In terms of volume, Holcim posted increases across all sectors, while witnessing the most robust growth in the cement segment, the Group's core business. Operating results also improved. Worthy of particular mention are the significantly better results generated by Holcim in the USA and Mexico. Consolidated operating profit for nine months was CHF 1,559 million (nine months 2001: 1,553). This development is especially significant given that the exchange rate of the US dollar (-6.5 percent) and a number of Latin American and Asian currencies continued to weaken against the Swiss franc. At CHF 1,732 million (nine months 2001: 1,447), cash flow from operating activities remained strong. In line with expectations, Group net income after minority interests was lower, contracting to CHF 514 million (nine months 2001: 613). The negative trend was, however, broken in the third quarter. At the beginning of 2003, CEO Markus Akermann will be handing over direct country responsibility for Central and South America to Thomas Knöpfel, currently Area Manager at Holcim Ltd.
- Distinctly stronger third quarter 2002.
- Thanks to operational improvements prospects are good to reach previous year's operating profit.
- EXCO member-designate Thomas Knöpfel to take over country responsibility for Central and South America from CEO Markus Akermann.
European operations lift results against a harsh backdrop
A number of Western European economies slowed down significantly over the past few months. In this difficult environment, Holcim Group companies in Europe achieved generally solid financial results. Building activity was once again particularly buoyant in Spain. Holcim also recorded an increase in demand in Italy and in most markets in Central and Eastern Europe. Continued heavy backlogs in the residential and infrastructure sectors led to higher sales volumes at almost all Group companies. Consolidated cement deliveries and sales of aggregates exceeded the previous year's figures. By contrast, the ready-mix concrete segment suffered a decline. Thanks to a successful drive to improve production and distribution efficiency, Group region Europe increased operating profit by 6.5 percent to CHF 456 million (nine months 2001: 428).
Higher production volumes at Holcim (US) produce anticipated improvement in North America
In the USA, Holcim is increasingly benefiting from the new Portland plant commissioned mid-year. Despite weaker economic conditions, the US Group company had no difficulty selling the additional output, making up for some of the production losses suffered in the first half. Driven by strong demand, Canadian-based St. Lawrence Cement reported a renewed improvement in financial results. Owing to the production losses at Holcim (US) in the first half of the year, cement sales failed to match the previous year's result. On the other hand, the aggregates and ready-mix concrete segments saw sales volumes improve. Group region North America generated an operating profit of CHF 222 million (nine months 2001: 234) despite capacity bottlenecks at Holcim (US) up to mid-year and a weakening dollar.
Latin America defies tough conditions to remain strong
In Latin America, the economic climate remains difficult. Volumes in the Group region are nonetheless generally stable. Construction activity is steadily solid, as are sales levels at Group companies in Mexico, Central America and the Caribbean. Sound order books in Ecuador's construction industry helped La Cemento Nacional to increase deliveries in all segments. Similarly, order volumes remained healthy in Chile's construction sector. However, Brazil's private sector was somewhat reluctant to invest during the runup to the elections. Argentina's building recession appears to have bottomed out. Group region Latin America maintained cement and clinker sales as well as deliveries of aggregates and ready-mix concrete on a par with the previous year. Despite weaker growth and strong currency devaluation trends in Argentina, Venezuela and Brazil, financial results again reached an impressive level following operational improvements. Group region Latin America witnessed a currency-induced decline in operating profit to CHF 603 million (nine months 2001: 638).
Earnings in Africa and the Middle East remain stable
On the whole, developments in this region were positive. Sales of cement in Egypt, South Africa and Morocco, and also in La Réunion and Madagascar, were considerably higher than in the same period of the previous year. Thanks to recent restructuring, results at the Group's Lebanese subsidiary were satisfactory. Consolidated cement deliveries for the region were higher, and despatch of aggregates and ready-mix concrete also rose. Results in this region were positive, overall. Group companies in Lebanon, South Africa and Morocco reported substantially improved figures. Operating profit for Group region Africa Middle East grew by 19.6 percent to CHF 201 million (nine months 2001: 168).
