it expected operational improvements in Europe, Latina America and Asia Pacific to make substantial contributions to a "solid" set of results.
"Let's keep our fingers crossed that we will have a good development in the US, in the North American economy," commented Akermann. "But, as you know, there are question marks."
Leaving aside exchange rate factors, the group expects operating profit and net income this year to exceed the levels of 2002.
The firm said earnings would rise in 2004 if an upturn in key markets boosted demand, further helping operating margins.
The company also announced the sale of its Swiss Eternit unit, which has been badly affected by asbestos claims.
Holcim, which is second in size only to France’s Lafarge group, made a net profit of SFr506 million last year on sales of SFr13 billion.
swissinfo with agencies
Holcim reported a nine-month net profit of SFr518 million ($382 million).
Net income was up 0.8% in Swiss francs, and 8.2% without negative currency effects.
Holcim also announced the sale of its Eternit plant, which had been badly hit by asbestos claims.
Last year Holcim posted a net profit of SFr506 million on sales of SFr13 billion.
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