* HeidelbergCement's sales volumes up in all businesses
* Holcim's sales down in Latin America, Europe
* Currency effects impair revenue, profits
* HeidelbergCement, Holcim confirm outlook for 2014
* Holcim shares down 5 pct, Heidelberg down 1 pct
(Adds forecasts, North America, Holcim results,)
By Marilyn Gerlach
FRANKFURT, July 30 Cement makers
HeidelbergCement and Holcim stuck to targets
for a rise in 2014 earnings, saying solid growth in North
America and cost cuts should offset unfavourable currency
effects, which weighed on second-quarter results.
After a deep winter chill depressed cement shipments in
North America in the first quarter, demand for first-time home
buyers picked up in April to June. The sector is seen benefiting
from a better economic environment in the United States for the
rest of the year.
For the second quarter, however, Swiss-based Holcim and
German rival HeidelbergCement on Wednesday posted earnings below
analysts' forecasts, citing weak currencies in Latin America and
in Asian countries such as Indonesia and India.
The latest numbers come as Holcim prepares to merge with
French rival Lafarge to create the world's top cement
company, indicating that the merged company may
face tougher conditions than initially expected, an analyst
"I still think (Holcim) management is telling us a too
optimistic story. The weaknesses in India and in Mexico - we
expected some of these, but we didn't quite expect how much of
this would have on impact on the results," Sanford Bernstein
analyst Phil Roseberg said.
"The merger process will continue and move forward. My gut
feeling is that the merger process is causing some of these
weaknesses because management is now taking its eye off the ball
in order to get the merger through. It has become less focused
and that's coming through into the results," he added.
Shares in Holcim slid 4.8 percent by 1107 GMT after soaring
15.2 percent so far this year fuelled by the announcement of the
merger with Lafarge.
HeidelbergCement shares dropped 2 percent, having risen 5.3
percent year-to-date, while the sector index was up 4
HeidelbergCement said exchange rates hit second-half
revenues by 482 million euros. Holcim, which derives half of
group sales from Asia and Latin America, said weaker currencies
in those regions trimmed quarterly revenue by 6.6 percent to
4.97 billion Swiss francs.
Operating profit at Holcim dropped 14 percent to 667 million
francs ($735 million), while it was flat at
HeidelbergCement at 516 million euros ($692 million).
Holcim said it saw a payoff from a cost-cutting programme,
which to date has helped save 1.45 billion Swiss francs.
France's Lafarge, which is planning to complete the merger
with Holcim in the first half of 2015, earlier this month also
posted a drop in quarterly profit mainly due to the strength of
the euro and the company's shrinking scale as it sheds assets to
HeidelbergCement executives told analysts in July that the
Holcim-Lafarge merger would be a good opportunity to acquire
assets the two companies would have to divest to get regulatory
approval for their deal.
HeidelbergCement, the fifth biggest maker of cement by
market value, said it continued to expect an increase in 2014
revenue, operating income and profit after solid volume growth
in North America and a rebound continued in construction markets
in Britain and Germany.
HeidelbergCement generates nearly half of its revenue in
North America, the United Kingdom, Germany and Northern Europe.
Heidelberg said that besides residential investments,
commercial and infrastructure construction were increasingly
expanding in North America, where Holcim saw quarterly cement
volume sales rising nearly 11 percent and operating profit by 30
Heidelberg started in June this year to improve working
production processes in 65 cement plants worldwide, on top of an
ongoing 150 million cost cuts at its logistics and changes in
rebates system to boost margins by 350 million euros by 2015.
ThomsonReuters' Eikon data show HeidelbergCement's price at
12.5 times its expected earnings over the next 12 months.
Holcim's ratio is higher at 15.2, reflecting a stock price rally
since the merger announcement.
($1 = 0.7461 Euros)
($1 = 0.9069 Swiss Francs)
(Reporting by Marilyn Gerlach in FRANKFURT and Katharina Bart
in ZURICH; Editing by Maria Sheahan and Jane Baird)