Sales in Group region Asia Pacific continue to rise
The economic environment in most of the markets in which Holcim operates continued to improve. Vietnam is still in the midst of a building boom and the company is pressing ahead with the construction of a new grinding station to expand production capacity. Cement consumption in the Philippines was stable, but prices came under pressure. However, the two Philippines Group companies were able to expand their cement sales. In Thailand, Siam City Cement continued on its successful path, and Holcim Malaysia also managed to perform well in the local market. In Indonesia, PT Semen Cibinong generated an operating profit in the third quarter of 2002. Business was very satisfactory in Australia, where the domestic sales of Queensland Cement rose strongly. Group region Asia Pacific witnessed strong sales growth across all segments. Operating profit totaled CHF 120 million (nine months 2001: 119).
Holcim expects solid operating results
Thanks to the global network, which gives the Group a presence in practically every important market, Holcim is able to balance out the effects of demand variations within individual regions or at Group level, respectively. In view of market weakness in several countries and the unfavorable exchange rate of the Swiss franc, the Board of Directors and the Executive Committee expect that, on the assumption of unchanged business conditions and excluding exceptional events, consolidated net sales for the year will fall slightly short of the result in the previous year. In view of improvements in operations, particularly in the third quarter, the prospects are good that Holcim can almost reach previous year's operating profit. Owing to the exceptional charges, Group net income will be lower than in 2001. Thanks to restructuring already completed in several Group companies and ongoing improvements in efficiency along the whole value chain, Holcim's current assessment of the outlook for 2003 is positive. Accordingly, the Board of Directors and the Executive Committee are confident about the Group's prospects in 2003.
Thomas Knöpfel to join Holcim Executive Committee
The Board of Directors of Holcim Ltd has decided to strengthen the Executive Committee as of 1 January 2003 with the appointment of Thomas Knöpfel, who will take over direct country responsibility for Central and South America from Markus Akermann. As planned, CEO Akermann will concentrate on Group-level management as of next year.
Thomas Knöpfel (51) gained a doctorate in law from the University of Zurich in 1982. He also holds a Master of Law degree in US business and financial law and is a licensed attorney. Thomas Knöpfel joined Holcim in 1988. His initial posting was with Holcim (España where he headed several divisions and was a member of the management committee. In 1995, he was appointed CEO of the Colombian Group company Cementos Boyacà.A. In his capacity as an Area Manager for Holcim Ltd, Thomas Knöpfel has been responsible for the Group companies in the Andes states since 1999, as well as for the Central America and Caribbean region since January 2002.
|Holcim Group: 3Q figures (cumulative)||2002||2001||+/-%|
|Annual production capacity cement||million t||139.5||121.2||+15.1|
|Sales of cement and clinker||million t||68.0||63.6||+6.9|
|Sales of aggregates||million t||67.9||64.8||+4.8|
|Sales of ready-mix concrete||million m3||18.9||18.8||+0.5|
|Net sales||million CHF||9,928||10,301||-3.6|
|Operating profit||million CHF||1,559||1,553||+0.4|
|Cash flow from operating activities||million CHF||1,732||1,447||+19.7|
|Group net income before minority interests||million CHF||727||773||-6.0|
|Group net income after minority interests||million CHF||514||613||-16.2|
|Earnings per dividend-bearing bearer share||CHF||13.16||16.10||-18.3|
|Earnings per dividend-bearing registered share||CHF||2.63||3.22||-18.3|
|Holcim Group: 3Q figures (July-September)||2002||2001||+/-%|
|Sales of cement and clinker||million t||24.5||21.5||+14.0|
|Sales of aggregates||million t||25.6||24.8||+3.2|
|Sales of ready-mix concrete||million m3||6.7||6.6||+1.5|
|Net sales||million CHF||3,487||3,719||-6.2|
|Operating profit||million CHF||624||556||+12.2|
|Cash flow from operating activities||million CHF||951||830||+14.6|
|Group net income before minority interests||million CHF||300||262||+14.5|
|Group net income after minority interests||million CHF||222||216||+2.8|
With majority and minority interests in more than 70 countries on all continents, Holcim is one of the world's leading suppliers of cement, as well as aggregates (gravel and sand), concrete and construction-related services.